CIF (Cost, Insurance, Freight)

CIF (Cost, Insurance, Freight) is one of the ICC Incoterms 2020 trade terms. Under CIF, the seller is responsible for delivering goods on board the ship at the port of origin, paying the ocean freight to the named destination port, and providing minimum cargo insurance for the sea voyage. Risk transfers to the buyer once the goods are on board the vessel at the port of shipment, even though the seller continues to pay for freight and insurance to the destination port.

What is CIF?

CIF applies only to sea and inland waterway transport - it is not appropriate for air freight or multimodal shipments that cross land before reaching the ship. The "C" covers the cost of the goods; the "I" covers insurance (at a minimum level under Institute Cargo Clauses (C), which covers only major perils); and the "F" covers the freight (the ocean shipping cost) to the named destination port. The buyer is responsible for everything that happens after the goods arrive at the destination port: port unloading charges, import customs duties and taxes, inland transport, and delivery to the final site.

In development-bank goods procurement, the schedule-of-requirements often specifies a CIF port as the delivery point when the procuring entity's country has a central port of entry and the procuring entity handles inland delivery itself. Bidders quoting CIF must include the cargo insurance premium and the full ocean freight in their unit price; these are not extras that the buyer pays.

Why CIF matters for bidders

CIF is a common source of pricing error for suppliers who assume the buyer handles more of the logistics than CIF actually requires. Under CIF, the seller must select a carrier, book space, obtain a bill of lading, and take out insurance - these are real procurement and administrative tasks with associated costs. The key point to remember is that risk transfers at the port of origin, not the destination port: if goods are damaged during the ocean voyage, the buyer owns the insurance claim, even though the seller paid for the policy. This means buyers sometimes prefer dap over CIF to obtain firmer delivery security.

FAQ

What port does "named destination port" refer to?

The bidding-document or schedule-of-requirements specifies the destination port, typically the main seaport of the procuring country. Bidders must confirm they can ship to that specific port when pricing.

Does CIF include import duties?

No. CIF delivers goods to the destination port before customs clearance. Import duties, taxes, and customs clearance costs at the destination port are the buyer's responsibility, as is all transport from the port to the final delivery site.

What insurance level is required under CIF?

Incoterms 2020 requires minimum coverage under Institute Cargo Clauses (C), which covers total loss and specified major perils but not all-risk. Buyers who want broader coverage under a CIF contract should specify Institute Cargo Clauses (A) as a contractual requirement, which effectively replicates the icc-incoterms CIP standard.