FOB vs CIF
Key Difference
Risk transfers to the buyer when goods are loaded on board in both cases. The difference is who pays freight and insurance: the buyer under FOB, the seller under CIF.
When to use FOB?
FOB suits buyers who have their own trusted freight forwarder/insurer or want direct control over freight pricing.
When to use CIF?
CIF can be convenient when the buyer has less logistics experience, or the seller can secure better freight rates through volume contracts.
Full Comparison
FOB – Free On Board
Sea/Inland Waterway Only- Seller's Responsibility
- Export-clears the goods and delivers them on board the vessel at the named port of shipment.
- Buyer's Responsibility
- Arranges and pays for ocean freight, insurance, and all transport/import formalities after loading.
- Risk Transfer Point
- When the goods are placed on board the vessel at the port of shipment.
PackagingSeller
Export ClearanceSeller
Origin Inland TransportSeller
Main Carriage (Freight)Buyer
Insurance—
Import ClearanceBuyer
Destination Inland TransportBuyer
Duties & TaxesBuyer
CIF – Cost, Insurance and Freight
Sea/Inland Waterway Only- Seller's Responsibility
- Like CFR, plus the seller must also arrange minimum-cover (ICC C-level) marine cargo insurance.
- Buyer's Responsibility
- Handles transport after the destination port and import formalities.
- Risk Transfer Point
- When the goods are placed on board the vessel at the port of shipment.
PackagingSeller
Export ClearanceSeller
Origin Inland TransportSeller
Main Carriage (Freight)Seller
InsuranceSeller
Import ClearanceBuyer
Destination Inland TransportBuyer
Duties & TaxesBuyer
Frequently Asked Questions
Risk transfers to the buyer when goods are loaded on board in both cases. The difference is who pays freight and insurance: the buyer under FOB, the seller under CIF.