Shipping Terms Explained

When buying products from overseas, there can be many terms used that you may be unfamiliar with. So here is a little rundown of some of the terms that you may hear.

Cost, Insurance, and Freight (CIF)

Cost, insurance, and freight (CIF) relates to the expense paid by a seller to cover the costs, insurance, and freight of a buyer’s order while it is in transit. The seller is responsible for any costs until the goods reach the buyer. Depending on the contract, this may either be until the goods reach the port of import, or until they reach the buyers hand. This may include export custom duties, export paperwork, or inspections or rerouting. The seller will also be responsible for covering the costs for any loss or damage to the product. 

Free on Board (FOB)

When goods are shipped FOB, the seller no longer has responsibility once a carrier takes possession of them, or, as in the case of ocean shipments, when the goods are placed safely aboard the vessel or when an on board bill of lading has been issued. The buyer then has the responsibility for insuring the goods from that point on.

Ex Works (EXW)

Ex works (EXW) is the term used to describe the arrangement where a seller makes a product available at a designated location, and the buyer of the product must cover the transport costs.

This arrangement involves much more for the buyer. The only responsibilities that seller has are to safely package the goods, label them appropriately, and deliver them to a previously agreed-upon location, which is usually the seller’s nearest port. The seller will also help the buyer get export licenses or other necessary paperwork, however the buyer will pay the actual fees for the documents.

The buyer is responsible to cover any expenses and account for any risks that pertain to the goods. Such risks could include loading the products onto a truck, transferring them to a ship or plane, dealing with customs officials, unloading them at their destination, and storing or reselling them. Even if it is arranged for the seller to help the buyer as for example, load the product onto a ship, the buyer still has the responsibility for any loss or damages if anything goes wrong during the loading.

Bottom Line

At Colombia’s best we want to take the hassle out of shipping and at the same time ensure the best care of your high quality goods. That’s why we recommend buyers to use the CIF shipping arrangement. Contact us now to see what we can do for you.