What is the difference between FOB and CIF?

What is the difference between FOB and CIF?

The abbreviation CIF stands for “cost, insurance and freight,” and FOB means “free on board.” These are terms are used in international trade in relation to shipping, where goods have to be delivered from one destination to another through maritime shipping. The terms are also used for inland and air shipments.

What are FOB and CIF contracts?

Under a CIF agreement, the seller assumes the costs and risks associated with transport until delivery, which is when the buyer assumes responsibility. With a FOB agreement, the seller transfers all of the risk and costs to the buyer once the shipment is loaded onto the shipping vessel.

What is the difference between CF and CIF?

Cost and Freight (C&F), commonly referred to as CFR or CNF, is very similar to CIF. The only difference is that the seller doesn’t cover the insurance.

What are the advantages of CIF and FOB?

In most cases, we recommend FOB for buyers and CIF for sellers. FOB saves buyers money and provides control, but CIF helps sellers have a higher profit. However, we recommend that new buyers use CIF as they get accustomed to the importing process.

What is the difference between FOB and CNF?

There are two major terms of shipment widely used round the globe. These are freight on board (FOB) and cost net freight (CNF). Other terms such as cost net insured (CIF) and cash against document/delivery (CAD) are also used. Based on the relationship between business entities, the terms are set.

What is the difference between FOB shipping and FOB destination?

Free on board shipping point indicates that the buyer takes responsibility for loss or damage the moment the goods get to the shipper. Free on board destination indicates that the seller retains liability for loss or damage until the goods are delivered to the buyer.

What is meant by FOB?

Free on Board (FOB) is a term used to indicate who is liable for goods damaged or destroyed during shipping. “FOB origin” means the buyer is at risk once the seller ships the product. “FOB destination” means the seller retains the risk of loss until the goods reach the buyer.

What is the difference between FOB and ex works?

What Do EXW and FOB Stand for? EXW stands for Ex Works, an incoterm whereby the buyer of a shipped product pays for the goods when they are delivered to a specified location. FOB, or Free on Board, instead shifts the responsibility of the goods to the buyer as soon as they are loaded onboard the ship.

What are the different types of FOB?

There are two types of FOB, which are FOB destination and FOB shipping point. The type of FOB to be used is typically designated in a customer’s purchase order, and is also stated on the supplier’s invoice to the customer.

What is the difference between C & F?

Celsius scale, or centigrade scale, is a temperature scale that is based on the freezing point of water at 0°C and the boiling point of water at 100°C. Fahrenheit scale is a temperature scale that is based on the freezing point of water at 32°F and the boiling point of water at 212°F.

What is FOB and FOC?

In short, under FOB terms, the seller completes all export formalities and delivers goods to get on board the vessel arranged by buyer. However in FCA terms, the seller’s liability to deliver goods fulfills, once after loading goods to the carrier appointed by buyer which is prior to onboard the main vessel.

What is FOB price?

The FOB (Free On Board) price is the price of goods at the frontier of the exporting country or price of a service provided to a non-resident. It includes the values of the goods or services at the basic price, the transport and distribution services up to the frontier, the taxes minus the subsidies.

Who pays CIF freight?

Who Pays CIF Freight? The seller must pay for the costs of transferring and shipping the freight as well as insuring the cargo until the goods have been delivered to the buyer’s port.

What are the advantages of FOB?

Most buyers choose FOB because it’s arguably the most affordable or cost-effective option. Under the FOB terms, buyers do not usually pay the higher fees that CIF protection plans incur. With Free On Board, the buyer has more flexibility and control of the terms, the cost, freight planning, and more.

What is the disadvantage of CIF?

Disadvantages of CIF Also, due to differences in transportation laws in some countries, costs may be somewhat higher than expected. These additional costs are also called hidden costs. It should be noted that the costs of various services may be higher than the costs that you have previously calculated and planned.

What is the difference between CNF and CFR?

What is the difference between CFR, C&F or CNF. All terms are one and no difference while operating. C&F and CFR are widely used terms of delivery in a domestic or international trade.

What is CFR?

The Code of Federal Regulations (CFR) is the codification of the general and permanent regulations published in the Federal Register by the executive departments and agencies of the federal government of the United States. The CFR is divided into 50 titles that represent broad areas subject to federal regulation.

How is CIF price calculated from FOB?

In order to find CIF value, the freight and insurance cost are to be added. 20% of FOB value is taken as freight. Means USD 200.00. Insurance is calculated as 1.125% – USD 13.00 (rounded off).