Xiaoyi has a new foreign trade fan who doesn’t understand the difference between FOB, CIF and CFR. Today, I will explain it separately, and I will add their advantages and disadvantages and how to make a choice that foreign trade guys are most concerned about. .

FOB first

FOB means that the seller's responsibility ends after the seller loads the goods on board and delivers them to the buyer. Buyer is responsible for all shipping, insurance and other related charges. Therefore, the FOB price only includes the cost of the goods and the seller's cost of transporting the goods to the terminal.

There are three advantages of FOB terms

1. The buyer can control the choice of transportation and insurance, and can choose the most suitable method according to his needs and budget.

2. The buyer can save costs, because the FOB price only includes the cost of the goods and the seller's cost of transporting the goods to the terminal, and does not include the transportation insurance fee.

3. The FOB terms are clear, easy to understand and operate.

There are two disadvantages of FOB terms

1. The buyer needs to bear more responsibilities and risks, because after the goods arrive at the dock, all responsibilities and risks are transferred to the buyer, including transportation loss and damage to the goods.

2. The buyer needs to handle all export procedures and documents by himself, including loading goods, arranging transportation and customs declaration, etc.

Therefore, the FOB clause is very beneficial to those companies that have certain export experience, have their own logistics channels, or have the ability to find better logistics services. In addition, for those companies that are sensitive to transportation costs, FOB terms are also more advantageous, because the FOB price does not include transportation insurance costs, so the cost can be controlled more flexibly.

then CIF

CIF means that the seller is responsible for paying the freight and insurance costs, as well as transporting the goods to the port of destination. The seller's responsibility does not end until the goods have reached their destination. Therefore, CIF prices include shipping and insurance costs.

There are two advantages of the CIF clause

1. The seller needs to be responsible for the transportation and insurance, and the buyer does not need to bear these costs and risks. When the goods are damaged or lost, the buyer can obtain compensation through claims.

2. The CIF price is more transparent than the FOB price, because it includes transportation insurance costs and all other costs, and there will be no hidden costs and unexpected costs.

There are also two disadvantages of the CIF clause

1. The seller needs to bear more responsibilities and risks, because he needs to be responsible for the transportation and insurance of the goods, and must ensure that the goods arrive at the destination and are not damaged during the process.

2. The CIF price is higher than the FOB price because it includes transportation insurance costs and other related costs.

Therefore, the CIF clause has more advantages for those companies that lack logistics channels and insurance experience. In addition, for those enterprises that have relatively high quality control requirements for export commodities, the CIF clause is more applicable, because the seller needs to be responsible for the quality of the export commodities, and will also provide corresponding protection in terms of insurance.

Finally CFR

CFR means that the seller is responsible for paying for the transportation of the goods, excluding insurance costs. The seller's responsibility does not end until the goods have reached their destination. Therefore, CFR prices include shipping costs, but not insurance costs.

There are two advantages of the CFR clause

1. The seller is responsible for the transportation costs of the goods, and the buyer does not need to bear these costs, which can save costs.

2. The terms of CFR are relatively simple and easier to understand and operate than FOB and CIF.

There are also two disadvantages of the CFR clause

1. The buyer needs to bear more responsibilities and risks, because after the goods arrive at the port, all responsibilities and risks are transferred to the buyer, including transportation loss and damage to the goods.

2. The CFR clause does not include the cost of transportation insurance. If the goods are damaged or lost during transportation, the buyer needs to bear the risk and loss by himself.

Therefore, the CFR clause is more advantageous for those companies that lack logistics channels and insurance experience. Different from CIF, the CFR price does not include insurance costs. Therefore, for some enterprises with export experience, independent logistics channels or the ability to find better logistics services, CFR clauses are more applicable and can control costs more flexibly.

Then some curious friends may ask, Xiao Yi, which one can you accept, FOB, CIF or CFR? Hey, I want it all

Terms of Trade|FOB|CIF|CFR|Foreign Trade Transport|International Transport