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4 (Incoterms) What is CIF (Cost , Insurance and Freight)

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This playlist helps you master the international commercial terms in a simple lucid manner Playlist Link - https://www.youtube.com/playlist?list=PL_16BSQMjAHMiQVULRRSb613OrR0_L4MD Incoterms stand for international commercial terms that apply to every buyer and seller when they engage in international business( shipments ).It lays down the scope as far as packing , insurance , freight etc goes for the buyer and the seller To cut short the crap , let's understand with a example and dive straight in , Say i am a manufacturer of cars in India . I get a Order from IBM /USA for 100 $ car . Let's look at what all order cases are possible (1) IBM places a exworks order Here , it is my duty to simply produce the cars and git it packed till the factory gates After that the ownership is transferred to the buyer He will get the custom clearance , trasnported to the Indian Port , get it shipped , pay for the occean freight , transit insurance m again get the goods custom cleared at the american port , get iot unloaded and again transport it to his warehouse My scope as a seller ended as soon as i packed the goods at the factory gate (2) IBM roughened up by the indian exercise places a FOB order Here , not only do i have to make the cars and get it packed but also after getting custom clearance get it transported to the port and put it on the boat Once i do that , the ownership of the goods now get transferred to the buyer .Until i put it on the boat , all insuirance etc is in my scope Now again , paying for the occean freight , transit insurance m again get the goods custom cleared at the american port , get iot unloaded and again transport it to his warehouse is in IBM's scope (3) IBM places a CIF order Now , i have to make the cars and get it packed , get custom clearance , transport it to the occean port , putit on boat , organise for the shipping and insurance during the transit .....simply put till the goods reach the american port , the ownership of the goods still remain with me Once the goods reach american port , then my ownership ends and thereon,get the goods custom cleared at the american port , get iot unloaded and again transport it to his warehouse is in IBM's scope (4) IBM places a FDD order Here , everythig is my scope ...until the goods reach the buyer's warehouse , all thing's are in my scope I.e producing the goods , getting it packed , shipping it to america , getting custom clearance both in india and america , getting goods unloaded at america and then further arranging transport for the goods to be taken to the buyer warehouse ....once the goods reach the buyer warehouse , the ownership now changes hands This is how using this small hypotheical example , we have learnt what are international commercial terms .You see at certain point , there was wide disputes as to who is responsible for what amd so the need was felt to have a common uniform set of rules for international commerce Let your knowledge help people ...the blessing's you get will keep you alive for making more valuable tuts , Cheers , Amlan
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Text Comments (1)
Davies Simweemba (8 months ago)
I want to understand why CIF is used to deliver freight even at the door step does it mean that there is a combination of terms for such a transaction?

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