What is the main difference between CIP and FOB?

They split 2 cost blocks differently. main carriage (freight) falls to the seller under CIP and the buyer under FOB; insurance falls to the seller under CIP and the none under FOB.

Where does risk pass under CIP?

When the goods are handed to the first carrier — same as CPT.

Where does risk pass under FOB?

When the goods are loaded on board the ship.

Can CIP and FOB both be used for container shipments?

CIP works for any mode of transport. FOB is written for sea and inland waterway transport only.

CIP vs FOB: who pays what

CIP is Carriage and Insurance Paid To. FOB is Free On Board. Incoterms 2020.

The difference that matters

Main carriage (freight):CIPSeller·FOBBuyer
Insurance:CIPSeller·FOBNeither obliged

Full cost split

Cost block	CIP	FOB
Export clearance	Seller	Seller
Carriage to port / terminal	Seller	Seller
Loading onto main carriage	Seller	Seller
Main carriage (freight)	Seller	Buyer
Insurance	Seller	Neither obliged
Unloading at destination	Buyer	Buyer
Import clearance	Buyer	Buyer
Duties and import taxes	Buyer	Buyer
Risk passes	When the goods are handed to the first carrier — same as CPT.	When the goods are loaded on board the ship.
Transport mode	Any mode	Sea / inland waterway

What people get wrong

CIP

The 2020 revision raised CIP cover above CIF’s. Contracts copied from pre-2020 templates often still assume they match.

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 CIP and FOB?: They split 2 cost blocks differently. main carriage (freight) falls to the seller under CIP and the buyer under FOB; insurance falls to the seller under CIP and the none under FOB.
Where does risk pass under CIP?: When the goods are handed to the first carrier — same as CPT.
Where does risk pass under FOB?: When the goods are loaded on board the ship.
Can CIP and FOB both be used for container shipments?: CIP works for any mode of transport. FOB is written for sea and inland waterway transport only.

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 CIP CFR vs FOB CIF vs CIP CIF vs FOB CIP vs CPT CIP vs DAP CIP vs DDP CIP vs DPU

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.