FOB (Free On Board) and CIF (Cost, Insurance and Freight) are two of the most commonly used Incoterms — the standardized trade-term definitions published by the International Chamber of Commerce (ICC) that specify exactly where cost and risk transfer from seller to buyer in an international shipment. Getting this choice right affects your landed cost calculation, your insurance obligations, and who is responsible if something goes wrong during ocean transit. This guide explains both terms plainly, without the jargon.
FOB — Free On Board
Under FOB terms, the seller's responsibility ends once the goods are loaded onto the vessel at the named port of shipment (e.g. "FOB Nhava Sheva" or "FOB Mundra" for a shipment from India). From that point on, the buyer is responsible for:
- Ocean freight cost
- Marine insurance (optional but strongly recommended)
- Import duties, customs clearance, and destination port charges
- Any risk of loss or damage during transit
FOB gives the buyer more control — you choose your own freight forwarder and shipping line, which can mean better rates if you ship regularly or have an existing logistics relationship. The tradeoff is more coordination on your side: you need to arrange the ocean freight booking and, ideally, marine insurance.
CIF — Cost, Insurance and Freight
Under CIF terms, the seller arranges and pays for ocean freight and a minimum level of marine insurance to the named port of destination (e.g. "CIF Rotterdam" or "CIF Los Angeles"). The seller's cost responsibility extends further than FOB, but — and this is the detail buyers most often misunderstand — risk still transfers to the buyer once goods are loaded onto the vessel at the origin port, exactly as with FOB. CIF affects who pays for freight and insurance; it does not mean the seller is liable for the goods for the entire journey.
Under CIF, the buyer is still responsible for:
- Import duties and customs clearance at destination
- Destination port charges and inland transport from the port
- Filing any insurance claim directly (since the seller only arranges a minimum-coverage policy, in the seller's or a named party's name)
FOB vs CIF at a glance
- Who books the ocean freight? FOB — buyer. CIF — seller.
- Who pays ocean freight cost? FOB — buyer, negotiated separately. CIF — included in the seller's price.
- Who arranges insurance? FOB — buyer, if desired. CIF — seller, minimum coverage only.
- Where does risk transfer? Both — at the port of origin, once goods are loaded on the vessel.
- Price comparability — an FOB quote and a CIF quote for the same goods are not directly comparable unit-for-unit; a CIF price already includes freight and minimum insurance, so compare landed cost, not just the unit price.
Which one should you choose?
If you have an established freight forwarder, ship regularly, or want direct control over insurance coverage and carrier selection, FOB usually gives you more flexibility and often a lower total cost if you have good freight rates. If you're a first-time importer, order infrequently, or would rather have one supplier quote cover freight so you can budget a single landed number, CIF is simpler to manage — at the cost of less control over which shipping line is used and the insurance coverage level.
Neither term is inherently "better" — they suit different buyer situations. If you're unsure which applies to your shipment, say so in your enquiry rather than guessing; a supplier experienced in export (see our guide to evaluating an exporter) should be able to explain the tradeoff for your specific order size and destination.
Other Incoterms you may encounter
FOB and CIF are the two most common terms for ocean container shipments, but they're not the only options. EXW (Ex Works), FCA (Free Carrier), CFR (Cost and Freight — like CIF but without insurance), DAP (Delivered At Place) and DDP (Delivered Duty Paid) each shift the cost/risk split to a different point in the journey. See the full list of Incoterms we coordinate on our Export Markets page.
Requesting a quotation under either term
When you submit an enquiry, you can specify FOB, CIF, or ask for guidance if you're unsure — our RFQ form has a dedicated field for exactly this. Your trade desk contact will confirm pricing under your preferred term, or explain the tradeoff if you'd like to compare both before deciding.