CIF
Cost, Insurance and Freight
Seller pays freight and minimum insurance (ICC C). The classic sea trade term - but risk still transfers at origin.
Visual Guide - Cost & Risk Transfer
Obligations & Cost Breakdown
Seller Obligations
- Arrange and pay freight to destination
- Procure minimum insurance (ICC C - 110% of CIF value)
- Load goods on board vessel
- Clear for export
Cost Responsibility:
Buyer Obligations
- Accept delivery at destination
- Import clearance and duties
- Note: May want additional insurance coverage above ICC C minimum
Cost Responsibility:
Risk Transfer Point
When goods pass ship's rail at port of shipment
Insurance Requirement
Seller provides MINIMUM (ICC C) - covers total loss only, NOT partial damage or theft. Buyer should consider ICC A (all-risks) coverage.
Real African Trade Examples
Shea Butter: Burkina Faso → France
CIF Abidjan (via Côte d'Ivoire)Organic shea butter for cosmetics industry
Small/medium exporters benefit from handling logistics end-to-end. European buyers often prefer CIF for simplicity - one price covers everything to destination.
FOB Abidjan if buyer has better freight rates
Sesame Seeds: Ethiopia → China
CIF DjiboutiWhite sesame seeds in bulk
Ethiopian exporters on the Djibouti–Asia route often have competitive freight arrangements. Chinese buyers accept CIF for Letters of Credit financing.
FOB Djibouti if Chinese buyer controls shipping
Rubber: Liberia → Malaysia
CIF MonroviaNatural rubber bales
Liberian rubber exporters include freight and insurance for a complete delivered cost. Simplifies pricing for Southeast Asian processors.
FOB Monrovia for experienced rubber traders
Common African Trade Usage
Popular for Letters of Credit transactions where banks require CIF pricing. Used by medium-to-large African exporters who want to offer a comprehensive price. Common for agricultural commodities (shea butter, sesame, cocoa butter) going to European and Asian markets.
Common Mistakes with CIF
Assuming Full Insurance Coverage
The Mistake: Buyer assumes CIF insurance covers all risks including partial damage, theft, and mishandling.
The Problem: CIF only requires ICC Clause C - which covers total loss events (sinking, fire, stranding). Theft, breakage, and water damage may NOT be covered.
The Solution: Buyers should request ICC A (all-risks) coverage in the contract, or purchase additional insurance. Consider using CIP which mandates ICC A.
Using CIF for Multimodal Transport
The Mistake: Using CIF for a shipment that involves road + sea + road segments.
The Problem: CIF is a sea-only term. It references 'on board vessel' and port-to-port delivery.
The Solution: Use CIP (Carriage and Insurance Paid To) for multimodal transport. CIP provides ICC A all-risks insurance and works for any transport mode.
When to Use CIF
Best For
- When buyer wants seller to handle shipping
- Letters of Credit transactions
- Traditional sea trade
- When buyer needs a single delivered price
Avoid When
- High-value cargo (minimum insurance may be insufficient)
- Containerized cargo at terminal
- When comprehensive all-risks insurance is needed