What is the difference between CIF and CNF? Why you must understand these incoterms!
In international logistics, clarity is everything. Recently, we handled a shipment from China to Europe that clearly highlighted the importance of understanding incoterms before confirming the deal. Misunderstanding this widely used Incoterm can lead to confusion, unnecessary conflict, and even lost trust between buyer and seller.
A Real Case
We recently arranged a shipment under CIF (Cost, Insurance, and Freight) terms. According to this agreement, shipper responsibility was to cover the cost of goods, marine insurance, and freight transportation to the destination port in Europe. Once the goods arrived, the consignee was expected to handle all destination-related expenses, including port handling fees, customs clearance, and final delivery charges.
Unfortunately, in this particular shipment, the consignee in Europe was not fully aware of what the CIF Shipping Terms involved. When the cargo arrived, the consignee was surprised to find out they needed to handle all destination-related expenses, including port handling fees, customs clearance, and final delivery charges.. This misunderstanding resulted in customs delays, disrupted the delivery schedule, and created unnecessary communication hurdles. A lack of clear understanding may caused unnecessary tension and disrupted the working relationship.
What Are CIF Terms?
CIF Terms, short for Cost Insurance and Freight, fall under what we provide as premium logistics services. Under these terms, the seller is responsible for the cost of shipping and insurance until the cargo arrives at the destination port. However, once the goods reach the port, the buyer becomes fully responsible for all charges incurred thereafter — including destination port charges, customs clearance fees, and local delivery costs.
CIF vs. CNF: What's the Difference?
It’s also common for clients to confuse CIF Terms with CNF Terms (Cost and Freight), also known as CFR Terms. The key difference lies in insurance:
Under CIF Terms, the seller pays for shipping and marine insurance.
Under CNF Terms, insurance is not included, and it’s up to the buyer to decide whether to insure the cargo.
So, while both terms require the seller to cover freight charges, Cost Insurance and Freight terms offer a more comprehensive level of premium service by including protection during transit.
Why It’s Crucial to Understand CIF Shipping Terms in Advance
First and foremost, a clear understanding of the Cost-Insurance-Freight Clause helps avoid ambiguity over who pays what. While these may seem like small details, they can result in thousands of euros in extra charges if misunderstood.
Secondly, knowing exactly what the CIF Shipping Terms include enables buyers to budget more accurately. When buyers realize too late that they’re responsible for clearance and delivery, it disrupts their financial planning and reduces logistics efficiency.
Moreover, in cross-border logistics, even minor oversights can cause serious consequences. When everyone involved knows their responsibilities, the supply chain runs smoother and more cost-effectively.
Our Suggestions
To prevent such issues, we always advise clients to confirm the shipping terms in writing before finalizing any deal. Especially for widely used clauses like CIF Terms, all parties — including the buyer — should clearly understand what is and isn’t covered.
As a freight forwarder, we proactively remind our clients to consider the following:
Who pays for destination port fees?
Who appoints the customs broker?
Are last-mile delivery charges included or extra?
These details may seem trivial at first, but in practice, they’re critical to maintaining control and avoiding shipment delays. As part of our premium logistics services, we take the time to explain terms like Cost Insurance and Freight in full, ensuring that our clients are informed and prepared.
Conclusion
This case was a powerful reminder that assumptions can damage cooperation. Even standard terms like CIF and other common terms must be carefully communicated. In international freight forwarding, a clear understanding of Incoterms is just as important as price and transit time.
In global trade, clarity on shipping clauses incoterms is the first step toward a successful and smooth delivery.
