CIF: 3 essential considerations when shipping with your supplier

What CIF means for your shipment: Key points to keep in mind

At first glance, it might seem perfect: your goods are ready, and the supplier offers to ship them to Rotterdam or Antwerp under the CIF incoterm (Cost, Insurance & Freight). The process appears simple, affordable, and fast, with the supplier taking responsibility for the shipment. All you have to do is wait for the ship to arrive. But is it really that straightforward? There are crucial details to keep in mind. Below, we outline the three key considerations for CIF shipping and the advantages and disadvantages of this method.

What does the CIF incoterm cover?

CIF (Cost, Insurance & Freight) means the supplier is responsible for exporting the goods and arranging transportation to the destination port. Freight costs and insurance are included, often listed separately on the invoice. While this may seem appealing, CIF agreements can involve hidden risks and costs.

Keep reading to discover the three essential considerations for CIF shipments and how to avoid surprises.

3 key considerations for CIF shipping

1. Hidden costs in CIF agreements

Although the supplier covers freight and insurance to the destination port, many additional costs after the goods arrive are your responsibility, including:

• Unloading fees.
• Customs clearance and administrative charges.
• Duties and taxes.

Moreover, once the goods are loaded onto the ship, you assume responsibility for risks such as damage or loss. These hidden costs can significantly impact your budget, making CIF less transparent than it initially appears.

2. Longer transit times

With CIF shipments, you have less control over logistics and timing, which can lead to:

• Difficulty tracking the shipment.
• Uncertainty about departure and arrival dates.
• Delays in the process.

The supplier determines who handles transportation and at what cost. To minimize expenses, suppliers may make decisions that extend transit times, prioritizing their interests over your schedule.

3. Limited control over shipping and insurance

By using CIF, you hand over the logistics to the supplier. While this may simplify the process, it limits your control over:

• The choice of shipping provider.
• The terms and conditions of insurance coverage.

The insurance policy is owned by the supplier. If your goods are damaged, you cannot claim compensation directly from the insurer. Often, damage is discovered only after delivery, by which time you’ve already paid the full transport costs. This lack of control can lead to significant frustrations.

Advantages and disadvantages of CIF shipping

Advantages:

• The supplier takes on more responsibility.
• Less effort required from you as the buyer.
• Saves time, as the supplier manages the process.
• Suppliers often have extensive logistics experience.

Disadvantages:

• Limited control over the transport and associated costs.
• Hidden fees upon arrival.
• Potentially longer transit times.
• No direct access to insurance claims in case of damage.

CIF vs. CFR: What’s the difference?

While CIF is commonly used for international shipments, there’s an alternative: CFR (Cost & Freight). The main difference is that CFR does not include insurance. This means you are responsible for insuring the goods yourself. CFR might be a better option if you prefer to manage insurance directly and have full control over the policy.

Take control of your shipping costs

At Cargoplot, we know how important it is to stay in control of your shipping process and costs. If you're considering CIF for your next shipment, make sure you fully understand the terms and potential hidden expenses. Our team is here to help you find the best solutions and avoid surprises. Compare all-in shipping costs and find the best route—Get a Quote Now!