What is CIF (Cost, Insurance and Freight)?
CIF — Cost, Insurance and Freight — is an Incoterm under which the seller is responsible for the cost of goods, marine insurance, and ocean freight to the named port of destination. It is one of the oldest and most used trade terms in international shipping, particularly for bulk and break-bulk cargo.
How CIF Works
Under CIF, the seller arranges and pays for: export clearance, loading the goods, ocean freight to the destination port, and minimum insurance coverage (typically Institute Cargo Clauses C). Risk, however, transfers to the buyer once goods are loaded on board the vessel — meaning the seller pays for freight and insurance but the buyer bears the risk during the voyage.
CIF vs FOB vs CFR
The key difference between CIF and FOB is that under FOB, the buyer arranges freight and insurance. Under CFR (Cost and Freight), the seller pays freight but not insurance. CIF adds insurance to CFR.
CIF in UAE Port Operations
CIF terms are commonly used in commodity trading through UAE ports. Bulk cargo shipments of grain, coal, and raw materials arriving at Jebel Ali frequently trade on CIF terms.
