A shipping term allocates tasks, costs and risk—it does not guarantee a landed price
Incoterms® rules help sellers and buyers describe delivery responsibilities in a sales contract. They do not set payment terms, transfer ownership, determine product quality or include destination duty and tax automatically. Always write the rule, version and named place or port—for example, “CIF [named destination port], Incoterms® 2020”.
The explanation below is practical orientation, not legal advice. Review the current ICC rules and confirm the transaction with your freight forwarder, broker or trade adviser.
Reviewed 2026-08-26 · For wholesale planning; final specifications and import requirements must be confirmed for each order.
FOB, CFR and CIF in practical language
FOB
The seller delivers the goods on board the vessel at the named port of shipment. The buyer arranges the main ocean carriage. Confirm origin terminal and documentation scope.
CFR
The seller contracts and pays the ocean freight to the named destination port, while risk transfers according to the rule at the shipment side.
CIF
The seller contracts freight to the named destination port and obtains the insurance cover required by the rule. Coverage level and claims process still need review.
ICC publishes eleven Incoterms® rules. Containerised shipments may call for discussion of FCA rather than using FOB automatically, because operational handover can occur before the container is on board. Ask the forwarder which rule matches the real delivery chain.
Do not confuse freight payment with risk transfer
Under CFR and CIF, the seller pays costs associated with carriage to the named destination port, but that does not mean the seller carries transit risk all the way to destination. This distinction is often misunderstood. Under CIF, the seller also arranges the insurance required by the rule; buyers should still review the insured value, exclusions, claim evidence and whether additional cover is sensible.
The ICC's Incoterms® 2020 resources are the authoritative starting point. Put the selected rule into the sales contract and align the quotation, invoice, booking and insurance documentation.
What may sit outside a CFR or CIF quotation
A destination-port quotation is not necessarily door-delivered landed cost. Depending on the contract and local chain, destination terminal handling, storage, demurrage, inspection, customs brokerage, duty, tax, port security charges, delivery order, container deposit and inland transport may remain for the buyer.
Request a written inclusions and exclusions schedule. Give the forwarder the container type, origin, destination, product description and expected timing so local charges can be estimated. Keep exchange-rate and delay sensitivity in the landed-cost model.
Questions to settle before accepting the term
✓Which Incoterms® version and exact named place or port applies?
✓Who books carriage and pays each origin and destination charge?
✓At what point does delivery and risk transfer under the selected rule?
✓Who obtains insurance, for what value, under which conditions and who can claim?
✓Which transport and customs documents will each party provide?
Write the answers into the commercial documents. A trade term works best when the operating parties interpret it the same way.
Frequently asked questions
Does CIF include import duty and tax?
Not automatically. CIF addresses specified cost, insurance and freight responsibilities under the rule; destination duties, taxes and local charges must be checked separately.
Is CIF risk-free for the buyer?
No. Review the risk-transfer point and insurance cover. Freight paid to destination does not mean the seller retains all transit risk to destination.
Which term is cheapest?
No rule is inherently cheapest. Compare the same complete logistics scope, service level, insurance and local charges before deciding.
Send a quote request that can be priced properly
Include your tyre sizes, quantities, preferred brands or quality tier, destination port and target timing. Thai Tire can then confirm current availability, a practical size mix and the next export step.
