Difference between FOB, CIF and CIF

Know the essence, know how to calculate, and you will know the difference. The price composition of three trade terms, FOB, CFR and CIF, is only applicable to sea or inland waterway transportation. In the price composition, it usually includes three aspects: procurement cost, expenses and net profit. The accounting of expenses is the most complicated, including domestic expenses and foreign expenses.

Domestic expenses include:

1. Processing and finishing costs;

2. Packaging cost;

3 storage costs (including warehouse rent, fire insurance, etc.). );

4. Domestic transportation costs (warehouse to dock);

5. Certificate fee (including commodity inspection fee, notary fee, consular visa fee, certificate of origin fee, license fee, customs declaration fee, etc.). ); 6. Freight (freight, lifting fee and barge fee, etc.). ); 7. Bank charges (discount interest, handling fees, etc.). ); 8. Estimated loss (loss, shortage, leakage, damage, deterioration, etc. ); 9. Posts and telecommunications (telegraph, telex, mail, etc. ).

Foreign expenses mainly include:

1. Foreign freight (sea freight from the port of shipment to the port of destination); 2. Foreign insurance premium (marine cargo transportation insurance); 3. If there is an intermediary, it also includes the commission paid to the intermediary.

The calculation formula is as follows:

FOB = purchase cost price+domestic expenses+net profit

CFR price = purchase cost price+domestic cost+foreign freight+net profit

CIF price = purchase cost price+domestic cost+foreign freight+foreign insurance premium+net profit.