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In Case of FOB Exporter has to Handover the Goods to Forwarder (Nominated by Importer and the Forwarder Issues FCR - Forwarder Cargo Receipt to the Exporter) or Deliver the Goods on Vessel within Stipulated time, which is Decided by the Importer (In this case BL – Bill of Lading is issued – Which is Marked as “Freight Collect”). Freight is paid by Importer and Risk of materials Transfers from Exporter once Materials Shipped on Board.
In Case of CIF, Insurance and Freight is Paid by Exporter and the Shipping Company Issues BL which is Marked Freight as Prepaid.
CIF )) cost insurance and freight\\
the seller clears the cargo for Export and pays the cost of moving the cargo to the port of destination the buyer bears all risks of loss or damage the saller however purchases the cargo insurance
FOB free on board
the seller delivers the cargo on board the vessels ang clears the cargo for Export from that point the buyer bears all cost and risks of loss or damage
cif = cost + insurrance + freight
fob = free on board it means the cost of product till the vsl
The difference between CIF and FOB is the freight and insurance costs to pay upto destination port. In case of CIF, these charges are borne by the seller and in case of FOB, they are borne by the buyer. Thats it.
FOB is "Free on Board" ideally it means the exporters responsibility ends once the cargo is placed on board the main carrier assigned by the importer. In most cases in such an INCOTERM the importer demands the "Bill of Lading" from the exporter as a proof of export and also the payment term is specified as "Collect".
However the exporter under FOB needs to bear all the costs uptil the boarding of the cargo on the assigned carrier which can be summarised as local warehousing cost, LTL/FTL cost upto dispatch CFS, Port dues, special service costs such as fumigation cost, pre shipment inspection cost etc.
CIF is "Cost Insurance and Freight", in such a INCOTERM clause the exporter also needs to bear the cost of main carriage and insurance cost of the cargo on board. The payment term is specified as "Pre Paid" in such an incoterm.
