CIF DELIVERY TERM - COST INSURANCE FREIGHT

CIF, delivery terms

CIF Delivery Term

CIF / Cost Insurance Freight - Cost, Insurance and Freight Delivery

CIF Delivery term is the most common used delivery term with FOB & EXW in incoterms. As a note, incoterms including 11 different delivery methods, and CIF is the one of this.

Cost Insurance Freight

In the form of CIF delivery, the exporter company completes the operation in such a way as to deliver the cargo to an agreed port in the country of the buyer. So seller (exporter) company respomsible to carry the goods from his factory to the destination port. 
This process include an expense; inland transportation, customs clearence, port charges, shipment costs and freight insurance. 

For example, if the delivery term in the contract or in the proforma invoice is given as  CIF Antwerp Port, an exporter company based in Istanbul city, exporter company is responsible for the shipment processes until the cargo ship reach to the port of Antwerp, Belgium.

CIF Delivery Term Insurance Obligation 

In the form of CIF transport, insurance is the seller's obligation. Seller's insurance only covering the inland transportation and main shipment. The insurance obligation finish till the goods reach to destination port.

CIF, "Cost Insurance Freight" How to Calculate Price

When calculating the CIF price, the seller, ie the exporter company, adds the profit share on the cost of the product, the packaging cost, the factory loading, the internal transportation to the port, the port costs, the customs costs, the transportation insurance and the freight cost. In this way CIF price is determined.


When calculating the CIF price, the vendor, ie the exporter, adds the profit share on the cost of the product and also add the expenses of the inland transportation cost, (carrying the container from his facility to harbour) harbour costs and customs clearance costs, main shipment cost (from seller's country to buyer's country)  In this way the CIF price is determined.

CIF Price Account: Product cost + profit share + packaging costs + loading in factory + inland transportation + port charges + customs expenses + insurance cost + freight cost

CIF Delivery Term: How it works

According to the CIF delivery method, the seller makes the shipment plan including all process and steps in CIF delivery term. ETA (estimated date of arrival) to be taken from the carrier before shipment and the buyer (importer) company let know about this. If the buyer company has any deadline, shipment alternatives and delivery time checked when exporter company prepare the proforma invoice or contract. The buyer should know about the delivery time to to prevent future problems. 

Basically, the seller (exporter) company should check the "free time periods" and negotiate with carrier to get maximum free time for destination port. In this way in the case of a longer customs clearance or any documentation problem, no extra port costs will occurred.

CIF Delivery In the form of Buyer and Seller's Responsibilities

Seller (Exporter) responsibilities CIF delivery Term
  • The seller load the container in his own facility, 
  • The seller should arrange the international shipment
  • Organizes the inland transportation to reach container to harbour, 
  • Ensures that the cargo is loaded to the ship on time 
  • Complete the customs clearence
  • International shipment costs belong to the seller.
  • The seller company should prepare the insurance covering all risks

Buyer (Importer)
  • The buyer's responsibilities start when the ship reach to destination port
  • The buyer company should handle the port of destination (in buyer's contry)
  • Customs clearance at destination point (in buyer's contry)
  • Inland transportation from destination port to buyer's facilities

CIF, delivery terms

CIF delivery is the most commonly used incoterms in "group C".

CIF "Cost Insurance Freight" Delivery and Distribution of Responsibility

The seller (exporter) company  should prepare the documents including: invoce, packing list, certificate or origin, insurance paper. Exporter company also should finish the customs clearence process

The seller (exporter) company handle the shipment process so they also managed the shipment with carrier company. As an advice, its better to send the Bill of lading draft to the buyer (importer) company and get their confirmation before the Bill of lading done. 

The carrier company agent contact with buyer (importer) company before the ship reach to destination port and check the main informations including; buyer company name, address, imported product name and hscode.... 

As an advise, if you are exporter company, always check the shipment till you sure the buyer company start customs clearence. Otherwise, you are responsible for all port costs, demuraggae costs at destination port, till the buyer accept the goods, start unloading and port process.

The seller (Exporter) company should send their export documents including; "invoice, packing list, certificate of origin, bill of lading and any other agreed  document" to the buyer by courier.

When agree on CIF delivery term, The port city should be clear and both parties check which port is the best option for the buyer company cause the ship arrive the buyer's country. Doublecheck if the destination port didnt mentioned on proforma invoice or contract and get the confirmation from buyer company when its clear.

CIF Delivery Term :  Seller & Buyer Responsibilities


details CIFCostsRisks
PackagingSellerSeller
Internal shipment (to the harbour)SellerSeller
Customs clearenceSellerSeller
Port Loading (handling)SellerSeller
ShipmentSellerBuyer
InsuranceSellerBuyer
Port Unloading at destination (handling)BuyerBuyer
Customs clearence at destinationBuyerBuyer
Internal shipment at destinationBuyerBuyer

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usatradevisa: CIF DELIVERY TERM - COST INSURANCE FREIGHT
CIF DELIVERY TERM - COST INSURANCE FREIGHT
In the form of CIF delivery, the exporter company completes the operation in such a way as to deliver the cargo to an agreed port in the country of th
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