CIF (Cost, Insurance and Freight)
Definition
CIF is an Incoterm for sea freight under which the seller pays for ocean freight and minimum insurance to the destination port, but risk transfers to the buyer once goods are loaded at origin. The buyer handles import clearance and delivery from the port.
In Practice
CIF splits cost and risk in a way that surprises many buyers: the seller pays to get goods to the destination port, yet the buyer bears risk from the moment of loading at origin. The seller must provide insurance, but only at minimum cover, so buyers with valuable cargo often purchase additional protection.
For planners, CIF is convenient because the quoted price includes freight, which simplifies purchase order costing. The downside is limited visibility and control: the seller books the carrier, so you may learn about rolled sailings or slow services late, and the freight markup is hidden inside the goods price.
A typical case is a small importer without a forwarding relationship buying CIF so the supplier arranges the ocean leg; as volumes grow, many switch to FOB to unbundle freight and negotiate their own rates.
Related Calculators
Related Terms
Incoterms are standardized international trade terms published by the International Chamber of Commerce that define where responsibility, cost, and risk transfer from seller to buyer in a shipment. Common examples include EXW, FOB, CIF, and DDP.
FOB (Free on Board)FOB is an Incoterm for sea freight under which the seller delivers goods loaded on board the vessel at the origin port, at which point cost and risk transfer to the buyer. The buyer pays for ocean freight, insurance, and everything after loading.
Ocean FreightOcean freight is the transport of goods by sea, typically in standardized containers aboard container ships. It is the dominant mode for international trade, offering the lowest cost per unit at the price of long transit times.
Customs ClearanceCustoms clearance is the process of getting goods approved by government authorities to enter or leave a country, including filing declarations, paying duties and taxes, and satisfying any inspections. Goods cannot be delivered until clearance is complete.