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CIF & CFR Shiping Terms

When importing using CIF (Cost, Insurance and Freight) or CFR (Cost and Freight) shipping terms the seller is responsible for all costs until the goods have landed at a named port in the country of arrival. As soon as the goods are unloaded from the vessel the buyer is responsible for the costs and risks involved from there until the cargo reaches its final destination.

CFR and CIF shipping terms are the same, with one obvious difference. When working to CFR terms, the seller will include the cost of the goods and the cost to get the goods to the port of arrival when he constructs the commercial invoice. With CIF terms, the seller will also include the cost of maritime insurance in his invoice.

CFR and CIF can seem like the easiest and cheapest way of importing goods but the buyer must try to identify the full costs that they will be liable to before agreeing to this shipping method. To stay in business, Chinese shipping agents need cargo to ship, and the easiest way to get it is not to charge for their service (or in some cases pay the seller to ship their goods!). This means that before they have even started the process they are working at a loss. However, they do have the cargo. Once the ship arrives at the seller’s destination port the Chinese Shipping agent’s counterpart will make their money back by billing the buyer China Import Service Charges and other documentation costs that can be through the roof.

This is not to say that CIF terms are not workable and many companies use them successfully with no problems, but on a first shipment the buyer should try to investigate the full costs before going ahead.

If you have any further questions or require advice about using CIF or CFR shipping terms or would like a quote for clearance and delivery please contact us on info@shipHFS.co.uk