CIF Vs FCA, a comparison under Inco terms 2020

Differentiate FCA and CIF as per Inco term rules for delivery 2020

The following information explains about the difference between CIF and FCA under Incoterms 2020.

As you are aware FCA means Free Carrier to a named destination agreed between buyer and seller under their contract of carriage where in the seller’s responsibility on costs and risks for movement of goods transfers to buyer when goods are loaded to the Carrier nominated by the Seller.   CIF means Cost Insurance and Freight to a named place mentioned under contract of carriage between buyer and seller.

CIF is a marine restricted delivery rules and is used for movement of goods by water mode of transport only.  But FCA rules of delivery are meant for all modes of transport for movement of goods. (Land, Sea and  Air). 

Under CIF terms of delivery of goods, the exporter is liable to bear the cost of movement of goods to the named location at importer’s country.  But under the FCA delivery terms, the exporter transfers his cost of movement of goods when goods are loaded to the carrier nominated by the importer. 

Under CIF, the insurance to move goods from the seller’s place to the name location is under the responsibility of Exporter.  But under FCA delivery rules of Incoterms 2020, neither the party is responsible and insurance may be arranged either buyer or seller as their mutual agreement under contract of carriage.

The risk under CIF terms of delivery passes from exporter to importer immediately upon the goods gone onboard the vessel, although the exporter meets the cost of movement of goods to the named place at importer’s country.   So the risks and costs move equally from exporter to importer under FCA terms whereas the risks and costs do not move from importer to exporter equally under CFR terms.

So the cost of movement of goods transfers from exporter to importer in exporter’s country under FCA. But under CIF terms, the cost of movement of goods passes from exporter to importer at the named place in importer’s country.

Under CIF terms, the main carriage cost is undertaken by the exporter and he has control over freight.  But under FCA rules, the exporter does not have the control over main carriage. 

*FCA diagram shown above is meant for movement of goods for exports,  wherein named place is Port of loading.   FCA delivery term means loading goods to the means of transport provided by the buyer or placing them at the disposal of the buyer’s carrier.  Read the separate post about FCA in this website for better understanding.

Two detailed posts about FCA and CIF are available in this website to understand both terms easily.  You may click below links to read the same for easy understanding as the same  are explained in simple language:

CIF  Cost Insurance and Freight 

FCA  Free Carrier

We hope, the above information helps you in understanding the difference between FCA and CIF terms of delivery rules according to Inco Terms 2020 published by International Chamber of Commerce.  Would you like to add more information based on your understanding and experience about the comparison between FCA and CIF, share below your thoughts?

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