CIF (Cost, Insurance, and Freight)

CIF (Cost, Insurance, and Freight) means the seller arranges and pays for shipping and insurance to the named destination port — but risk transfers to the buyer as soon as the goods are loaded on the vessel at origin. You're paying for a service (shipping + insurance) for goods that are already at your risk during transit. That asymmetry catches buyers off guard.

CIF as customs value. Beyond the Incoterm, CIF is the EU's, UK's, and most of the world's customs valuation standard. Import duty is calculated on the CIF value — the price of the goods plus freight to the port of entry plus insurance. A $10,000 FOB shipment with $500 freight and $50 insurance has a CIF value of $10,550 in the EU. Duty is applied to $10,550, not $10,000. For a 10% duty rate, the difference is $55 per shipment.

CIF vs FOB customs basis. The US is the major exception — it uses the FOB transaction value as the customs base. This means the same goods cost more (in duty) to import into the EU than the US on an identical freight route, purely because of the valuation basis difference. For high-freight routes (e.g., China → Europe), the difference can add 3–5% to the effective duty rate versus the equivalent US import.

CIF vs CPT vs CIP. CIF is only recommended for sea freight (the seller contracts for carriage to a named sea port). For multimodal and air freight, Incoterms 2020 recommends using CPT (Carriage Paid To) or CIP (Carriage and Insurance Paid To) instead — these use the named place of delivery rather than a port, and are more appropriate when goods are containerised from factory to destination warehouse.