We work under the following terms of delivery:
CIF Cost, Insurance & Freight (named port of destination)
This term is broadly similar to the above CFR term, with the exception that the seller is required to obtain
insurance for the goods while in transit to the named port of destination. CIF requires the seller to insure
the goods for 110% of their value under at least the minimum cover of the Institute Cargo Clauses of the
Institute of London Underwriters (which would be Institute Cargo Clauses (C)), or any similar set of
clauses. The policy should be in the same currency as the contract. The seller must also turn over
documents necessary, to obtain the goods from the carrier or to assert claim against an insurer to the
buyer. The documents include (as a minimum) the invoice, the insurance policy, and the bill of lading.
These three documents represent the cost, insurance, and freight of CIF. The seller's obligation ends when
the documents are handed over to the buyer. Then, the buyer has to pay at the agreed price. Another point
to consider is that CIF should only be used for non-containerized seafreight; for all other modes of
transport it should be replaced with CIP.
CFR Cost and Freight (named port of destination)
The seller pays for the carriage of the goods up to the named port of destination. Risk transfers to buyer
when the goods have been loaded on board the ship in the country of Export. The Shipper is responsible
for origin costs including export clearance and freight costs for carriage to named port. The shipper is not
responsible for delivery to the final destination from the port (generally the buyer's facilities), or for
buying insurance. If the buyer does require the seller to obtain insurance, the Incoterm CIF should be
considered. CFR should only be used for non-containerized seafreight and inland waterway transport; for
all other modes of transport it should be replaced with CPT.
FAS – Free Alongside Ship (named port of shipment)
The seller delivers when the goods are placed alongside the buyer's vessel at the named port of shipment.
This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that
moment. The FAS term requires the seller to clear the goods for export, which is a reversal from previous
Incoterms versions that required the buyer to arrange for export clearance. However, if the parties wish
the buyer to clear the goods for export, this should be made clear by adding explicit wording to this effect
in the contract of sale. This term should be used only for non-containerized seafreight and inland
CPT - Carriage Paid To (named place of destination)
CPT replaces the C&F (cost and freight) and CFR terms for all shipping modes outside of non-
containerized seafreight. The seller pays for the carriage of the goods up to the named place of
destination. However, the goods are considered to be delivered when the goods have been handed over to
the first or main carrier, so that the risk transfers to buyer upon handing goods over to that carrier at the
place of shipment in the country of Export. The seller is responsible for origin costs including export
clearance and freight costs for carriage to the named place of destination (either the final destination such
as the buyer's facilities or a port of destination. This has to be agreed by seller and buyer, however). If the
buyer requires the seller to obtain insurance, the Incoterm CIP should be considered instead.