Huashang Fenghui International Logistics

Focus on Southeast Asia/Vietnam/Cambodia logistics dedicated line integrated service provider

CIF (Cost Insurance and Freight (insert named port of destination): The Chinese translation of the CIF term is cost plus insurance plus freight, (designated port of destination, the original text is Cost Insurance and Freight (insert named port of destination) The constitutive factors include the usual freight from the port of shipment to the agreed destination port and the agreed insurance premium. Therefore, the seller has the same obligations as the CFR terminology, but also provides the buyer with cargo insurance and pays insurance premiums. According to trade practice, the amount of insurance insured by the seller should be 10% added to the CIF price. If the buyer and seller do not agree on a specific insurance, the seller only needs to obtain the minimum insurance coverage. If the buyer requires war insurance, the premium Under the premise of being borne by the buyer, the seller shall provide additional insurance. When the seller applies the insurance, if it can do so, the insurance must be insured in the contract currency.

CIF notes:

It needs to be emphasized that, according to the CIF terminology, although the seller arranges the transportation of the goods and handles freight insurance, the seller does not undertake the obligation to guarantee the delivery of the goods to the agreed port of destination, because CIF is a term for shipment and delivery, not The term for delivery at the port of destination, which means that CIF is not "CIF".

CIF CIF, or "cost, insurance and freight", means that the delivery is completed when it is loaded on the carrier's ship at the port of shipment.

CIF usually refers to FOB + freight + insurance.

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C&F (CFR) is different from CIF. C&F: cost and freight, refers to cost + freight, followed by the name of the destination port, which means that the freight must be counted to the port of destination, and the responsibility ends at the port of loading.

C&F (CFR) usually refers to FOB + freight. The seller must pay the freight and expenses required to transport the goods to the designated port of destination, but the risk of loss or damage to the goods after delivery and any additional costs caused by various events are transferred from the seller to the buyer. However, under CIF conditions, the seller must also apply for marine insurance against the risk of loss or damage to the buyer’s goods during transportation.

Therefore, the seller concludes the insurance contract and pays the insurance premium. The buyer should note that the CIF term only requires the seller to insure the minimum insurance coverage. If the buyer needs higher insurance coverage, he needs to reach an explicit agreement with the seller or make additional insurance arrangements by himself.

The CIF term requires the seller to go through customs clearance procedures for the export of goods and the buyer to go through customs clearance procedures for the import of goods.

This term only applies to sea and inland water transportation. The CIP term should be used when the parties do not bear the obligation to ship.

CIF price calculation:

CIF USD total price = (FOB USD unit price x quantity + total freight and other miscellaneous charges)/[1-(1+insurance bonus rate) x insurance rate]

Remark 1:
FOB={{1-[Tax refund rate/(1+VAT rate)]} x RMB tax included price}/Exchange rate
Formula analysis:
FOB=(Renminbi tax included-tax refund income)/Exchange rate
Among them: tax refund income = RMB tax price × [tax refund rate / (1 + value-added tax rate)]
then:
FOB={RMB inclusive of tax price-{RMB inclusive of tax price×[tax refund rate/(1+VAT rate)]}}/ exchange rate
FOB={{1-[Tax refund rate/(1+VAT rate)]} × RMB tax included price}/Exchange rate
What this program calculates is only a cost price, that is, only the value of the product is considered, and other costs such as freight from the factory to the port, port miscellaneous fees, transaction costs, etc. are not considered; if you are a foreign trade company, this program does not consider profit.
Remark 2:
If you fill in "0" in the boxes for premium rate and premium rate, you will get the total CFR price.
Remark 3: Total freight and other miscellaneous expenses
You can count the freight and other non-refundable expenses in this item, such as profit, but it must be converted into US dollars (for the conversion rate, please visit the ICBC RMB spot foreign exchange rate; if You want to know about the exchange rate of other currencies
Remark 4:
About the insurance premium rate and insurance premium rate
The insurance markup rate is generally 10%. Regarding the insurance rate, you can contact the insurance company or freight forwarder. There are certain differences according to the region and the type of insurance.
FOB price calculator CIF price calculator
FOB, CFR and CIF conversion
1. FOB price is converted to other price CFR price = FOB price + foreign freight
2.CIF price = (FOB price + foreign freight) / (1-insurance bonus × insurance rate)
3. CFR price is converted to other price FOB price = CFR price-foreign freight
4.CIF price=CFR price/(1-insurance bonus×insurance rate)
5. Convert CIF price to other price FOB price=CIF price×(1-insurance bonus×insurance rate)-foreign freight
6.CFR price=CIF price×(1-insurance bonus×insurance rate)
The difference between CIF and CIP
CIP and CIF have similarities. Their price composition includes the usual freight and agreed insurance premiums. Moreover, contracts concluded under these two terms are all shipping contracts. However, the terms CIP and CIF have obvious differences in terms of delivery location, risk division boundaries, and the seller’s responsibilities and expenses. The main manifestations are: CIF applies to water transportation, the delivery location is at the port of shipment, and the risk is divided by the port of shipment. Shipment is the boundary, and the seller is responsible for chartering and booking space, paying the freight from the port of shipment to the port of destination, and handling water transportation insurance and paying the insurance premium. The CIP term is applicable to various modes of transportation. The place of delivery must be agreed by both parties according to the different modes of transportation. The risk is transferred when the carrier controls the goods. The insurance provided by the seller is not only water transportation insurance, but also various Transportation insurance.
The difference between CIF and FOB
the difference
FOB(free on board):
That is, delivery on board at the port of shipment (but when dealing with North American countries, it should be after FOB +vessel to indicate delivery on board). Therefore, the seller will deliver the goods that meet the requirements of the contract to the buyer designated by the time and port of shipment specified in the contract On board and notify the buyer in time. The freight and insurance afterwards have nothing to do with the seller.
CFR (cost and freight formerly called C&F, "90 General Rules" changed to CFR):
Cost and freight is that the seller is responsible for handling the transportation of the goods and bears the freight to the designated port of destination. It is shipped at the port of shipment specified in the contract and within the specified shipping period. The buyer is notified, the relevant documents are submitted, and the delivery obligation is completed after customs clearance. Not responsible for insurance.
CIF(cost, insurance and freight):
Cost, insurance and freight, as the name implies, is more than the insurance cost in the CFR clause. That is, the seller is responsible for signing the transportation contract from the place of departure to the destination and paying the normal transportation costs. In the CIF term, the seller is also responsible for the cargo insurance , Pay the corresponding insurance premium.
Similarities between the two
1) The place of delivery of these clauses is at the port of shipment, and they are all applicable to water transportation.
2) Even though the CIF is responsible for the insurance costs, the risk transfer is based on the shipment on the ship at the port of shipment. In other words, the seller will have nothing to do with the completion of the shipment.
3) In order to clarify the burden of loading or unloading fees, and to simplify complex transactions, these three terms have their corresponding variations.
4) Contracts concluded under these terms are all shipment contracts.
Pros and cons
Choosing to trade at the FOB price is beneficial to you under the unstable market conditions of freight and insurance premiums. But there are also many passive aspects, such as: due to importers’ delays in dispatching ships, or delays in shipment due to various circumstances, and vessel name changes, exporters will increase warehousing and other expenses, or delay payment for goods. Cause interest loss. Regarding the exporter’s control of exported goods, under FOB conditions, because the importer and the carrier contact the ship, once the goods are loaded on the ship, even if the exporter wants to resell the goods in transit or at the destination, or take other remedial measures , It will take some setbacks and incur more costs.
Under the condition of exporting at CIF price, the problem of cargo connection can be better solved, giving exporters more flexibility and maneuverability. In general, as long as the exporter guarantees that the goods shipped comply with the contract, as long as the documents submitted are complete and correct, the importer must pay. After the goods have passed the ship’s rail, even if the goods are damaged or lost when the importer pays, the importer shall not refuse to pay for the goods due to the damage. In other words, an export contract executed at CIF price is a specific type of "document sales" contract. A savvy exporter must not only be able to grasp the quality and quantity of the goods he sells, but also grasp every link in the process of the arrival of the goods and the payment of the goods. The loading, transportation, and risk control of goods should be controlled as far as possible, so that the profit of trade can be guaranteed.
Case
A Chinese company exported a batch of goods to Singapore on August 2, 2006 at CIF prices. After the conclusion of the contract, our company shipped the goods to the Shanghai wharf on September 10, and began loading on the carrier ship of China Ocean Shipping Company on September 14, and the ship was completed at 5 pm that day. The carrier vessel set sail on September 15, arrived in Singapore on October 2, and the Singapore company took delivery on October 6.
The term chosen by both parties in this case is CIF (cost, insurance and freight), and its format should be CIF (Singapore). According to the general rules, the seller fulfills the obligation of delivery when the goods pass the ship’s rail at the port of shipment Shanghai. However, as a seller, a Chinese company must pay the freight and expenses required to transport the goods to the designated port of destination Singapore. However, the risk of loss or damage to the goods after delivery and any additional costs caused by various events will be transferred by the seller To the buyer. The seller must also apply for marine insurance that the buyer should bear the risk of loss or damage to the goods in transit, including signing an insurance contract and paying insurance premiums.