CIF

CIF (cost, insurance and freight) is a trade term under which the seller's price includes the goods, marine insurance, and freight to the named destination port.

CIF is the buyer-side counterpart to FOB. A CIF price tells an importer what a cargo costs landed at their port, before customs duties and inland transport. The seller books the vessel and buys insurance, but under the standard rules risk still passes to the buyer once the goods are on board at origin; the seller pays for the voyage without carrying the risk of it.

Iron ore is the clearest example. The main iron ore benchmark is quoted CIF at Chinese ports, so it already includes freight from Australia or Brazil. When freight rates rise, the CIF price can climb even though the mine’s FOB receipts are unchanged, and the difference between Australian and Brazilian ore partly reflects the longer voyage from Brazil.

Import statistics in many countries are recorded on a CIF basis while exports are recorded FOB, which is why the same trade flow appears with a larger value in the importer’s books. See FOB, CIF and Incoterms.