FOB vs CIF: What's the Difference?
The short answer: FOB stops at the origin port; CIF carries on to the destination port. Here's exactly what changes — cost, responsibility, risk, and insurance.
FOB vs CIF at a Glance
| Dimension | FOB | CIF |
|---|---|---|
| Full name | Free On Board | Cost, Insurance & Freight |
| Price includes | Goods + inland freight + port charges | FOB + ocean freight + marine insurance |
| Who pays freight | Buyer | Seller (to destination port) |
| Who pays insurance | Buyer | Seller (110% of CIF value) |
| Risk transfers | On board at origin port | On board at origin port (same) |
| Best for | Buyers with a freight forwarder | New importers wanting an all-in price |
When to Use FOB vs CIF
Choose FOB when…
You have your own freight forwarder, want to control the carrier, or can get better freight rates yourself. FOB puts freight under your control — cheaper when your forwarder beats the supplier's rate, more expensive when it does not.
Choose CIF when…
You're new to importing, want a single price to the destination port, or the supplier has better freight rates. CIF simplifies logistics but gives you less control.
Put Your Own Numbers On It
The table above says what changes between the two terms. What it cannot say is what the difference is worth on your shipment — that depends on your freight, your insurance rate, and your margin. Run your figures through the calculators:
- FOB calculator — enter your costs once and see the EXW, FOB, and CIF price per unit side by side, with your margin and exchange rate applied.
- CIF calculator — if you already have an FOB figure. Enter the FOB cost per unit, not an FOB selling price: the calculator adds freight and insurance and then applies your margin, so an already-margined figure would count the margin twice.
- Landed cost calculator — what the buyer actually pays once duty, destination port charges, and inland delivery are added.
All three run the same formulas, written out in full on the methodology page.
The other two sea terms sit between these two: FOB vs CFR vs CIF compares all three and shows where only the seller's cost obligation moves.
Frequently Asked Questions
Which incoterm should I use, FOB or CIF?
Use FOB when the buyer controls shipping and has a freight forwarder. Use CIF when the seller can get better freight rates or the buyer prefers a single delivered price.
Where does risk transfer under FOB?
Under FOB, risk transfers from seller to buyer once the goods are loaded onto the vessel at the named port.
Who pays the ocean freight under CIF?
The seller pays ocean freight and insurance under CIF and includes them in the quoted price. The buyer still pays unloading and local charges at destination.
Who buys insurance under FOB?
Under FOB, the buyer is responsible for insuring the goods during the ocean voyage. Under CIF, the seller buys the insurance.
Does CIF work for all shipping methods?
No. CIF applies to ocean freight. For air freight or road transport, the comparable incoterms are CIP or CPT.