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Difference between CIF and CFR
This article seeks to offer a basic difference between CIF and CFR terms, along with some of their variations – CIFFO and C&FFO. These terms are commonly used in the context of Incoterms.
Incoterms, short for International Commercial Terms, is a set of standardized rules established by the International Chamber of Commerce (ICC) to streamline international trade. These rules define the roles, costs, and risks involved in global commerce. When parties mention Incoterms, they refer to the most recent edition of the rules. The latest version, Incoterms 2020, has been in effect since January 1, 2020.
Understanding CIF and CFR (C&F)
CIF stands for "Cost, Insurance, and Freight." This term indicates that the seller is responsible for arranging and paying for the goods, transportation, and insurance coverage up to the destination port. The seller covers most costs until the goods reach their final port of call.
CFR (C&F) means "Cost and Freight." It is often used interchangeably with C&F. Under this term, the seller handles and pays for shipping the goods to the destination port, similar to CIF, but insurance coverage is not included. The buyer is not required to insure the goods, but they can choose to do so at their own expense.
There are also additional terms like CIFFO and C&FFO, which are extensions of CIF and CFR, respectively, with an additional "Free Out" component. Essentially, CIFFO is CIF with the added responsibility for unloading the goods at the destination port. Similarly, C&FFO is C&F with the same added responsibility for unloading. The "Free Out" element specifies whether the seller or buyer is responsible for unloading costs based on contract terms. This concept of "Free Out" is not part of Incoterms, so it's advisable to define it clearly in the contract to avoid misunderstandings.
by findcarmailer on 2024-05-09 08:38:38