incoterms fob and cif

Incoterms
FOB
(Free On Board)
… named port of departure
FOB
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FOB is a term of international trade, is expressed in Incoterms.
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It means “free on board”.
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It similar to FAS, but sellers need to pay cost of loading.
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The transfer of risk occurs when goods overcome ship’s rail at loading
port.
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This term specify loading port.
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It can be used only for sea and inland waterway transport.
Seller’s obligations
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Take export license, pay for tax and export cost (if needs)
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Deliver goods on board.
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Provide perfect transport documents to prove goods is loading on board.
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Pay cost of loading
Buyer’s obligations
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Make transport contract and pay cost.
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Pay cost of loading on board.
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Take Bill of Lading (B/L)
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Pay unloading costs.
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Accept all risks and loss of goods when goods overcome the ship’s rail
at loading port.
The difference between FOB 2000 and 2010
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According to FOB 2000, the ship’s rail is the boundary to divide the increase of
risks and costs between sellers, buyers and critical point (point on the ship’s
rail at port of shipment).
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Sellers must deliver and buyers must receive goods on ship’s rail at port of
shipment.
The difference between FOB 2000 and 2010
(continue)
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The risks and costs handed over between sellers and buyers is carried
out on the ship’s rail.
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According to FOB 2010, is defined clearly on deck.
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It means goods is overcome the ship’s rail and is arranged on deck.
CIF
(Cost, Insurance and Freight)
…named port of destination
CIF


It means that the sellers delivers when the goods pass the ship’s rail in the
port of shipment

The sellers must pay the costs and freight necessary to bring the goods to
the named of port destination but the risk of loss of or damage to the
goods, as well as any additional costs due to events occurring after the
time of delivery, are transferred from the sellers to the buyers.
CIF

However, in CIF the seller is also has to procure marine insurance against
the buyer’s risk of loss of or damage to the goods during the carriage.

The sellers contracts for insurance and pays the insurance premium.

The buyers should note that under the CIF term the sellers is required to
obtain insurance only on minimum.

This term required the sellers to clear the goods for export.
CIF
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If the buyers want to be insurance on higher level, the buyers must either
need to agree as much expressly with the sellers or to take own extra
insurance agreements.
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It can be used only for sea and inland waterway transport.
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If the parties do not intend to deliver the goods across the ship’s rail, the
CIP term should be used.
The difference between the version 2000 & 2010


When conducting to buy the insurance, the sellers must follow the
changes of the new coverage.