CIF vs FOB: who pays what

CIF is Cost, Insurance and Freight. FOB is Free On Board. Incoterms 2020.

The difference that matters

Full cost split

Cost blockCIFFOB
Export clearanceSellerSeller
Carriage to port / terminalSellerSeller
Loading onto main carriageSellerSeller
Main carriage (freight)SellerBuyer
InsuranceSellerNeither obliged
Unloading at destinationBuyerBuyer
Import clearanceBuyerBuyer
Duties and import taxesBuyerBuyer
Risk passesWhen the goods are loaded on board at origin — same as CFR.When the goods are loaded on board the ship.
Transport modeSea / inland waterwaySea / inland waterway

What people get wrong

CIF

The required cover is the minimum level, not all-risks. Buyers who assume they are fully covered find out at claim time.

FOB

Routinely misused for containers. A container is handed over at a terminal days before loading, so the seller keeps risk they think they have shed.

Questions

What is the main difference between CIF and FOB?
They split 2 cost blocks differently. main carriage (freight) falls to the seller under CIF and the buyer under FOB; insurance falls to the seller under CIF and the none under FOB.
Where does risk pass under CIF?
When the goods are loaded on board at origin — same as CFR.
Where does risk pass under FOB?
When the goods are loaded on board the ship.
Can CIF and FOB both be used for container shipments?
Both are written for sea and inland waterway transport. For containers, the goods usually leave the seller's control at a terminal rather than at the ship, so a rule for any mode of transport normally fits better.

Whichever term you agree, the paperwork has to say so

The Incoterm and named place belong on the commercial invoice, the packing list and the shipper's instructions — spelled the same way on each. ovrseas generates the set from one entry so they cannot disagree with each other.

Commercial invoice template

Compare other pairs

CFR vs CIFCFR vs FOBCIF vs CIPCIF vs CPTCIF vs DAPCIF vs DDPCIF vs DPUCIF vs EXW

Incoterms® is a registered trademark of the International Chamber of Commerce. This page is an independent summary of how costs and risk are allocated and is not affiliated with or endorsed by ICC. For contract drafting, use the official Incoterms® 2020 rules published by ICC.