Quick Answer: Terms Of Trade In Which Cost Of Goods, Insurance And Freight Are Paid By Exporter?

What is CIF and FOB terms?

The abbreviation CIF stands for “cost, insurance and freight,” and FOB means “free on board.” These are terms are used in international trade in relation to shipping, where goods have to be delivered from one destination to another through maritime shipping. The terms are also used for inland and air shipments.

What is CIF term?

Cost, insurance, and freight (CIF) is an international shipping term that describes the seller’s responsibility for the cost of shipping, freight charges, and insuring the cargo being shipped via ocean or waterway. However, the buyer assumes responsibility for the goods once the cargo has reached the buyer’s port.

What is FOB term?

Free on Board (FOB) is a shipment term used to indicate whether the seller or the buyer is liable for goods that are damaged or destroyed during shipping. “FOB origin” means the purchaser pays the shipping cost from the factory or warehouse and gains ownership of the goods as soon as it leaves its point of origin.

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What is the term CFR in shipping?

Cost and freight (CFR) is a trade term that requires the seller to transport goods by sea to a required port. Each term refers to an agreement governing the responsibilities of shipping that fall respectively to buyers and sellers in an international trade transaction.

Which is better CIF or FOB?

When you sell CIF you can make a slightly higher profit and when you buy FOB you can save on costs. Seller must pay the costs and freight includes insurance to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods are loaded on the ship.

How is CIF calculated?

In order to find CIF value, the freight and insurance cost are to be added. Insurance is calculated as 1.125% – USD 13.00 (rounded off). The total amount of CIF value works out to USD 1313.00. If any local agency commission involved, the same also is added on CIF value of goods – say 2% on FOB – USD 20.00.

What is FOB and CIF price?

Meaning: FOB means free on board. The price includes all the expenses incurred until goods are actually loaded on board the ship at port of shipment. CIF stands for cost, insurance and freight. The seller meets cost of goods, freight and marine insurance.

What is the difference between CIF and C&F?

Cost and Freight (C&F), commonly referred to as CFR or CNF, is very similar to CIF. The only difference is that the seller doesn’t cover the insurance. The seller agrees to carry the goods to a port in China and pays all fees related to loading the goods onto the vessel.

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What is the difference between CIF and CIP?

What is the difference between CIP and CIF? In CIP, the risk of goods passes from the seller to the buyer at the destination port, whereas in CIF the risk is transferred to the buyer — once the goods are loaded by the seller on the vessel port.

How is FOB value calculated?

FOB Value = Ex-Factory Price + Other Costs (b) Other Costs in the calculation of the FOB value shall refer to the costs incurred in placing the goods in the ship for export, including but not limited to, domestic transport costs, storage and warehousing, port handling, brokerage fees, service charges, et cetera.

Who pays shipping in FOB?

FOB freight prepaid and added specifies that the seller is obligated to pay the freight transportation charges. However, the seller bills the cost of transportation to the buyer. The seller assumes the risk of loss of or damage to goods during transportation because the seller owns the goods during transit.

Who is responsible for the freight cost when the terms are FOB?

Indicating “FOB port” means that the seller pays for transportation of the goods to the port of shipment, plus loading costs. The buyer pays the cost of marine freight transport, insurance, unloading, and transportation from the arrival port to the final destination.

Which is better FOB or CFR?

Free on Board means the seller is responsible for the product only until it is loaded on board a shipping a vessel, at which point the buyer is responsible. With CFR, the seller must arrange and pay all costs to ship the product to a destination port, at which point the buyer becomes responsible.

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What is FOB and CFR price?

CFR ( Cost and Freight ) Once goods are on board the vessel, responsibility for said goods then falls on the buyer. This can be contrasted with a seller under a FOB shipping transaction; where the seller is merely responsible for delivery of the goods to the port of origin; they will then be transported.

How is CFR value calculated?

Case fatality rate is calculated by dividing the number of deaths from a specified disease over a defined period of time by the number of individuals diagnosed with the disease during that time; the resulting ratio is then multiplied by 100 to yield a percentage.

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