CIF, or Cost, Insurance, and Freight, is an international trade term defined in the Incoterms rules published by the International Chamber of Commerce (ICC). CIF is often used in maritime shipping transactions, and it outlines the responsibilities, costs, and risks between the seller and the buyer.

Delivery Point

In a CIF transaction, the seller is responsible for delivering the goods on board the vessel at the specified port of shipment. Additionally, the seller is responsible for obtaining and paying for marine insurance coverage for the goods during transit.

Seller's Responsibilities

Under CFR, the seller is responsible for:

• Packaging and preparing the goods for export.
• Transporting the goods to the named port of shipment.
• Loading the goods onto the vessel.
• Providing and paying for marine insurance to cover the goods during the sea voyage.
• Providing the buyer with any necessary documents, like invoices, export licenses, insurance certificates, or other documentation.

Buyer's Responsibilities

• Unloading the goods from the vessel at the named destination port.
• Paying for all costs and risks from the destination port to the final destination.
• Handling import customs formalities, duties, taxes, and clearances.

Transfer of Risk

Risk is transferred from the seller to the buyer at the point when the goods are on board the vessel at the specified port of shipment. However, due to the requirement for the seller to provide insurance, the seller remains responsible for the goods' condition during the sea voyage until they reach the destination port. After unloading at the destination port, the buyer assumes the risks.

CIF is a commonly used Incoterm for international trade involving maritime shipping. It provides buyers with a degree of security by requiring the seller to obtain marine insurance, which can help protect against potential losses or damage during transit. Clear specification of the named port of shipment, the named destination port, and a well-defined agreement between the parties are crucial for a successful CIF transaction.