What is the difference between CIF and FOB in international shipping?

CIF (Cost, Insurance and Freight) and FOB (Free on Board) are the two most common Incoterms used in China trade, and choosing between them affects who pays for freight, who arranges insurance, and how your customs value is calculated. Under FOB: the seller loads the goods on the vessel in China; you (the buyer) pay for ocean freight, arrange marine insurance, and handle import customs. Under CIF: the seller pays for freight and provides basic cargo insurance to the destination port; however, risk transfers to you at the same point as FOB — when goods are loaded on the vessel in China. This is a common source of confusion: the seller pays freight but does not bear the risk during transit. For customs value calculation: FOB price + freight + insurance = CIF price = customs value at Russian border. If your invoice already states CIF, that IS your customs value. Insurance consideration: CIF requires only minimum coverage (Institute Cargo Clauses Condition C). This is rarely adequate. Even on CIF terms, most experienced importers purchase their own all-risk (Condition A) cargo insurance. Recommendation: FOB gives you more control over forwarder choice and freight rates. Use CIF for first orders with a new supplier when you want simplicity; switch to FOB as the relationship matures.