Quick Answer: How Is FOB And CIF Price Calculated?

What is difference between CIF and CFR?

Cost and freight (CFR) is a trade term that requires the seller to transport goods by sea to a required port.

Cost, insurance, and freight (CIF) is what a seller pays to cover the cost of shipping, as well as the insurance to protect against the potential damage of loss to a buyer’s order..

How is CIF price calculated from FOB?

In order to find CIF value, the freight and insurance cost are to be added. 20% of FOB value is taken as freight. Means USD 200.00. Insurance is calculated as 1.125% – USD 13.00 (rounded off).

How is FOB price calculated?

FOB Value = Ex-Factory Price + Other Costs (b) Other Costs in the calculation of the FOB value shall refer to the costs incurred in placing the goods in the ship for export, including but not limited to, domestic transport costs, storage and warehousing, port handling, brokerage fees, service charges, et cetera.

What is the difference between FOB and CIF price?

The abbreviation CIF stands for “cost, insurance and freight,” and FOB means “free on board.” These are terms are used in international trade in relation to shipping, where goods have to be delivered from one destination to another through maritime shipping. The terms are also used for inland and air shipments.

Which is better CIP or CIF?

CIP stands for Carriage and Insurance Paid To (… … The major difference to the seller of transporting goods under CIF or CIP is that under CIF, the seller only needs to take out marine insurance against the buyer’s risk of loss of or damage to the goods during the sea or inland waterway journey.

Who pays the freight on FOB?

FOB freight collect specifies that the buyer must pay the freight transportation charges when the buyer receives the goods. However, the seller assumes the risk associated with transporting the goods because the seller still owns the goods during transit.

What is FOB price in shipping?

Free On Board, in short FOB, is a term frequently used in shipping terms where the seller quotes a price including the cost of delivering goods to the nearest port. … In simple terms, FOB price means the buyer has to bear the shipping costs completely.

What is CIF amount?

Cost, insurance, and freight (CIF) is an expense paid by a seller to cover the costs, insurance, and freight of a buyer’s order while it is in transit. The goods are exported to a port named in the sales contract. … Once the freight loads, the buyer becomes responsible for all other costs.

What is FOB CIF and CNF?

In CIF and CNF, the shipper is responsible until unloading with one difference between the two types. … CIF means they will pay for the cost, the insurance and the freight, where CNF means the consignee is responsible for the insurance only.

What does FOB stand for?

FOB stands for “free on board” or “freight on board” and is a designation that is used to indicate when liability and ownership of goods is transferred from a seller to a buyer.