Incoterm
What CIF covers on a reefer load of oranges
Under CIF the seller pays the sea freight to the named port and buys the insurance, while the risk passed to the buyer back at the loading port. The cover the rule obliges is the narrow one. A claim for fruit that arrived warm is read against the policy that was bought, and the freight paid says nothing about it.
The figures
| Incoterms 2020 group | Rules for sea and inland waterway transport |
|---|---|
| Risk passes | On board at the port of shipment |
| Sea freight | Paid by the seller to the named port of destination |
| Insurance | Bought by the seller, minimum level of cover |
| Unloading and import | Buyer, from the port of destination onwards |
| Container equivalent | Carriage and Insurance Paid, with wider cover |
What it changes on an order
You are reading the insurance certificate
Ask which set of cargo clauses it names and whether a temperature deviation or a breakdown of the refrigeration machinery sits inside them. The narrow clauses answer a listed set of events, and a warm container is not automatically one of them.
You are comparing this against a delivered price
The term stops at the destination port. Terminal handling, customs entry, the inland leg and the waiting all come after it, and a CIF figure put beside a delivered figure will look better than it is by exactly the cost of that tail.
Something arrives damaged
Because the risk moved at origin, the claim belongs to the buyer even though the seller bought the policy. Get the certificate assigned to you, keep the temperature record from the container, and open the survey before the fruit is thrown away.
What this note does not settle
- We are not in a position to quote freight or insurance. Our shipping terms, carriers and any cover we might arrange are unconfirmed, and nothing here is an offer of either.
- An insurance policy is not a warranty on the fruit. Deterioration that comes from the state of the goods themselves sits outside cargo cover, which is why the specification and the loading checks carry their own weight.
- What the clauses actually cover is settled by the wording of the policy and by your broker. This note points at the question, and the answer belongs to whoever issues the certificate.
Source: ICC Incoterms 2020 rules
Paid by one side, carried by the other
The odd shape of this rule is a seller buying a service for a risk that is no longer theirs. Freight to the destination port and a cargo policy both sit on the seller's invoice, while the fruit has been travelling at the buyer's risk since the loading port. When a container arrives warm, the loss belongs to the buyer and the paper that might cover it was arranged by somebody else.
Three steps are worth taking early because of that. Get the insurance certificate issued or assigned so you are able to claim on it, read which set of cargo clauses it names, and know who to call for a survey before anyone starts tipping fruit into a skip. A claim opened after the load has been destroyed becomes an argument about photographs.
Where a port price stops being a landed price
This term finishes at the destination port, and a surprising share of the cost lives after that. Terminal handling, the customs entry, storage while the entry clears, the inland leg and the waiting at your door all fall outside the quoted figure. Set that figure against a delivered offer and it wins by exactly the size of the tail it leaves out.
Ask for both prices from anyone able to give them, or rebuild the port price yourself using your forwarder's rates for that tail. The exercise takes an afternoon per destination and it is done once. What it prevents is a cheaper looking quotation turning into a more expensive shipment.
Talk to the grower
Tell us the variety, the sizes and the delivery week you need. You get a delivered price and what we can commit to in writing, from the person who picks the fruit.
The grower handles enquiries. Response times are still to be confirmed.