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CFR VS CIF

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QUERY FROM DONAPATRICE
CIF/CFR

WHAT IS THE DIFFERENCE BETWEEN cif/cfr?

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MR. OLD MAN’S COMMENT

Hi Donapatrice

It's a simple question.

The below quoted from Incoterms 2000 can help answer your question:

"CFR: COST and FREIGHT means that the seller delivers when the goods pass the ship's rail in the port of shipment. The seller must pay the costs and the freight necessary to bring goods to the named port of destination. But the risk of loss 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.

CIF: COST, INSURANCE and FREIGHT means that the seller delivers when the goods pass the ship's rail in the port of shipment. The seller must pay the costs and the freight necessary to bring goods to the named port of destination. But the risk of loss 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. However, in CIF the seller also has to procure marine insurance against the buyer's risk of loss or damage to the goods during the carriage."

So now you may see that the main difference between CFR and CIF is INSURANCE for which the seller has to contract and pay the premium.

Best regards,
Nguyen Huu Duc …

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6 Comments

  1. anonymous

    May 26, 2011 at 7:05 pm

    Anonymous writes:what is the difference between Surrendred B/L , Non- Nego B/L ,Released B/L & Sea way B/L ?I want to become a member in this blog and share question and answers. I tried but failed.Please advise. ThanksSusmita Bangladesh [email protected]

    Reply

  2. mroldmanvcb

    May 26, 2011 at 10:05 pm

    Just create an opera account by signing up. Once you have owned an opera account/blog you can invite other members including me to become your friends. And of course, you can post your questions or give your answers to other bloggers'questions.Regarding the difference between surrendered B/L and released B/L, sea waybill and non-negotiable B/L… just google these terms and you'll have definitions for them.

    Reply

  3. anonymous

    May 28, 2011 at 2:05 pm

    Anonymous writes:could you please help me with the links.Thanksbithi rashidBangladesh

    Reply

  4. mroldmanvcb

    May 28, 2011 at 4:05 pm

    Dear bithi rashid, It seems you have become my friend already. Welcome!Please note that this blog is for those who eat, sleep and breathe L/C, hence, questions regarding L/C, UCP, URC… are always welcomed.Just send your questions in English and you'll receive Mr. Old Man's answers in English. However, please also note that Mr. Old Man is not a superman that can answer all the questions.Thanks for your visit to Mr. Old Man.Best regards,Mr. Old ManP/s: If you are interested in Trade Services Update LC Monitor for which Mr. Old Man is a country editor, please give your email address to receive the latest issues.

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  5. anonymous

    March 26, 2013 at 11:03 pm

    Anonymous writes:What is the most suitable price to the purchaser CIf or CFR

    Reply

  6. mroldmanvcb

    March 27, 2013 at 11:03 am

    A quick answer is that it depends but CFR is recommended.I think the following Q&A can help further elaborate your questtion:SHOW YOUR LOVE FOR THE COUNTRY BY USING APPROPRIATE INCOTERMSFriday, March 5, 2010 5:28:52 PMIncoterms QUERY Dear Mr.Old! I just read a document about Incoterms and it stated that: If containers are used for transportation of goods, FOB should be replaced by FCA, CFR by CPT, and CIF by CIP.For the benefit of macroeconomics and microeconomics, merchants should choose the “C”-terms when exporting and “F”-terms when importing.Can u explain the reason for me? Many thanks ——————————————————-COMMENT FROM MR. OLD MANThanks for asking Mr. Old Man. Intelligent queries.1) WHY FCA, CPT, CIP FOR CONTAINERIZED GOODS? It is true that if containers are used for transportation of goods, FOB should be replaced by FCA, CFR by CPT, and CIF by CIP. You are requested to pay attention to the point where the risks of loss or damage to the goods are transferred from the seller to the buyer (transfer of risks). Under trade terms like FOB, CRF and CIF the buyer must bear the risk of loss or damage to the goods from the time they have passed the ship’s rail at the named port of shipment, whereas under FCA, CPT and CIP the buyer bears the risks of loss or damage to the goods from the time the seller delivers the goods to the carrier at a point agreed in the contract of carriage. And as you may know, containerized goods are delivered at CY (container yard) or CFS (container Freight Station), not over the ship’s rail. Hence, if choosing FOB, CFR or CIF term for transportation of containerized goods, the buyers must bear the additional risks of loss or damage (if any) to the goods for the distance from CY or CFS to the ship’s rail. 2) WHY C-TERMS WHEN EXPORTING AND F-TERMS WHEN IMPORTING?I don’t want to use big words like “for the benefits of macroeconomics and microeconomics”. But it is true that a patriotic merchant should choose C-terms when exporting and F-terms when importing as this is a good way to contribute to the development of his country’s transport industry and insurance industry and the growth of his country GDP.Under CFR or CPT term the exporter must contract (normally with the local carrier) at his own expense for the carriage of the goods to the place of destination, i.e., he must pay the carrier all costs relating to the goods until they have been delivered as well as freight and all other costs including loading and unloading costs. Under CIP and CIF, in addition to freight and other costs, the exporter must pay the local insurer the insurance premium for the goods. Under FOB term the importer must contract (normally with the local carrier) at his own expense for the carriage of the goods from the named port of shipment. Under FOB the importer is not obligated but may buy insurance for the goods from the local insurer. To use domestic service is to love the country. The merchants should bear in mind “BUY FOB, SELL CIF”. By choosing the right trade terms, the merchants can help his country’s GDP grow fast. From another angle, a wise merchant can also get much benefit from “BUY FOB SELL CIF” practice, i.e., being able to negotiate with the local carrier and insurer for the lower freight cost and a lower insurance premium. Best regards,Mr. Old Man

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