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Conditions CIF What Is? When Should I Buy CIF?

Conditions CIF What Is? When Should I Buy CIF?

Are you currently want to understand more about the conditions of delivery, the way in division of responsibilities as well as the costs between the buyer and the seller according to conditions CIF? Distinguishing delivery terms FOB, CIF, CFR,..in fact, CIF is an attractive option for those who want to reduce the burden of shipping costs, insurance and other related costs in the process of moving goods from the port comes to the port of destination in the country of delivery. Let's find out more about delivery terms CIF and the benefits that it can bring to your business through the article below okay.

Terms of delivery CIF 

Conditions CIF (Cost, Insurance, and Freight) is a term in international trade to describe a type of contract of purchase and sale of goods. According to conditions CIF, the seller is responsible for transporting goods to the named port of destination (Port of Destination) is designated by the buyer. The seller must also purchase insurance coverage the goods until the goods are delivered to the buyer at the named port of destination.

Conditions CIF
According to conditions CIF, the seller is responsible for transporting goods to the named port of destination (Port of Destination) is designated by the buyer

Under conditions CIF, the seller is responsible for ensuring cargo safety and insurance for the goods during shipping. The seller must bear free shipping and free insurance for goods to the named port of destination. However, when the goods have been delivered at the port of destination, the responsibility and costs related to goods transfers to the buyer.

The buyer must bear the responsibility and costs related to customs clearance, import costs, and freight from the port to the place of final destination. The buyer must also bear the risks related to the goods after the goods have been delivered at the port of destination.

The most important conditions CIF apply only to carriage by sea or river. If delivery by means other shipping such as aviation or road, then other conditions such as CIP (Carriage and Insurance Paid to) or DAP (Delivered at Place) can be applied.

When should I choose the form of delivery according to conditions CIF?

CIF is often considered a beneficial terms for the small and medium enterprises, as well as the new business engaged in the activity of buying and selling international goods not too large. In terms of this, the responsibility of the buyer for the goods is higher than the seller, but in terms of cost, the buyer will have to bear less because the seller has to bear the costs related to transporting the goods to the country of the buyer.

However, it should remember that buying CIF can increase the cost for the buyer because the seller directly working with the carrier and can set a higher price to earn more profit. Besides, when large cargo, more buyers may have difficulty in controlling goods. Since when the goods are loaded onto the ship, the seller is no longer responsible for goods so if any issues arise in the shipping process, the seller can not be handled promptly and information may come slowly with buyers do have to go through intermediaries.

Therefore, when deciding to buy CIF, buyers need to carefully consider and evaluate factors such as cost, the ability to control commodities and risk management. If the amount of small commodities and the ability to better control, CIF can be a reasonable option. However, when large cargo and requires high control, buyer may need to review the terms of delivery other as FOB or CFR.

Responsibilities of the parties when the delivery according to conditions CIF

The responsibilities of sellers and buyers in the delivery process according to conditions CIF (Cost, Insurance, and Freight) as follows:

The seller (seller) has the responsibility of how?

Deliver goods: The seller must deliver goods as specified in the sales contract. Goods must meet the requirements of quantity, quality, packaging, and must comply with the regulations on export.

Delivery according to conditions cif
The seller must deliver goods as specified in the sales contract
  • Freight: The seller must be responsible for shipping of goods from the place of production or its warehouses to the port directory is specified in the contract. Party the seller must arrange and pay the cost of freight to the port of export.
  • Cargo insurance: The seller has to buy cargo insurance until the goods pass the edge of the ship at the port of export. This insurance protects goods from the risk of loss or damage during shipping.
  • Offering documents: The seller must provide the documents related to the goods and shipping to the buyer including the shipping bill, bill of goods, transport documents, and proof of insurance.

Buyer (buyer) has the responsibility to happen?

  • Payment value of goods: The buyer must pay the value of goods as agreed in the contract of sale. Time and method of payment is specified in the contract.
  • Import manager: buyers are responsible for the import of goods and the customs related. This includes arrangements and payment of fees, taxes and import duties, and compliance with customs regulations.
  • Freight: buyer is responsible for freight from the port of importation to the final destination specified in the contract. Side the buyer must arrange and pay the cost of freight from the port of import.
  • Costs and risks when the goods pass the edge of the ship: buyer responsible for the cost and risk once the goods pass the edge of the ship at the port of export. This includes being responsible for the preservation, domestic shipping, and insurance of goods from the port of export to the final destination.

Distinguishing delivery terms FOB, CIF, CFR

FOB (Free On Board), CIF (Cost, Insurance, and Freight) and CFR (Cost and Freight) is the delivery terms commonly used in international trade. Below is the distinction between the three terms of delivery FOB, CIF, CFR:

FOB (Free On Board)

Under the conditions FOB, the seller is responsible for transporting goods to export port (Port of Shipment) and bear shipping cost to this port. When goods are loaded onto ships at the port of export, responsibility and risk transfers to the buyer. The buyer must bear the shipping costs and the costs related to goods from the port of export to the final destination, including the costs of import and customs clearance.

CIF (Cost, Insurance, and Freight)

According to conditions CIF, the seller is responsible for transporting goods to the named port of destination (Port of Destination) and bear shipping cost to this port. The seller must also purchase insurance coverage the goods until the goods are delivered to the buyer at the named port of destination. After the goods have been delivered at the port of destination, the responsibility and costs related to the goods passes to the buyer, including the cost of import and customs clearance.

Distinguishing delivery terms fob cif cfr
The seller must also purchase insurance coverage the goods until the goods are delivered to the buyer at the named port of destination

CFR (Cost and Freight)

Under conditions of CFR, the seller is responsible for transporting goods to the named port of destination (Port of Destination) and bear shipping cost to this port. However, other conditions CIF, the seller is not required to buy cargo insurance for buyers. After the goods have been delivered at the port of destination, the responsibility and costs related to goods transfers to the buyer.

In fact, the main distinguishing between FOB, CIF and CFR, located in the seller take the responsibility and pay the fees and risks associated with shipping goods to the named port of destination. In the case of CIF, the seller also has to procure insurance of the goods until delivery at the port of destination.

Unit shipping HNT – Prestigious, sustainable, competitive

In the main areas of activity of HNT, one of the important factors affecting the success of a business freight is the terms of delivery. In the context of the market increasingly competitive, ensuring delivery conditions exactly the right time and safety is a factor in the decision to create the trust and satisfaction for our customers.

HNT is active in many areas freight such as sea, road, rail and service providers, freight forwarders, warehouse for rent, customs import and export goods, forwarders, cargo tally, and many other transportation services. Our team of experienced staff and professional of HNT committed to meet all the transportation requirements of customers in the best way.

For advice and answers to all questions related to conditions of delivery and the shipping service of HNT, you can contact us by hotline 0981.655.880 (Mrs. Thi) now!