What are FOB and CIF?
The meaning of the acronyms FOB and CIF is related to the payment of freight in the maritime transport of goods. These acronyms are used to distinguish between buyer and supplier who bears the costs of freight, ie who bears the costs and risks of transportation.
FOB and CIF are the abbreviations of the English terms Free On Board (FOB) and Cost, Insurance and Freight (CIF). They are part of the Incoterms (International Trade Terms) which are defined standards for international trade.
FOB Freight (Free on Board)
The acronym FOB means free on board. In this type of freight, the buyer assumes all the risks and costs with the transportation of the merchandise, once it is placed on board the ship. At the risk of the supplier, the goods must be placed on board at the port of shipment designated by the importer.
CIF Freight (Cost, Insurance and Freight)
CIF is the acronym for Cost, Insurance and Freight, which in Portuguese means ” Cost, Insurance and Freight “. In this type of freight, the supplier is responsible for all costs and risks with the delivery of the goods, including shipping and freight insurance. This liability ends when the goods arrive at the port of destination designated by the buyer.
Who Pays for Freight?
The acronym CIF means that the freight and the insurance are paid by the supplier, who is responsible for the delivery to the place of destination. In the case of FOB, the customer pays for the freight and insurance of the merchandise in question.