FOB vs CIF — which Incoterm is better?
When a company starts exporting, one of the most important decisions is choosing the right Incoterm. Among the most common are FOB (Free On Board) and CIF (Cost, Insurance and Freight).
The decision may seem simple, but it directly affects costs, risk allocation, responsibilities and even the profitability of the operation.
What is FOB?
Under FOB, the exporter is responsible for the goods until they are loaded on board the vessel at the port of shipment. From that point onward, the risk shifts to the buyer.
- The buyer pays the international freight;
- the buyer arranges the insurance;
- the buyer covers costs in the destination country.
For many exporters — especially those just starting — FOB reduces exposure and operational complexity.
What is CIF?
Under CIF, the exporter arranges international freight and insurance up to the port of destination. Even though the formal transfer of risk still occurs at loading, the exporter manages more of the process.
- Coordination with carriers and schedules;
- documentation and logistics;
- insurance and freight included in the deal.
CIF can be attractive when the exporter has reliable partners and wants to offer a more complete solution to the buyer.
FOB vs CIF: a practical comparison
FOB: the buyer controls freight and insurance, and the exporter assumes less risk.
CIF: the exporter controls logistics, assumes more responsibility and may capture greater margin — if freight and insurance are negotiated well.
Which Incoterm should you choose?
There is no single answer. In general, FOB tends to be simpler for companies taking their first steps in international trade, while CIF may increase competitiveness for businesses with structure and experience.
How BrazilTrad supports exporters
The decision between FOB and CIF is not only logistical. It involves strategy, cost management, risk and governance.
BrazilTrad supports exporters and buyers by:
- analyzing total landed costs;
- recommending the most suitable Incoterm;
- negotiating freight and insurance;
- reviewing contracts;
- monitoring the entire transaction from start to finish.
Want guidance choosing between FOB and CIF?
Talk to our team.