Cost, Insurance and Freight (CIF) - Incoterm Explained in Hindi - YouTube

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Namashkar, my name is Mukul and welcome to Asset Yogi

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If you want to import goods from another country

For example, you want to export goods from India to another country

then knowing about Incoterms is very important

Incoterms are the standard terms whose full form is International Commercial Terms

On the basis of incoterms, the delivery point for the seller is decided from where the responsibility of the buyer starts

So the responsibilities of buyer and seller in all the terms are defined in Incoterms

CIF is also an incoterm whose full form is Cost, Insurance and Freight

CIF term is only used in sea or river transport

or it is used when goods are traded through waterways from one country to another

3 more similar terms are there on which I made videos

FAS, FOB, CFR. So you can watch those videos also

How the responsibilities are transferred from seller to buyer in those terms

In this video, we'll see in detail that what are the responsibilities of the buyer/seller in CIF

At what time seller handover the carrier of the buyer and from where does the responsibility of the buyer starts

With that, what are the exact documentation that the seller handover to the buyer

We'll discuss about it

So stay tuned till the end. Let's switch to the blackboard

So in this video, we'll discuss about CIF

The full form of CIF is Cost, Insurance and Freight

CIF is an incoterm

The full form of incoterm is International Commercial Term

There are a total of 11 types of Incoterms

and these are defined by the International Chambers of Commerce

So all these 11 terms and conditions define that how the cargo will be exported and imported from the countries

So if we understand this through an example, let's say

there is a buyer who owns a steel factory in Shanghai, China

and he wants to import iron ore from India

Let's say there is an iron ore mine in Orissa from where he wants to import

So a whole transportation chain will be formed

Let's say iron ore will first reach Visakhapatnam port and from there it will be exported

after that, it will be imported at Shanghai port

Then it will travel through roads or rail and then it will reach the Shanghai factory

So till where the seller will bear the costs and from where the responsibility of the buyer starts

That is defined by the Incoterms

In Incoterms, the most important is the delivery point

At which delivery point, responsibility, cast, and risk will get transferred

So the delivery point is the most important in Incoterms

Let's see what will be the delivery point in CIF

And we'll also see the transportation chain and how the buyer/seller will pay the costs

So the first responsibility of the seller is to handle the iron ore and bear the charges on own

After that, he will load the iron ore or whatever his cargo is

either he will transport it by road, in this case, I took an example of road

It can also be transported by rail

So he will bear all these charges

After that, cargo will reach Visakhapatnam port

Over there, custom clearance is his responsibility

will pay the freight forwarding fees to whoever is handling the logistics

Will pay the terminal charges, paying the charges on Visakhapatnam port is seller's responsibility

Seller will also be responsible to load the cargo on the ship

So he will bear the loading charges

After that, cargo will travel to Shanghai port

So this ocean freight is

As we mentioned the freight in this, this is ocean freight

This is also bore by the seller in the case of CIF

After that, there is a risk of cargo getting damaged in between the ocean

Insurance is bought for that

In the case of CIF, the seller buys this insurance

So in the CIF case, Shanghai port will be the delivery point in this case

And the expenses before reaching port will be the seller's responsibility and risk will also be on the seller

So he will cover the risk by buying this insurance

After that, he'll bear the unloading charges

The buyer will bear the loading and unloading charges

So the buyer will take all the expenses and risk from here

So what are these charges?

Unloading of iron ore from the ship

After that, custom clearance will be done,

will pay import duties and taxes

With that, transportation can be done through road or rail

In this case, cargo unloaded from the ship

then loaded into truck or rail

The buyer will bear those charges and then transportation is also the buyer's responsibility

So if we see the highlights of CIF, what are these?

One is, this CIF term is only there in the case of transportation through sea or inland waterway

If this main terminal is a road

or rail or air

In this case, CIF is not applicable

If the main career is through sea, ocean, or river

Only in those cases, CIF is applicable

and CIF should only be used when there are bulk cargos

An important point to note here is

If your cargo is non containerised, then only use CIF

and if it is a containerised cargo,

then you can use the CIP term

It is a practical problem. Let's say the seller is handling the cargo

till the terminal home country

So in this case, it's his responsibility to load the cargo

If the cargo on the terminal is containerised cargo then it cannot be loaded

Containerised cargo is loaded in the warehouse of the freight forwarder

So these containers are already loaded

So you will not pay the port charges on the terminal because those are very high

and it is not practically possible also

That's why CIP is a term for containerised cargo so you can use this

And in this case where there are bulk cargos and it can be easily handled

and there is the access to vessel with the seller. Then only this term is used

So if we talk about the seller's responsibility, it is

Export clearance. He clears all the documents

Then he loads the cargo on the ship and he is also responsible for the ocean freight and insurance

If we have to give an example of how these terms and conditions are written in the contract

So it is written in a way

50,000 tonnes iron ore CIF terminal XYZ, Shanghai, China

What does it mean?

The seller is responsible for 50,000 tonnes

CIF terminal XYZ.

This XYZ terminal at Shanghai port

Til there, the seller is responsible. So the buyer

will give the payment for 50,000 tonnes cargo

With that, this cost is already included

the seller is giving the quote in this way

So the quote given by the seller to the buyer includes transportation till here

After that, transportation is the responsibility of the buyer

from Shanghai port to the factory

So it is reflected here that the buyer is responsible for the transportation cost and risk

from Shanghai port terminal including the unloading charges

So we already discussed that the unloading on the port is handled by the buyer

Only the ocean freight and insurance are the seller's responsibility till Shanghai port

And finally, there is one more responsibility of the seller to give all the documentation

to the buyer in which there is a commercial invoice of the cargo

The packing list is there. The packing list is not there in the bulk cargo

But if there is any general packed cargo

then the packing list is there

and if the packaging is on wood pallets, there is a wood packaging certificate

The most important document is the ocean bill of lading

It is a title document which is generally in case of ocean cargo

If it is travelling through air or rail, then in that case it is a consignment bill of lading

and it is not a title transfer. What is the importance of the title here?

If the seller is loading the cargo and he is handing over the bill of lading

to the buyer at the Shanghai port. So it is a title document

If the title document will not be transferred to the buyer

then the cargo would not be loaded

That's why it is very necessary for the buyer to clear all the dues before loading

So I think I covered all the highlights of CIF

So in the next videos, we'll talk about CPT and CIP

So as I said here that you can use 'cost and insurance paid' if there is a containerised cargo

So for containerised cargo, CIP and CPT are used

The full form of CPT is Carriage Paid To

So what are the responsibilities of the seller and buyer in these

and at what delivery point these responsibilities are transferred

We'll see in the next videos so do watch those videos

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