Explain the difference between FOB and CIF in English and the pros and cons 15

FOB and CIF are two commonly used terms in the international **, the difference between them is: FOB (Free on Board) refers to the free on board price, that is, the seller to deliver the goods to the port of shipment on the ship, the cost and responsibility are borne by the seller, once the goods pass the side of the ship, the responsibility is transferred to the buyer. In FOB**, the seller is not responsible for the cost of transportation and insurance of the goods.

CIF (Cost, Insurance and Freight) refers to the cost, insurance premium and freight price, that is, the seller bears the freight and insurance costs, but only in the insurance and transportation method arranged by the seller, and once the goods arrive at the destination port, the responsibility is transferred to the buyer. In CIF**, the seller bears the cost of shipping the goods and the cost of insurance. In simple terms, FOB means that the seller only needs to be responsible for delivering the goods to the ship at the port of shipment, and the remaining transportation and insurance costs are borne by the buyer, while CIF means that the seller needs to bear the transportation and insurance costs of the goods until the goods arrive at the destination port.

It should be noted that FOB and CIF are only **** terms and do not involve the transfer of ownership of the goods, which needs to be confirmed in accordance with the provisions of the contract and local laws and regulations.

The reason for choosing CIF for export is that there is insurance for the buyer by the seller, which can promote the development of China's insurance industry; FOB is chosen when importing because FOB does not include insurance premiums, and of course, there are reasons to promote the development of China's insurance industry.

CIF means "cost plus freight insurance" in Chinese, and the shipping procedures and freight bearing, as well as the insurance procedures and what expenses are borne by the seller. It is more convenient for buyers to use CIF.

FOB means "Free on Board at the Port of Shipment" in Chinese, and the transportation procedures and freight bearing, as well as the insurance procedures and what expenses are borne by the buyer. Using FOB is more convenient for sellers.

Through the above comparison, it is not difficult to see that it is best to use CIF for export and FOB for import. However, due to the high risk of FOB, the use of FCA has been recommended by the state in recent years. The following factors need to be considered when using the terminology:

Transportation conditions, supply of goods, freight situation, risks on the way to freight, whether there are difficulties in handling the procedures for import and export of goods. Only by fully considering various circumstances can the risks be minimized and the returns maximized.

First of all, the serious mistake upstairs, the FOB CIF risk points are all on the side of the ship.

The following formula is clearly visible, and thousands of words are incomparable:

FOB Delivery at the port of shipment.

CFR is on top of FOB plus shipping costs.

CIF is on top of FOB plus shipping and insurance.

Namely. FOB fob.

CFR = Cost + Freight

CIF = Cost + Insurance + Freight

But sometimes it's better to say a little more:

First explain what FOB and FOB is at the port of shipment.

CIF stands for Cost Plus Premium. From the perspective of risk transfer, FOB and CIF are exactly the same, both are bounded by the cargo crossing the ship's side. The seller's risk is the risk before the shipment crosses the ship's side, and the buyer's risk after the ship's side is crossed.

FOB export, because there is no need to worry about the change of insurance costs and freight, there are fewer factors to consider when making a price, it is easy to price, and the first price will be relatively low. The CIF price includes insurance and freight, so it is higher than FOB**. But in the same way, the seller who adopts CIF** will take the initiative when delivering the goods, while the FOB must be the delivery, otherwise the resulting loss fees, demurrage and other expenses will have to be paid by the seller.

CIF includes freight and insurance, which is paid by the seller, while in FOB the seller is not responsible for shipping and insurance. The rest is the same in terms of customs formalities and risk transfer. All of them are for the seller to handle the export customs clearance, and the risk is transferred when the port of shipment crosses the ship's side.

First, the essence is different:

1. The essence of FOB: In the transaction on FOB, the buyer is responsible for sending a ship to receive the goods, and the seller shall load the goods on the ship designated by the buyer within the port of shipment and the specified time limit specified in the contract, and notify the buyer in time. When the goods are loaded onto the named vessel at the port of shipment, the risk passes from the seller to the buyer.

2. The essence of CIF: The constituent factors of the price include the usual freight and the agreed insurance premium from the port of shipment to the agreed port of destination, so the seller has the same obligations as CFR terms, but also for the buyer to handle freight insurance and pay the insurance premium, according to the general international practice, the seller should add 10% of the insurance amount according to the CIF price.

Second, the cost is different:

1. The cost of FOB is stipulated: delivery on board at the port of shipment (but when trading with North American countries, it should be delivered on board after FOB + vessel) Therefore, the seller can deliver the goods that meet the requirements of the contract to the ship designated by the buyer at the time and port of shipment specified in the contract, and notify the buyer in time. Shipping and insurance charges after that are not related to the seller.

2. CIF's fee regulations: cost, insurance plus freight, as the name suggests, is more insurance than CFR terms. That is, the seller is responsible for entering into the contract of carriage from the place of departure to the destination, and paying the normal transportation costs, and in CIF terms, the seller is also responsible for handling cargo insurance and paying the corresponding insurance premiums.

In fact, it is very simple, FOB is the ** of the goods delivered to the port, and CIF is the ** of the goods delivered to the port of the other country (including insurance premiums).

The full text of FOB is Free on Board, i.e. Delivered on Board (Designated Port of Shipment).

The Chinese translation of the CIF term is Cost, Insurance and Freight (..)named port of desti-nation) is concluded under this term, and the price of the goods is composed of the usual freight and the agreed insurance premium from the port of shipment to the port of the agreed destination. CIF covers insurance and shipping costs more than FOB.

A1**The nature of the port after the term is different, the port after FOB refers to the seaport or river port of the country where the seller is located, while the port after CIF refers to the seaport or river port of the country where the buyer is located, and after the port of destination after the CIF **term.

2.The cost composition is not the same, ** is not the same. FOB** is to consider all the costs and profits of the goods from the purchase of raw materials, production to the loading of goods for export declaration into the buyer's designated hold, while CIF is in.

3.THC terminal handling fees are paid differently. According to the principle that whoever pays the sea freight pays the THC fee, the THC fee in the FOB** clause shall be borne by the buyer.

Question: Is it included or not shipped when declaring?