Cost, Insurance & Freight (CIF)

CIF stands for Cost, Insurance and Freight: an Incoterms 2020 rule for sea freight under which the seller pays the ocean freight and a minimum level of cargo insurance to the named destination port, while risk passes to the buyer as soon as the goods are on board the vessel at origin. So a quote of "CIF Los Angeles" means the seller has bundled the ocean leg and a basic policy into the price. It does not mean the seller is responsible for the cargo until it reaches Los Angeles.

Where CIF applies, and where it does not

CIF is one of the four Incoterms rules written for sea and inland-waterway transport only; the other three are FAS, FOB and CFR. The ICC's guidance is that these four are not intended for containerized cargo handed to a carrier at a terminal before loading, or for road, air or rail transport. The any-mode counterpart with the same cost-and-insurance shape is CIP, which under Incoterms 2020 also carries a higher default level of insurance. "CIF by air" is therefore a misnomer. A supplier quoting CIF on an air shipment is describing a CIP-like deal, and the contract should say "CIP" with the named airport so there is no argument about where risk passed. Compare the two side by side in the Incoterms explainer.

Who does what under CIF

Cost and risk split at different points

This split is what trips importers up. Risk transfers when the goods are placed on board the vessel at the port of shipment, but the seller's cost obligation runs to the named destination port. Between those two points the buyer already owns the risk on cargo the seller is still paying to move, which is why the insurance obligation exists at all. If the container goes over the side mid-ocean, the claim is the buyer's to make against the policy the seller bought.

The insurance the seller must buy

• Minimum cover is Institute Cargo Clauses (C) or equivalent, a named-perils policy covering fire, stranding, collision and general average contributions, not theft, damage or water ingress
• The sum insured is 110% of the contract value of the goods, in the currency of the contract
• Cover runs to the named destination port only, so the inland leg to your door is uninsured unless you buy your own policy

Incoterms 2020 kept CIF at the Clauses (C) minimum while raising CIP to Clauses (A) all-risks cover. If you want all-risks cover on a CIF purchase, write it into the sales contract and expect to pay for it, or arrange your own cargo insurance from the port onward.

CIF USA: what a CIF quote still leaves with the US buyer

"CIF USA" is not a complete term, because CIF must name a port, such as "CIF Los Angeles" or "CIF New York". Whichever port is named, the seller's obligations stop at the ship. Everything on the US side is yours:

• Importer Security Filing. Under 19 CFR 149.1 the ISF Importer is the party causing the goods to arrive in the United States by vessel, which for a normal purchase is the buyer, and the ten data elements are due no later than 24 hours before the cargo is laden at the foreign port. The seller's forwarder can file as your agent, but the liquidated damages of $5,000 per violation, up to $10,000 per filing, are assessed against you. Airlift can file it for you through its ISF service
• Customs entry, duties and taxes. You are the importer of record. Duty depends on classification, origin and customs value. On Asian lanes the general rate is only the first layer: Section 301, Section 232 and IEEPA duties sit on top. Check the current stack in the tariff simulator and the tariff updates tracker, and see customs clearance for how the entry is filed
• Cargo release. The seller booked the freight, so the bill of lading is issued to the seller or its forwarder. The destination agent will not release your container until the seller releases the bill, usually after payment or under the letter of credit, and free time keeps running meanwhile
• Destination charges and delivery. Terminal handling, chassis, drayage and any demurrage are billed to you at the seller's forwarder's rates, not rates you negotiated

How CIF affects US customs value

Short answer: you should not pay duty on the freight and insurance inside a CIF price, but you need proof of what they cost. US customs value is the transaction value: the price actually paid or payable for the goods, which 19 CFR 152.102(f) defines as exclusive of the costs of transportation, insurance and related services incident to the international shipment from the country of export to the place of importation. A CIF price includes exactly those costs, so the broker deducts the international freight and insurance from the invoice price before declaring the value. CBP's rules for that deduction:

• The deduction must be the actual freight and insurance cost, not an estimate or a percentage. CBP's guidance is that declaring a value net of estimated freight can be a failure to exercise reasonable care
• If the actual amounts are not known at entry, the full CIF price is declared and CBP is told it includes an unknown amount for freight and insurance; the deduction is made at liquidation once the seller supplies the figures
• Foreign inland freight from the factory to the port is deductible only under the conditions in 19 CFR 152.103(a)(5), which in practice means a through bill of lading and an itemized invoice; otherwise it stays in the value

In practice, ask the seller to show the ocean freight and the insurance premium as separate lines on the commercial invoice, or to hand over the rated bill of lading and the policy. Because duties, including the additional tariffs, are calculated on that value, an importer who cannot evidence the deduction pays duty on the freight as well as the goods.

CIF vs CFR vs FOB

All three deliver at the same point, so the buyer carries the same risk under each. What changes is who buys the freight and, under CIF, who buys the policy. A CIF price is only comparable with an FOB price once the freight and insurance have been stripped out, which is also the customs-value exercise above. The FOB vs CIF comparison in the Incoterms explainer sets the two side by side.

When a US buyer should not accept CIF

• When you want to choose the carrier, the routing and the transit time yourself. Under CIF the seller's forwarder picks the cheapest sailing that fits its own contract, and you find out the vessel and the ETA after the fact
• When cargo release matters. The seller holds the bill of lading, so a payment dispute at origin becomes a container sitting on a US terminal earning demurrage
• When the shipment is containerized at all: the ICC points to CIP, or to FCA if you book the freight, for cargo handed over at a terminal
• When you need a clean customs value. The deduction rules above are manageable, but only if the seller will document the freight and insurance it bought
• On tariff-exposed lanes, where the landed cost depends on the duty stack far more than on the freight, and an ocean rate you cannot see makes the comparison between suppliers unreliable

Most Asia-to-US importers use FOB instead: the supplier delivers on board and you book the ocean freight through your own NVOCC. That is the usual term on the China to USA, India to USA and Vietnam to USA lanes.

Comparing CIF against FOB with Airlift

Ask the supplier for both prices, then put the FOB figure through Airlift's rate search to see what the ocean leg costs when you control it. Airlift is an FMC-licensed NVOCC (OTI license 016162): our ocean freight team books the carrier and issues the bill of lading in your name, we file the ISF, and our licensed customs-broker network handles the entry at destination. Already buying CIF? We can still handle the ISF, the entry and the delivery from the port, and arrange cargo insurance for the inland leg the seller's policy does not cover.