November 5, 2025
Blog

Delivery terms are among the cornerstones of international trade, clearly outlining the responsibilities, risks, and cost-sharing between the seller and the buyer. These concepts minimize uncertainties that may arise during the transportation process and create a secure and predictable foundation for trade between parties. Especially in maritime shipping, the terms CIF (Cost, Insurance and Freight) and FOB (Free on Board) stand out as they determine critical aspects such as who bears the logistics costs, who is responsible for insurance, and at which point the ownership and risk of the goods transfer. CIF and FOB delivery terms in logistics play a major role both in the drafting of contracts and in practical logistics operations.

What Does Cost, Insurance and Freight (CIF) Mean?

CIF is an international trade term formed from the initials of “Cost, Insurance and Freight.” According to the CIF delivery term, the seller is responsible not only for loading the goods onto the ship but also for covering the freight costs to the destination port and for providing maritime insurance.

This means the seller continues to bear some of the risks during the journey even after the goods are loaded onto the ship. By purchasing insurance, the seller protects the buyer against possible damage to the goods during transport. However, technically, the risk transfers to the buyer once the goods are loaded onto the ship. Thanks to the insurance, the buyer has the right to claim compensation in case of damage during the journey.

CIF is generally preferred in cases where the buyer does not want to deal with the complexities of transportation and insurance. Firms new to international trade often opt for CIF to reduce the operational difficulties in the logistics process.

What Are the Seller’s Responsibilities Under CIF?

Under the CIF delivery term, the seller has more obligations compared to other delivery terms. The seller is responsible for many processes, from the production and packaging of the goods to the organization of transportation.

Preparing and packaging the goods by the specified date
Completing the export customs procedures
Arranging the means of transportation and paying the freight cost
Delivering the goods to the port for loading
Obtaining maritime insurance valid from the moment of loading
Sending the insurance policy to the buyer
Preparing and delivering shipping documents to the buyer

The buyer, on the other hand, is responsible for handling the import procedures at the destination port. They must pay the relevant customs duties, present the necessary documents, and take delivery of the goods. In case of loss or damage during transportation, the buyer has the right to claim compensation under the insurance coverage.

What Is FOB? What Are the Differences Between CIF and FOB?

FOB stands for “Free on Board.” According to this delivery term, the seller’s responsibility continues until the goods are loaded onto the ship. Once the goods are placed on the ship’s deck, all risk and costs pass to the buyer. Freight and insurance arrangements are entirely the responsibility of the buyer.

Key Differences Between CIF and FOB

The Main differences between CIF and FOB can be summarized as follows:

Responsibility Transfer Point: In CIF, the seller handles transport and insurance until the destination port, whereas in FOB, the seller’s responsibility ends once the goods are loaded on board.
Insurance: In CIF, the seller is obliged to insure the goods during maritime transit. In FOB, the buyer must arrange their own insurance.
Cost Calculation: CIF includes transport and insurance costs in the product price. In FOB, these are additional costs borne by the buyer.

Which Is More Advantageous: CIF or FOB?

Whether CIF or FOB is more advantageous depends on the type of trade, the parties’ preferences, and the details of the transaction. If the buyer has the infrastructure to manage transportation and insurance processes, FOB may be the better option. However, for companies that prefer not to deal with these processes and want to focus solely on product delivery, CIF emerges as a more convenient choice.

Pricing strategy is also a determining factor. In CIF, the cost of freight and insurance is included in the product price. In FOB, these costs are added separately. Buyers need to accurately analyze the total cost and determine which option aligns better with their budget.