A pricing idiom that shows the price of products, insurance, and cargo is added in the pricing quote.

The seller needs to pay the costs, and freight plus insurance to bring the merchandise to the port of destination. However, the risk is transferred to the customer once the products are loaded on the ship.

Importers usually buy CIF whenever they’re new in global trade, or they have very modest freight. It is a more comfortable method of shipping as sellers don’t have to take care of cargo or other shipping details, but the customer has to realize that he/she is most likely paying a higher price to get the product than it should. The supplier is responsible for organizing the cargo and insurance details. Managing freight might be too detailed or complicated for a newbie importer. Therefore they just let their supplier deliver the merchandise to them. It is an easy way of bringing the freight from point A to point B without even coping with particulars but with a higher price. Why could CIF cost you more? The seller will often work with his very own forwarder and indicate the price supplied from his forwarder as an added way of making a profit.

The term CIF is used for ocean cargo only. However, in practice, many importers and exporters still use the term CIF from the air freight.

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