The export order received by an exporter from a foreign buyer may be on FOB terms, CIF firms, and CIP or CPT terms are among the most common of the 12 international commerce terms (incoterms) established by the International Chamber of Commerce (ICC) in 1936. These are international shipping agreements used in the transportation of goods between a buyer and a seller. The price quoted by the seller (exporter) is based on these shipping arrangements.
FOB: FOB means Free on Board. Under FOB or ‘FOB port’ terms that the seller (exporter) pays for transportation of goods up to port of shipment plus loading cost. Once the goods have been loaded – technically, they are considered to be delivered into the control of the buyer. When the cruise begins, the buyer then assumes all liability. So in FOB terms besides cost of the goods, the buyer (importer) pays charges involved in marine freight transport, insurance, and transportation from the arrival port to the final destination. The price quoted by the seller on above terms is known as ‘FOB value’
CIF: CIF means Cost Insurance and Freight. Under CIF value terms the seller (exporter) pays the cost of marine freight transport, insurance, unloading, and transportation from the arrival port to the final destination. The seller is obligated to insure the goods while in transit for 110% of their value. From the location of delivery of goods by the seller at importing country, the buyer (importer) bears all risks and additional costs if any occurring after such delivery of goods to the agreed location.The price quoted by the seller on above terms will be costlier than FOB value which is known as ‘CIF value’
As per Inco terms, CPT means Carriage Paid up to the destination mentioned. CIP means, carriage and insurance paid up to the destination mentioned.
