Shipping & Freight Payment Terms

Shipment Terms

CIF

CIF is one of the more common Incoterms (International Commercial Terms) accepted by Importers/Exporters around the world.

CIF - COST, INSURANCE AND FREIGHT (at named port of destination) "Cost, Insurance and Freight" means the ownership of the shipment transfers from seller to buyer the moment it passes the ship's rail in the port of shipment. The seller must pay the costs and freight necessary to bring the goods to the port. However, in CIF the seller also has to procure marine insurance against the buyer's risk of loss of or damage to the goods during the conveyance.

Consequently, the seller contracts for insurance and pays the insurance premium. The buyer should note that under the CIF term the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have greater insurance cover, he would either need to agree to as much with the seller or to make his own extra insurance arrangements.

This term can be used only for sea and inland waterway transport. If the parties do not intend to deliver the goods across the ship's rail, the CIP term should be used.

the goods across the ship's rail, the CIP term should be used.

CNF (or C&F)/ CFR

CNF (or C&F)/ CFR is one of the more common Incoterms (International Commercial Terms) accepted by Importers/Exporters around the world

CFR: COST AND FREIGHT (at named port of destination)

"Cost and Freight" means the seller's responsibilities are concluded once the goods pass the ship's rail at the port of shipment.

The seller must pay the costs and freight necessary to bring the goods to the named port of destination BUT the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are transferred from the seller to the buyer.

The CFR requires the seller to clear the goods for export.

This term can be used only for sea and inland waterway transport. If the parties do not intend to deliver the goods across the ship's rail, the CPT term should be used.

FOB

FOB is one of the more common Incoterms (International Commercial Terms) accepted by Importers/Exporters around the world

FOB - FREE ON BOARD (... named port of shipment)
"Free On Board" means that the seller delivers when the goods pass the ship's rail at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that point onwards. The FOB term requires the seller to clear the goods for export. This term can be used only for sea or inland waterway transport. If the parties do not intend to deliver the goods across the ship's rail, the FCA term should be used.

OEM

OEM (Original Equipment Manufacturer) indicates that a manufacturer offers the service of manufacturing products to be marketed under another company's brand.