The main differences between FOB and CIF

FOB (Free on Board) and CIF (Cost, Insurance and Freight) are two trade terms commonly used in international trade, and they differ significantly in several ways. Here are the main differences between FOB and CIF:
1. Different port positioning
FOB: The goods shall be delivered at the designated port of the seller's country.
CIF: The seller is responsible for shipping the goods to the designated port in the buyer's country.
2. Differences in cost structure
FOB: Covers the ex-factory price of the goods, export declaration fees and expenses related to loading the goods to the buyer's designated cabin, plus the seller's profit. The sea freight and insurance of the goods shall normally be borne by the buyer.
CIF: On the basis of FOB price, the seller shall bear the full freight and insurance cost of the goods from the port of loading to the port of destination.
3. Insurance treatment is different
FOB: Insurance matters shall be handled by the buyer.
CIF: The Seller shall take care of the insurance and pay the premium. The Seller shall also take care of the insurance according to the terms of the contract and the insurance clause and deliver the insurance policy to the buyer.
4. Different shipping arrangements
FOB: The buyer is responsible for appointing the shipping company or freight forwarder to arrange the shipment.
CIF: The seller has the right to choose the shipping company or freight forwarding company independently, and is responsible for arranging the transportation of the goods.
5. The risk of force majeure varies
FOB: Under the FOB clause, the insurance is handled by the buyer and the policy is in the hands of the buyer. It is difficult for the seller to claim compensation from the insurance company and obtain evidence in case of force majeure risks.
CIF: The seller is responsible for insurance and insurance at the port of departure. Once the customer refuses to pay or returns the document, the seller can claim from the local insurance company with the policy.
To sum up, there are significant differences between FOB and CIF in terms of port positioning, fee structure, insurance treatment, shipping arrangement, shipment notice time, force majeure risk bearing, delivery place and liability transfer point. In the actual trade, the buyer and the seller should choose the appropriate trade terms and specify the relevant clauses according to the specific situation to avoid disputes.