——SOURCING GLOSSARY
FOB vs CIF — which one should you choose?
The short answer: FOB puts you in control of the shipping; CIF hands that control to the seller. With FOB, you arrange and pay the main freight from the origin port. With CIF, the seller arranges freight and insurance to your port — convenient, but you give up control of cost and cover.
Either way, the risk is yours from origin.
FOB vs CIF, side by side
Why CIF can quietly cost you more
CIF looks easier because the seller “handles shipping.” But here’s what often happens: the seller marks up the freight and may earn a rebate from their forwarder — so you pay above market rate, baked invisibly into the CIF price.
With FOB, you (or your sourcing agent) book freight directly at real market rates and see every line item. For repeat or larger orders, that difference adds up.
Frequently asked questions
FOB is often cheaper in real terms, because you book freight at market rate instead of paying the seller’s marked-up CIF price.
Under CIF the seller buys insurance (minimum cover). Under FOB you arrange your own, so you choose the level of cover.
No. In both, transit risk passes to you when the goods are loaded at origin. The difference is who arranges freight and insurance.
On FOB terms, the freight is yours to control — we book it at real market rates.
From Incoterm selection to freight negotiation, we help you cut landed cost without cutting corners.