CIF (Cost, Insurance and Freight) is the incoterm under which seller is responsible to clear the goods for export, arrange freight, insurance and load the cargo onboard the vessel.
Seller bears the cost of warehousing, packaging,
transportation to port, export custom clearance, loading into vessel, freight
and marine transit insurance till port of destination.
Buyer bears the costs of unloading from vessel,
import custom clearance with duties and taxes, delivery of goods at buyer's
premises and unloading at buyer's premises.
CIP (Carriage and Insurance Paid To) is the incoterm under which seller delivers
the goods to the first carrier, at that point seller's responsibility ceases
and buyer's responsibility starts, but seller needs to pay all costs until
goods reached to the named place. A carrier can be a person, company, agent, shipping
line, airways, railway, road transport etc.
In case of CIP seller bears the costs of packing
& warehousing, transportation from warehouse to the first career, export
custom clearance, origin terminal handling charges, freight, insurance till
named place/ place of delivery and destination terminal handling charges.
Buyer bears the costs of custom clearance for
import along with import duties and taxes, delivery at buyer's premises and
unloading.
Under both incoterms, (CIF & CIP) seller
arranges the freight, primary transportation and insurance. Seller clears the
cargo for export in both. In both cases buyer clears the cargo for import,
arrange delivery and unload the cargo at point of delivery.
Differences:
1. CIF is used for sea and inland waterways shipments only but CIP can be used for all modes of transportation.
2. CIF is used for bulk shipments, it cannot be used for containerized cargo but CIP can be used for containerized cargo.
3. In CIF risk is transferred from seller to buyer once seller loads the cargo onboard the vessel but in CIP risk is transferred from seller to buyer once seller delivers the cargo to 1st carrier.
4. In CIF seller bears the cost of freight, insurance and all the activities in origin until the cargo is loaded onboard the vessel, in CIP seller bears the cost of freight, insurance and all the activities until the cargo is delivered to the first carrier and the seller pays for destination terminal handling charges also.
|
Incoterms |
CIF |
CIP |
|
Packaging charges |
Seller |
Seller |
|
Loading charges |
Seller |
Seller |
|
Delivery to port/Place |
Seller |
Seller |
|
Export clearance, Duty & taxes |
Seller |
Seller |
|
Terminal handling (origin) |
Seller |
Seller |
|
Loading on carrier |
Seller |
Seller |
|
Freight cost (ocean/air/surface) |
Seller |
Seller |
|
Insurance charges |
Seller |
Seller |
|
Terminal handling (Destination) |
Buyer |
Seller |
|
Delivery at destination |
Buyer |
Buyer |
|
Unloading at destination |
Buyer |
Buyer |
|
Import clearance, Duty & taxes |
Buyer |
Buyer |
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