Let’s try to understand the difference between FOB and CIF; we have listed some points down below.
What is FOB Shipping?
Free on Board determines that until the goods are loaded up on the deck they are the responsibility of the seller but as soon as they are loaded on the deck, it becomes the responsibility of the buyer. The sellers prefer the Free on Board price since the seller is responsible for the shipping for the products until they arrive at the seller’s nearest point.
What is CIF Shipping?
CIF is Cost Insurance and Freight, which is considered as one of the most expensive options while getting products shipped from one destination to another as the seller of the product uses a freight forwarder of their choice who may or may not charge the consumer or the buyer more than the actual price. This is to add up a certain amount of margin or profit while getting the work done.
FOB vs CIF: Which is better for shipping?
Let’s get down to the main difference between FOB and CIF shipping,
Shipping :In FOB shipping, the buyer is responsible to book a ship via which the products will reach the final destination whereas, in CIF shipping, the seller is the whole sole responsibility for finding a ship.
Insurance :One of the major difference between FOB and CIF is the insurance of the products as in FOB the seller does not have to purchase insurance or the products whereas in CIF the seller needs to sign an insurance contract for the products which provides a policy of insurance of at least 110% of the value of the goods.
Costs :It is advised to go with the FOB option for shipping as the buyer gets control over the shipping process and the costs are comparatively cheaper. Whereas in CIF shipping, since the seller has the authority over shipping charges and arranging a ship with the help of a freight forwarder, the cost is higher.
Risk :When it’s FOB shipping, the buyer tends to bear all the risk of the damages or loss of the goods whereas in CIF shipping the seller is liable to meet all the charges or the loss or damaged products.
There is one essential point that you should know while getting to know about FOB vs CIF shipping that since the shipping is international there is a set of two currencies involved in the process and there can be hidden costs during the exchange rate. If you make your shipping payment via a bank, the exchange rate used to convert the payment may be marked up by 3-5%, which is a hidden fee you end up paying. So use an alternative money transfer service which at Boxnbiz we provide for your hassle-free shipping.