Find out FOB and CIF prices in freight

Overview of FOB

What is FOB?

FOB stands for Free On Board, simply understood as the waiver of liability on the Departure Deck. FOB is a common term of delivery in Incoterms 2010. The seller needs to pay the freight for loading the goods on board. When the seller delivers the goods on deck to the buyer, over the ship's rail at the loading port, all risks of the goods on deck pass to the buyer. People often call FOB contract, FOB price,...

The contract must specify the name of the port of loading according to the FOB structure + the loading position (or the position of risk transfer). This is a way to know where the rights and obligations of the two parties are transferred.

For example: Write FOB Hai Phong ie Hai Phong is the position to transfer the risk of the seller in Vietnam to the buyer.

FOB price is the price at the border gate of the exporting party. FOB does not include insurance and shipping charges to the port of the importer.

For example: If you buy goods from Shanghai - Shanghai port and import to Vietnam via Ho Chi Minh Port. You will have to pay the shipping fee, buy insurance for the goods moving from Shanghai port to Ho Chi Minh port

Terms of delivery FOB

Terms of delivery FOB only apply to means of water transport (international and domestic sea transportation).

All costs before the goods are on board will be paid by the seller such as customs fees, export taxes, etc.

When FOB is required, the seller must do all the customs clearance for the export of the goods. Import clearance procedures, taxes and fees after that, the seller is not obligated.

Learn about CIF

What is CIF?

◾ CIF stands for Cost , Insurance , Free (cost, insurance, freight), is the condition of delivery at the port of discharge. With CIF, the seller is responsible for paying the costs of bringing the goods to their destination. The location of the transfer of risk in this case is at the port of loading.

In the contract, CIF is written with the name of the port of discharge. For example, CIF Hai Phong Port ie HP port is the place of discharge.

◾ CIF price is the price at the buyer's border gate, including the cost of transportation and insurance of goods to the border gate of the consignee.

CIF price = FOB price + freight

CIF number is customer code number, company at the bank. A company can open multiple accounts at a bank and the bank manages it with a CIF number. Simply put, the CIF number is the company's code number at a bank.