CIF Trade Terms

CIF Trade Terms
Detailed Explanation of CIF (Cost, Insurance, and Freight) Trade Terms
CIF (Cost, Insurance, and Freight, often translated into Chinese as “Cost, Insurance, and Freight”) is a typical “seller-led” price term in international trade. It is clearly defined by the International Chamber of Commerce (ICC) in its International Commercial Terms (INCOTERMS® 2020). Its core principle is that the seller bears the freight and basic insurance costs for transporting the goods to the designated port of destination, while the risk transfers to the buyer after the goods are loaded on board.
I. Core Definition and Application Scenarios of CIF
The essence of CIF is that after the seller loads the goods onto a vessel at the designated port of loading, he or she must pay the freight for transport to the designated port of destination and obtain minimum insurance coverage for the goods. Once the goods are loaded on board, the risk transfers to the buyer, but the seller still has the two core obligations of “arranging transportation” and “procuring insurance.” Applicable Scenarios: This applies only to ocean and inland waterway transport (e.g., container shipping and bulk carrier transport). It does not apply to air, rail, or intermodal transport (terms such as CIP should be used in these scenarios to avoid confusion).