FOB vs CIF

A practical importer’s comparison of two common maritime trade terms.

The central difference

Under FOB, the seller normally delivers the goods on board the nominated vessel at the agreed port of shipment, while the buyer arranges the main freight. Under CIF, the seller arranges and pays the main carriage and minimum required insurance to the named destination port.

Control versus convenience

FOB often gives the buyer more control over the forwarder, freight negotiation and destination planning. CIF can be more convenient when the seller has good shipping arrangements, but the buyer should still understand destination charges and document responsibilities.

Risk and cost are not the same

A common mistake is assuming that the party paying freight carries all risk until arrival. Incoterms separate cost allocation from risk transfer. The exact version of the applicable Incoterms rules and the named ports should be stated clearly in the quotation and invoice.

What to confirm before accepting

Confirm the named port, included charges, insurance scope, local destination fees, customs responsibility, document type and who controls the booking. Never rely only on the three-letter term without the full named place and written cost breakdown.

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