Incoterms (International Commercial Terms) define the responsibilities of buyers and sellers in international commodity transactions — including who arranges shipping, insurance, and delivery. CIF and FOB are two of the most commonly used Incoterms in commodity trade coordination.
FOB — Free on Board Explained
FOB (Free on Board) means the seller is responsible for delivering the goods to the nominated port of shipment and loading them onto the vessel. Once loaded, risk transfers to the buyer. The buyer arranges and pays for freight and insurance from the port of origin. FOB is common in bulk commodity shipments where buyers have established freight relationships.
MoonGate provides administrative coordination only. All Incoterms decisions should be made with independent legal and commercial counsel.
CIF — Cost Insurance Freight Explained
CIF (Cost, Insurance, Freight) means the seller arranges and pays for freight and insurance to the named port of destination. Risk transfers to the buyer once goods are loaded on the vessel — same as FOB — but the seller pays freight and insurance costs. CIF is often preferred by buyers who do not have established freight relationships or who want a delivered price.
Key Differences and Documentation
Under FOB, buyers control freight and insurance. Under CIF, sellers control these elements. Under FOB: seller provides commercial invoice, packing list, certificate of origin, and bill of lading (freight arranged by buyer). Under CIF: seller additionally provides insurance certificate and freight invoice. Both require standard quality documents (SGS, assay certificate, etc.) See our Document Checklist for full details.
Learn more: How to Reduce Risk in Commodity Transactions | Submit an Inquiry