CIF and FOB are sea and inland-waterway terms under Incoterms® 2020. In simplified terms, FOB places delivery and risk transfer when goods are on board the buyer-nominated vessel at the named shipment port; under CIF the seller also arranges carriage and the required insurance to the named destination port, while risk still transfers at shipment rather than arrival.
Containerised cargo requires care
For container shipments handed to a carrier or terminal before vessel loading, parties should consider whether FCA, CPT or CIP better reflects the operational handover. The chosen rule should match what actually happens, not merely customary wording in a quotation.
What CIF and FOB do not decide
- Transfer of legal title.
- Payment timing or documentary conditions.
- Product quality, tolerances or inspection finality.
- Sanctions, export controls, tax or import eligibility.
- Demurrage, detention and free-time allocation unless contracted.
- Claims evidence, jurisdiction or dispute resolution.
Contract drafting priorities
State the rule and named place precisely, for example “CIF [named destination port], Incoterms® 2020”. Then separately agree shipment window, carrier and route restrictions, insurance scope, freight surcharges, document set, risk and title language, container free time, destination charges, inspection, payment release and quality claims.
General commercial guidance only. Grade nomenclature and market practice vary. The signed contract, current official specifications and transaction-specific professional advice control.