CIF / FOB price

Customs value

Principles for classifying a product in the Harmonized System.

Understanding CIF and FOB Pricing

The terms CIF (Cost, Insurance, Freight) and FOB (Free On Board) are essential in international trade, as they determine who is responsible for the costs and risks associated with the transportation of goods.

CIF Pricing

CIF pricing includes the cost of goods, insurance, and freight to the port of destination. This means that the seller covers all expenses until the goods reach the port of arrival. This type of pricing is advantageous for the buyer, as it transfers the responsibility for risks and costs to the seller until delivery at the destination port.

FOB Pricing

In contrast, FOB pricing means that the seller is responsible for the goods until they are loaded onto the ship at the port of shipment. From that point on, the buyer assumes the costs and risks. This term is often preferred by buyers who wish to have more control over transportation and insurance after loading.

Practical Tips

  • Term Choice: Choose the term that best fits your logistics strategy and your ability to manage risks.
  • Negotiation: When negotiating contracts, ensure you fully understand the implications of each term to avoid unexpected costs.
  • Insurance: If you opt for FOB, consider purchasing insurance to cover risks after loading.

By mastering these concepts, you can optimize your international transactions and better manage your logistics costs and risks.