Bow of a crude oil tanker at sea under an orange evening sky

FOB & CIF Supply Solutions

Clear delivery terms. Defined responsibilities.

We review commodity supply inquiries on Free on Board (FOB) and Cost, Insurance and Freight (CIF) bases, subject to the product, route, availability and agreed contractual structure.

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The Two Bases

FOB and CIF at a glance

Selecting the appropriate delivery basis helps buyers and sellers establish their respective responsibilities for delivery, carriage, insurance and risk.

FOB

Free On Board

The seller delivers the goods on board the vessel nominated by the buyer at the agreed port of shipment. Under Incoterms® 2020 FOB, risk transfers to the buyer at that point, and the buyer generally arranges the main carriage and bears the associated costs after delivery.

Seller

Supplies goods conforming to the contract
Delivers the goods on board the buyer’s nominated vessel at the named port of shipment
Handles export clearance, where applicable

Buyer

Nominates the vessel and arranges and pays for main sea carriage
Arranges cargo insurance, if required
Bears risk from the moment the goods are on board
Handles import clearance at destination

Typical inquiry requirements

Product and specification
Contract quantity
Agreed loading port
Vessel nomination and loading window
Price basis and payment conditions
Inspection and documentation requirements

CIF

Cost, Insurance and Freight

The seller arranges and pays for carriage to the named destination port and obtains the insurance cover required by the rule. Importantly, risk does not remain with the seller until arrival: under Incoterms® 2020 CIF it generally transfers to the buyer when the goods are loaded on board at the port of shipment.

Seller

Contracts and pays for carriage to the named destination port
Obtains cargo insurance to the level required by the contract and applicable Incoterms® rules
Delivers the goods on board at the port of shipment and handles export clearance, where applicable

Buyer

Bears risk from loading on board at the port of shipment
Receives the goods at the named destination port
Handles import clearance and destination costs not covered by the carriage contract

Typical inquiry requirements

Product specification and quantity
Destination port
Required delivery window
Freight and insurance arrangements
Inspection and shipping documentation
Agreed payment and contractual conditions

Shipment journey

Who carries cost and risk – and where

1Supply pointProduct prepared for export
2Port of shipmentGoods loaded on board
3Main sea carriageVessel on passage
4Port of destinationVessel arrives
5BuyerImport clearance & receipt

Seller’s costs

Up to loading on board the buyer’s nominated vessel

Freight

Buyer arranges and pays for main carriage

Cargo insurance

Buyer’s choice and cost

Risk

Passes to the buyer once goods are on board

Seller’s costs

Includes carriage to the named destination port

Freight

Seller contracts and pays for main carriage

Cargo insurance

Seller obtains cover required by the contract

Risk

Still passes to the buyer once goods are on board

Seller Buyer

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Comparison

Side-by-side comparison

Comparison of FOB and CIF responsibilities
Responsibility	FOB Free On Board	CIF Cost, Insurance & Freight
Main sea carriage	Arranged and paid by the buyer	Arranged and paid by the seller to the named destination port
Cargo insurance	Buyer’s choice and cost	Obtained by the seller to the level required by the contract
Point of delivery	On board the vessel at the port of shipment	On board the vessel at the port of shipment
Transfer of risk	When goods are on board at the port of shipment	When goods are on board at the port of shipment
Export clearance	Seller, where applicable	Seller, where applicable
Import clearance	Buyer	Buyer
Named place	Port of shipment – “FOB [loading port]”	Port of destination – “CIF [discharge port]”

This is a general summary, not legal advice. The final contract should specify the applicable Incoterms® rule, version and named port or place. FOB and CIF are generally intended for sea and inland waterway transport. Incoterms® is a registered trademark of the International Chamber of Commerce (ICC).

Structuring Your Transaction

The right basis depends on your transaction

The appropriate delivery basis depends on the commodity, transport arrangements, commercial objectives and responsibilities agreed between the parties.

We can review your preferred terms and coordinate the relevant commercial requirements for consideration.

Discuss your terms

FAQ

Questions about supply terms

Which basis should I choose?

FOB generally suits buyers who have their own chartering, freight and insurance arrangements. CIF suits buyers who prefer the seller to arrange carriage and insurance to their destination port. If you are unsure, select “Open to Discussion” on the quotation form.

Under CIF, when does risk pass to the buyer?

Under CIF, risk generally passes to the buyer once the goods are loaded on board the vessel at the port of shipment – even though the seller pays for carriage and insurance to the destination port. This is why the insurance cover matters to the buyer.

Can other delivery terms be discussed?

FOB and CIF are the standard bases for inquiries. If you have a different requirement, describe it in the additional information section of the quotation form and it will be reviewed.

Which version of the Incoterms® rules applies?

The version is specified in the sales contract – typically Incoterms® 2020 for current contracts. The contract terms always take precedence over this general summary.

Request FOB or CIF pricing

Tell us your product, quantity, preferred basis and destination port.

Request FOB/CIF Pricing