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International trade has a hidden rule that defines the success of online stores selling outside of Spain. Many entrepreneurs lose thousands of euros in customs due to a small mistake in their transport contract. Big brands protect their profit margins with a three-letter code that is very easy to use. This code balances the scale of responsibilities in maritime transport. How do these brands get their products to cross the ocean without financial surprises? The answer lies in a logistics tool that you are going to learn about right now.
What is the Incoterm CIF
The acronyms Incoterm CIF stand for Cost, Insurance, and Freight. It is a term that regulates international purchases in transport by sea or navigable waterways.
This agreement fixes the obligations assumed by the seller and the buyer during the ship's journey. The seller pays the expenses to bring the merchandise to the agreed final destination port. The seller also has the obligation to contract minimum marine insurance to protect the products.
Who assumes the risk in CIF conditions
The distribution of risk is the most important part of this maritime agreement. The seller assumes the risk of loss or damage only until the merchandise is loaded onto the ship. The risk transfers to the buyer at that exact moment, before the ship starts sailing.
The buyer assumes the risks during the journey across the ocean. The buyer also pays the unloading costs at the destination port. Import procedures at the local customs are paid by the buyer. The final transport from the port to the online store is paid by the client too.
When it is the best option for your business
This agreement is an excellent alternative if you are starting to make large maritime imports. The seller organizes all the main transport and you avoid logistics complications at origin.
- It is ideal for homogeneous goods that travel on traditional ships.
- It works very well when the seller gets very cheap freight rates.
- It ensures that products travel protected by a mandatory insurance policy.
You must avoid this agreement if you send products inside closed containers. Containers are delivered to port terminals before being loaded onto the ship. The Incoterm CIP is a much safer option for containerized or multimodal transport.
AMPHORA: Optimize your e-commerce logistics
Controlling international costs is vital to maintain a good profit margin on the internet. Digital brands need efficient processes inside the warehouse to compensate for maritime transport expenses.
At AMPHORA Logistics, we help online stores simplify their entire logistics operations. We offer a great e-commerce fulfillment service backed by intelligent technology to monitor your stock in real time. Our team prepares your orders without errors and with an amazing speed.
Forget about the heavy operational tasks that slow down the daily growth of your business. Discover how to improve your customer experience and scale your sales without limits. Your brand deserves a professional logistics setup that always works with mathematical precision.