CIF and FOB under Inco terms 2020

Difference between FOB and CIF under delivery rules of ICC 2020

Cost Insurance and Freight at named location (CIF)  Vs. Free On Board at a named location(FOB)

Under FOB delivery terms, the seller completes his obligation of costs and risks under movement of goods and passes to buyer when the goods are placed to the Vessel (on board the ship).  But under CIF delivery rules, the seller transfers costs of movement of goods to the buyer when the goods arrived at buyer’s side.

The costs covered by the seller under CIF terms passes from seller to buyer when the goods arrived at named destination at buyer’s side.  But the seller under FOB is responsible to bear the cost till the goods gone onboard the vessel nominated by the buyer.

The freight payment against main carriage under CIF is liable to pay by the seller.  But under FOB, the main carriage is undertaken by the buyer.

Risks of Seller under FOB terms transfers to buyer when goods are gone onboard the vessel.  Under CIF terms, the seller’s risks passes to buyer when goods are loaded to the carrier.

As per Incoterms 2020, under CIF delivery rules, the seller is liable to cover minimum insurance cover against the goods moved from seller to buyer.  Under FOB terms of delivery, neither the party is responsible to arrange insurance as per Incoterms 2020 rules thereby either the buyer or the seller may undertake insurance as per their contract of carriage mutually agreed.

The buyer has control over deciding ocean freight, as main carriage is arranged by him and he holds strength in tracking shipment under FOB delivery terms.  But under CIF, the buyer has to depend upon the seller for getting export shipment details with shipping tracking, as the seller has control over freight under main carriage.

2 separate posts about CIF and FOB are explained easily with simple language in this website, you may click below to read those.

FOB  Free On Board

CIF  Cost Insurance and Freight

The above information is about the difference between CIF and FOB.  You may add your thoughts below about the comparison between FOB and CIF.

Click here to read other delivery rules under Inco terms  

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