FOB vs CIF
Where Risk And Cost Actually Split

The two most common Incoterms in Pakistani import/export paperwork, and the two most frequently confused.

The Comparison

FOB and CIF, Side By Side

Both are sea-freight-only Incoterms. The difference is who pays freight and insurance after the goods are loaded.

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Risk Transfers The Same Way

Under both FOB and CIF, risk passes from seller to buyer once the goods are loaded on board the vessel at the port of shipment. This part is identical.

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FOB, Buyer Pays Freight

Under FOB (Free on Board), the seller's job ends at loading. The buyer arranges and pays for ocean freight and insurance from the shipping port onward.

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CIF, Seller Pays Freight & Insurance

Under CIF (Cost, Insurance and Freight), the seller pays freight to the destination port and arranges insurance, but risk still transfers at loading, same as FOB.

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Common In Letters of Credit

CIF terms are frequently written directly into letters of credit for Pakistani imports, since the quoted price already includes freight and insurance to the destination port.

In Practice

Which One Should You Use?

Neither term is universally "better." It depends on who's better positioned to arrange freight.

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FOB For Confident Buyers

If you (the buyer/importer) already have a reliable freight forwarder and want control over carrier choice and freight cost, FOB usually works out cheaper and more transparent.

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CIF For Simplicity

If you'd rather have one all-in quoted price and let the seller handle freight and insurance logistics, CIF is simpler to manage, especially for first-time importers.

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Insurance Coverage Matters

CIF only requires the seller to buy minimum insurance coverage under Incoterms rules. If you want fuller protection, you may need to arrange supplementary cargo insurance yourself even under CIF terms.

Related Reading

Understand The Full Picture

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All 11 Incoterms
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Letter of Credit Basics
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FCL vs LCL Shipping
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What Is WeBOC?
FAQ

FOB vs CIF, Answered

The exact questions that come up when choosing between these two terms.

Is FOB or CIF cheaper? expand_more
It depends on the freight market and your own shipping relationships. CIF folds freight and insurance into the seller's quoted price, while FOB leaves you to arrange and pay for both separately. Neither is inherently cheaper; compare the all-in landed cost under each before deciding.
Does risk transfer differently under FOB vs CIF? expand_more
No. Under both terms, risk passes to the buyer once the goods are loaded on board the vessel at the port of shipment. The difference between FOB and CIF is entirely about who pays for freight and insurance after that point, not about when risk transfers.
Can I negotiate CIF terms into FOB, or vice versa? expand_more
Yes. Incoterms are contract terms both parties agree to, not fixed law. Many import/export negotiations do switch between FOB and CIF quotes depending on which party has better freight rates or insurance access.

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