CIF is a term of international trade (known as Incoterm ) to refer to the cost, insurance and freight of maritime or river logistics that both the seller and the buyer of a commercial transaction must respect and negotiate. The Incoterm CIF is generally used for more valuable industrial products and to avoid the costs and documents of customs processes to the buyer. CIF is the Incoterm with the highest coverage in terms of cost, insurance and freight. The rights and obligations of these three aspects cover different stages of logistics and transport.

With the CIF, the seller agrees to cover the shipping, insurance and logistics and transportation documentation from the seller’s warehouses to the shipment of the merchandise to the ship at the port of origin.

Responsibility for the expenses and documentation of the vendor with the Incoterm CIF covers up the term of customs procedures at the port of destination. But mandatory seller insurance only covers until the products are shipped. Therefore it is not responsible if the ship sinks, for example. To reduce the risk of the buyer, the Incoterm 2010 CIF requires the seller to contract at least a minimum insurance that covers the route of the merchandise from the shipment in the port of origin to the port of destination. This insurance must cover at least 10% of the contract concluded between both parties.

The correct way to use the acronym is first to put the Acoterm acronym agreed between buyer and seller, followed by the destination port and the Incoterm version that was used. For example: CIF Port of New Orleans, Incoterms 2010 to ship products by ship to New Orleans.

Incoterm , CIF and FOB

The acronym CIF belongs to one of the eleven current terms of the most recent revision: Incoterm 2010. IncotermInternational Commercial Terms or ‘international trade terms’ is an international classification of the operation of the expenses, insurance, risks and responsibilities of the seller and the buyer with respect to the transportation and logistics of any contractual commercial transaction. To see what does FOB stand for, check this slang dictionary.

The Incoterms are important because:

  • standardize international trade rules with respect to logistics and transport;
  • define the obligations of the parties involved;
  • define the risks of both the buyer and the seller; and
  • Transportation costs are clearly determined and divided.

The Incoterm FOB is the oldest and historically the most used. Its acronym is an acronym in English for Free on Board which means ‘free on board’. This means that the seller assumes the costs and risks of the merchandise until it is loaded to the ship that the buyer stipulated at the port of origin. FOB is an Incoterm generally used for heavy machinery where cargo involves risks and damages.

  • Lactose Intolerance Definitions of Lactose Intolerance (Milk Sugar Intolerance) - About 90 percent of the world’s population suffers from lactose intolerance or intolerance to milk sugar. In the countries of Central Europe, fewer people suffer [...]
  • Bone Marrow Failure Definitions of Bone Marrow Failure - Bone marrow atrophy can have different causes depending on the patient. Some forms of bone marrow insufficiency can be cured with appropriate therapy steps. What [...]
  • Hypodontia Definitions of Hypodontia - In the case of congenital and hereditary hypodontia, one to five permanent teeth of the jaw are missing, with the absence of six teeth being [...]
  • carbon monoxide poisoning Definitions of CMP - According to abbreviationfinder, CMP stands for carbon monoxide poisoning. Carbon monoxide poisoning can go unnoticed and is life-threatening. The gas displaces vital oxygen from the blood. Poorly [...]
  • Hypoplastic Left Heart Syndrome Definitions of HLHS - According to abbreviationfinder, HLHS stands for Hypoplastic Left Heart Syndrome. The term hypoplastic left heart syndrome summarizes a severely underdeveloped left heart and several other serious [...]
  • Cosmos Definitions of Cosmos - According to DigoPaul, cosmos is a Latin term that comes from a Greek word and is used to name the set of all created things. [...]
  • Cork Definitions of Cork - The Latin word cortex derived in the Mozarabic kórčo, which in turn came to our language as cork. That is the name given to the [...]
  • ICT Definitions of ICT - Information technology and communications. Known by the acronym ICT according to abbreviationfinder, Information technology and communications are the set of media (radio, television and conventional [...]
  • OSI Model Definitions of OSI Model - OSI model. Reference framework for the definition of communication systems interconnection architectures. According to abbreviationfinder, it is a functional guideline for communications tasks and therefore [...]
  • Cooperation Definitions of Cooperation - The Latin word cooperatio derived from the term cooperation, which refers to the act and result of cooperating: acting together to achieve a common goal [...]