Question: When Should I Use CIF?

How does DAP work?

In DAP, Delivered at Place, the seller is responsible for moving the goods from the origin to their delivery at the place agreed with the buyer ready for unloading at destination.

Under DAP terms, the risk passes from seller to buyer from the point of destination mentioned in the contract of delivery..

What is FOB and CIF?

CIF vs. FOB: An Overview Cost, Insurance, and Freight (CIF) and Free on Board (FOB) are international shipping agreements used in the transportation of goods between a buyer and a seller.

Does CIF include duties?

CIF Shipping Terms | My Responsibilities Your responsibilities when importing goods on CIF/CFR terms begin as soon as the shipment arrives in the UK. Once the goods land you are responsible for all the arrangements and costs incurred in the UK. These costs include: … Import duties & taxes.

How are CIF charges calculated?

In order to find CIF value, the freight and insurance cost are to be added. 20% of FOB value is taken as freight. Means USD 200.00. Insurance is calculated as 1.125% – USD 13.00 (rounded off).

What costs are included in CIF?

Cost, insurance, and freight (CIF) is an expense paid by a seller to cover the costs, insurance, and freight of a buyer’s order while it is in transit. The goods are exported to a port named in the sales contract.

What is difference between CIP and CIF?

Let us look in to CIF Vs. CIP. … CIF means Cost Insurance and Freight (followed by a destination) which means, the value of goods sold includes cost of goods, insurance and freight up to destination mentioned. CIP means, Carriage and Insurance paid (up to named destination).

What is EXW price?

Ex works (EXW) is an international trade term that describes when a seller makes a product available at a designated location, and the buyer of the product must cover the transport costs.

Which is better CIF or FOB?

The advantage of buying FOB is that the buyer can get better deals on freight services, unlike in CIF where the buyer has to rely on the freight services chosen by the seller. This is because the seller might be looking to make profit from the freight services. The buyer therefore makes profit from buying FOB.

Is DAP and CIF same?

No, they are not the same. CIF should only be used for conventional sea freight shipments, it is not appropriate for containerised freight or movements by any other modes of transport. … DAP is suitable for any type of transport including conventional sea freight and containerised freight.

Does CIF include port charges?

The CIF Model The responsibility of the seller ends once the goods reach the buyer’s port of choice. … These charges include customs clearance fees, port security fees, docking charges and warehouse storage fees.

Who pays the freight on FOB?

FOB freight prepaid and added specifies that the seller is obligated to pay the freight transportation charges. However, the seller bills the cost of transportation to the buyer. The seller assumes the risk of loss of or damage to goods during transportation because the seller owns the goods during transit.

What does FOB stand for?

FOB stands for “free on board” or “freight on board” and is a designation that is used to indicate when liability and ownership of goods is transferred from a seller to a buyer.

What is difference between CIF and CFR?

Cost and freight (CFR) is a trade term that requires the seller to transport goods by sea to a required port. Cost, insurance, and freight (CIF) is what a seller pays to cover the cost of shipping, as well as the insurance to protect against the potential damage of loss to a buyer’s order.

Can CIF be used for air freight?

But both of these expressions are false, because CIF incoterms rule is to be used only for sea or inland waterway transport. as a result you cannot use CIF trade term with air shipments, land shipments or rails shipments.

What is CIF invoice?

So what does FOB and CIF means ? CIF – COST INSURANCE AND FREIGHT (named port of destination): Seller must pay the costs and freight includes insurance to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods are loaded on the ship.

Does CIF include unloading?

If CIF is the customs valuation basis, the costs of unloading the vessel, clearing customs, and delivery to the buyer’s premises in the country of destination—including inland insurance—must be deducted to arrive at the CIF value.

Does DAP include duty?

DAP is an Incoterm that states that the seller must make the goods available to the buyer at the buyer’s chosen location at origin. Under DAP delivery terms, the seller is not responsible for unloading the goods at destination or for any customs-related costs, tariffs, taxes, fees, or duties that may apply.