What is the difference between FOB and CIF?

FOB (Free On Board) means the seller delivers goods onto the vessel at the port of origin, and risk transfers to the buyer once the goods are on board. The buyer arranges and pays for ocean freight and insurance. CIF (Cost, Insurance, and Freight) means the seller arranges and pays for freight and minimum insurance to the destination port, but risk still transfers to the buyer once goods are loaded onto the vessel at origin.

Which is better for first-time importers, FOB or CIF?

CIF is generally recommended for first-time importers because the seller handles freight booking and insurance, reducing the logistical complexity for the buyer. However, CIF typically costs more because the seller adds a margin on freight and insurance. As importers gain experience and establish relationships with freight forwarders, many switch to FOB to gain more control and reduce costs.

Who is responsible for insurance under FOB and CIF terms?

Under FOB, the buyer is fully responsible for arranging marine cargo insurance from the moment goods are loaded onto the vessel. Under CIF, the seller must provide minimum insurance coverage (ICC C clause) to the destination port — however, this minimum coverage is often insufficient for high-value commodities. Buyers should always arrange their own supplementary insurance regardless of the Incoterm used.

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FOB vs CIF: Which Shipping Term is Right for Your Import Business?

By Cakglo Team · March 2026 · 7 min read

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FOB vs CIF: Which Shipping Term is Right for Your Import Business?

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