FOB is a popular Incoterm (International Commercial Term) used in global shipping. Under an FOB agreement, the seller is responsible for delivering goods to a specified port and loading them onto the vessel nominated by the buyer. That’s where the seller’s responsibility ends. Once the container is on board, all risk—along with the cost of sea freight, insurance, and anything that happens next - transfers to the buyer.

Key features of FOB:

• The seller covers export customs clearance, domestic transport to the loading port, and loading costs.
• Buyer arranges and pays for shipment, insurance, and anything after goods are on board.
• Risk passes from seller to buyer once the goods cross the ship’s rail at the port of shipment.

This makes FOB an attractive choice when buyers have experience with international shipping, have their own freight contracts, or want maximum control over logistics costs.

CIF pushes responsibility further into the journey. The seller not only delivers and loads the goods but also arranges and pays for the main carriage (ocean freight) and minimum insurance coverage to the named port of destination. However, the risk still transfers to the buyer at the moment the goods are loaded onto the ship - not when they arrive in the buyer’s country, as some might expect.

Key features of CIF:

• Seller pays for transport to the destination port and provides at least minimal cargo insurance.
• Buyer takes over risk and further costs (such as import clearance, duties, and delivery to final address) once the goods are loaded on the vessel.
• Insurance arranged under CIF is usually basic and may not cover all risks.

This term is commonly chosen by buyers who want a simpler experience, letting the seller handle most logistics up to arrival at the destination port.

While both terms deal with seaborne trade and port-to-port transit, the specifics of cost, risk, and control separate FOB and CIF. Here are the main contrasts in plain language:


FOB gives buyers more control but more work. CIF offers sellers a bigger role, but buyers may pay for lower-quality freight or insurance unless they negotiate specifics.

Consider a small business importing coffee from Vietnam to Australia. Under FOB terms, the Vietnamese supplier delivers the coffee to Ho Chi Minh City port, and the buyer’s shipping agent arranges ocean freight to Sydney and handles insurance. If the container is damaged after leaving Vietnam, the Australian importer must file the insurance claim, as the risk already shifted.

If shipped under CIF, the same supplier handles ocean freight and secures basic insurance. If the coffee is damaged at sea, the importer’s claim goes through the seller’s insurance - which often has limited payout and doesn’t always match the real cargo value.

Deep-diving into the nuances of importing Vietnamese coffee to Australia? This guide highlights how Incoterms impact logistics and risk management.

Newer importers sometimes pick CIF, assuming it’s easier and reduces headaches. It can feel reassuring to let the exporter coordinate everything. But CIF comes with a few surprises:

• Cost mark-ups: Sellers can add a premium to the freight and insurance costs, making the overall shipment pricier than market rates.
• Insurance gaps: Standard CIF insurance usually covers only a portion of losses - typically “minimum coverage” under Institute Cargo Clauses (C), not the broader protection of Clauses (A). If disaster strikes, buyers may not recover the full value.

FOB, by contrast, gives the buyer freedom to use their choice of forwarder and insurance, often finding lower rates or better terms.

Which term is best depends on your business model, location, and supply chain skills:

• Experience level: Experienced importers often gravitate toward FOB to retain control and cut logistics costs.
• Destination port: Remote or complex ports sometimes make CIF simpler, as sellers take care of hurdles up to arrival.
• Trust in supplier: CIF makes sense when the exporter is established and offers transparent, competitive rates.
• Insurance requirements: If cargo value is high, buyers may prefer FOB to negotiate full-value coverage rather than rely on minimal seller-provided insurance.

For a complete understanding of what these terms mean when importing all kinds of foods (not just coffee), the Importing Food into Australia: Guide for Businesses & Individuals (2025 Update) walks through how delivery terms affect total cost, customs clearance, and even import duty calculation.

Legal definitions and industry guidance on FOB and CIF are detailed in the official ICC Incoterms® 2020 rules, which are recognized worldwide. Importers should also check with relevant customs agencies for updates; for example, Australia’s Border Force offers clear instructions on responsibilities under different Incoterms.

Choosing between FOB and CIF can shape your shipping strategy, risk exposure, and bottom line. For companies moving packaged food, green coffee, or any plant-based product, a little planning upfront makes global trading smoother and less stressful.

If you’re seeking a reliable export-ready supplier of Vietnamese goods - especially for products like coffee, confectionery, or snacks - MR.VIET supports partners with clear documentation, logistics, and help in navigating the right incoterms for your business goals. Working with pros means fewer border delays and more confident trade. Learn more about MR.VIET’s wholesale and export services.