CIF is an international trade term where the seller pays freight, insurance, and costs to deliver goods to the buyer’s specified port of destination. However, risk transfers to the buyer when goods cross the ship’s rail at the port of shipment.
CIF is an international trade term under INCOTERMS® requiring the seller to pay costs, insurance, and freight to deliver goods to the buyer’s specified port of destination. Risk transfers to the buyer when goods pass the ship’s rail at the port of shipment, even though the seller pays for post-shipment logistics.
Example Scenario
A British seller in Southampton sells 500 cases of whiskey to a German buyer using CIF Hamburg:
Seller’s actions:
- Purchases marine insurance covering the journey.
- Handles UK export customs and provides shipping documents.
- Pays for ocean freight from Southampton to Hamburg.
Buyer’s actions:
- Pays for unloading the goods at Hamburg Port.
- Settles German import taxes (duties/VAT).
- Arranges delivery from Hamburg Port to their warehouse.
Key Highlights
Seller’s obligations:
- Export costs, freight, and insurance.
- Shipping documents and export clearance.
Buyer’s obligations:
- Post-discharge costs (unloading, import taxes).
- Risk of loss/damage after goods cross the ship’s rail.
Ideal for:
Buyers seeking seller-managed shipping/insurance but willing to handle post-discharge responsibilities.
