What is CIF in Export?
The international fisheries trade is a multibillion-dollar industry. However, shipping products across countries in the fisheries sector is a difficult matter, especially when it comes to charging shipping costs. As a result, knowing the payment method for shipping products is important.
In the world of international trade logistics, there is one method of trade payments between countries that you need to know, namely CIF. It stands for Cost, Insurance, and Freight.
Cost, Insurance, and Freight are fundamental aspects that should be understood by all parties engaged in the export and import of an item or commodity, particularly in terms of responsibility for shipping fishery products, which are included in the commodities’ risk.
Well, let’s discuss in more in depth about CIF, here we go with the explanation!
Getting to Know the Basic Concepts of CIF
CIF–in terms of export delivery, is a method of payment in which the exporter will be responsible for the procurement process for products to customers.
There are a few basic issues to consider when it comes to company obligations as an exporter under the CIF system. The exporter must comply with a number of technical requirements, including:
- Prepare commercial invoices or important documents in accordance with existing contracts.
- Manage the packaging of goods according to the rules and standards of export products or export packaging.
- Manage permits related to export activities, such as securing permits and customs procedures or custom clearance.
Then what about the risk transfer or transfer of risk? The CIF system stipulates that the transfer of risk between the exporters and the importers can be carried out onboard the ship at the port of destination.
Until it arrives in your country, these above are the responsibilities of an exporter. It means that the exporter bears the entire risk of loss or damage. Because all of these costs are already incorporated in the price of the products, importers are charged to pay a high price.
The Advantages of Using CIF System
When properly implemented, CIF has a lot of advantages. Although it does require a more expensive fee, importers no longer need to think about shipping costs, insurance, and various other complicated procedures.
If you intend to start importing products using the CIF system, you should be aware of the following advantages:
Freedom in contracting: By using the CIF system, exporters and importers are free to enter into trade contracts. Both parties are free to determine the terms of delivery when entering into a contract.
You, as the importer, will evaluate the system of transporting goods and also the existing insurance when buying with the CIF system.
Importers don’t need to prepare many things: The CIF system can be advantageous to the importer. Importers do not have to worry about transportation expenses or insurance processes and procedures with this system because the exporter has taken care of everything.
The exporter clearly lists the transportation price: Because all operational expenses are covered by the exporters, exporters must clearly specify the price of transportation in this arrangement. Everything is taken care of by exporters, from packaging to products arriving at the final destination.
For this reason, CIF is one of the effective methods so far and is also widely chosen by importers from the fisheries sector, all around the world.
Honorably introducing you to C-Fishery! With the number of transactions that have been made, our reputation is well-maintained. As one of the biggest and most reliable fishery exporters, we are happy to have you as our partner. Contact us now if you have any further questions! (Yustika)
