What does CIF mean?
CIF stands for Cost, Insurance and Freight, an Incoterms® 2020 rule for sea and inland waterway transport. The seller delivers the goods on board the vessel at the port of shipment, pays the freight to the named port of destination and buys minimum insurance cover. The risk passes to the buyer once the goods are on board (HMRC).
| Feature | FOB (Free on Board) | CIF (Cost, Insurance and Freight) |
|---|---|---|
| Named place | The port of shipment, for example FOB Colombo | The port of destination, for example CIF Rotterdam |
| Where the seller delivers | On board the vessel the buyer nominates | On board the vessel at the port of shipment |
| When the risk passes to the buyer | When the goods are on board | When the goods are on board |
| Who books and pays the sea freight | The buyer | The seller |
| Who insures the cargo at sea | The buyer, if it wants cover | The seller, at minimum cover (Institute Cargo Clauses (C)) unless more is agreed |
| Transport | Sea and inland waterway only | Sea and inland waterway only |
From HMRC's Incoterms guidance and the ICC; see the sources at the end of this guide.
What is the difference between FOB and CIF?
Under both rules the seller delivers the goods on board the vessel at the port of shipment, and the risk passes to the buyer at that moment (HMRC). The difference is who books and pays for the voyage. Under FOB the buyer books and pays the sea freight and insures the cargo if it wants cover. On CIF terms the seller books and pays the freight to the port of destination and buys minimum insurance cover.
So a CIF price includes more, but the cargo is still at the buyer's risk during the voyage. If it is damaged at sea, the buyer relies on the insurance the seller bought, which by default is the minimum cover of Institute Cargo Clauses (C) (ICC). A buyer who wants wider cover should ask for it, or buy FOB and insure the cargo itself.
What is FOB Colombo?
FOB Colombo means Free on Board at the Port of Colombo. The seller delivers the goods on board the vessel the buyer nominates at Colombo; from that moment the risk passes to the buyer, and the buyer bears all costs from then on, including the sea freight (HMRC).
FOB suits goods the seller loads on board the vessel. Containerised goods are usually handed over at the container terminal instead, before they are loaded, and for those the ICC recommends FCA (Free Carrier) rather than FOB (ICC Academy).
Which Incoterm is best for perishable air freight?
FOB, CFR and CIF are for sea and inland waterway transport only, so they do not fit air freight. The rules for any mode of transport do: FCA, CPT and CIP (HMRC, ITA). Which one is best depends on who books the flight:
- FCA if you or your forwarder book the air freight.
- CPT if the seller books and pays it to the destination.
- CIP if the seller should also insure the cargo, at the higher cover CIP requires (ICC).
Fresh produce can spoil on the way, so the delivery point matters. Under FCA the risk passes when the goods are handed over at the named place (HMRC), so name it exactly, for example the cargo terminal at Bandaranaike International Airport, and agree the insurance the cargo needs.
| Rule | The seller delivers the goods | The seller pays the main carriage | The seller insures the cargo |
|---|---|---|---|
| FCA (Free Carrier) | To the carrier or another person the buyer nominates, at the named place | No | No |
| CPT (Carriage Paid To) | To the carrier the seller nominates | Yes, to the named destination | No |
| CIP (Carriage and Insurance Paid To) | To the carrier the seller nominates | Yes, to the named destination | Yes, at Institute Cargo Clauses (A) cover |
What Incoterms do not cover
Incoterms set out where the goods are delivered, when the risk passes and who pays which costs. They do not say when ownership of the goods passes, or how and when the buyer pays (ITA). Those go in the sales contract. The page on minimum orders, pricing and payment terms covers them for Harvest Gate's consignments.
Agreeing the terms with Harvest Gate
Harvest Gate is an agricultural exporter based in Colombo, Sri Lanka. Its consignments ship by sea from the Port of Colombo or by air from Bandaranaike International Airport. When you request a quote, tell us the Incoterm and the named place you want, with the product, quantity and destination. The export process sets out each step, and you can request samples before you order.
Buyer questions
Questions buyers ask about FOB and CIF
What importers ask about Incoterms when buying from Sri Lanka. Not answered here? Send the question with your enquiry.
Request samples01What is FOB CIF?
"FOB CIF" usually means the two sea freight terms compared. Under FOB (Free on Board) the seller's costs end once the goods are on board at the port of shipment. CIF (Cost, Insurance and Freight) adds the sea freight and minimum insurance to the port of destination. Under both, the risk passes to the buyer when the goods are on board.
02What is FOB and CIF?
FOB and CIF are two of the eleven Incoterms 2020 rules published by the International Chamber of Commerce. Both are for sea and inland waterway transport only (ITA). FOB names the port of shipment, such as FOB Colombo; CIF names the port of destination, such as CIF Rotterdam.
03Does CIF include insurance?
Yes, but only minimum cover. Under CIF the default is Institute Cargo Clauses (C), and the buyer can ask for more. CIP, the rule for any mode of transport, requires the higher cover of Institute Cargo Clauses (A) (ICC).
04Do Incoterms set the payment terms?
No. Incoterms do not say how or when the buyer pays, or when ownership of the goods passes (ITA). Those are agreed separately, in the sales contract.
Sources
- HMRC, UK government: Customs valuation: Incoterms.
- ICC, the International Chamber of Commerce: Incoterms® 2020.
- ICC Academy: FOB and FAS Incoterms® 2020 explained (13 May 2025).
- ITA, the US International Trade Administration: Know your Incoterms.
Incoterms® is a trademark of the International Chamber of Commerce. This guide explains the rules in general and is not legal advice; check the terms of each contract.
Request samples
Check the produce before you agree the terms.
Request samples of the products you need, and tell us your preferred Incoterm when you request a quote.