Transport and logistics: understand the difference between CIF and FOB shipping

Those who work in retail need to be familiar with the reality of their customers, because only then is it possible to understand their needs and meet their demands. In the case of auto parts store owners, this involves understanding CIF and FOB freight.

Think about it: how to create quality offers and stand out from the competition in the sale of products for transport and logistics without knowing the daily life and challenges of those who work in the sector?

It may seem like an obvious caution, but many retailers don’t have the sensitivity to research on the topics that are part of their audience’s daily lives. Aware of this, try to stay well informed to differentiate yourself from the competition.

If you still don’t know what CIF and FOB shipping means, don’t worry. In this article, we’ll explain the basic differences between the two modalities and when each is typically used. Inform yourself with us and get even closer to your clientele!

What are the main differences between CIF and FOB freight?

Even with the rise in diesel, the road freight market has not stopped. In fact, it has remained extremely hot, reaching a growth of more than 37% in 2021, according to data published by Mundologistica Magazine.

The heating up of the logistics area in the last year is a reflection of the trend that started with the pandemic, in which the increase in the use of e-commerce triggered the realization of deliveries during social isolation, something that has remained even now in the post-pandemic recovery.

Demand in the transport sector is growing. In this context, choosing between CIF and FOB shipping makes all the difference in the way orders are placed. Understand this important particularity and align your store’s approach, taking better advantage of the sector’s opportunities:

CIF

CIF stands for “Cost, Insurance and Freight”. In Portuguese, the term means “Cost, Insurance and Shipping”. However, in Brazil, the model is better known by the name “Frete paid at origin”.

In it, it is the seller himself who bears the responsibility for moving the product. That is, he pays the freight, monitors the goods and deals with any delays or losses. To the consumer, just pay for the item and wait for its arrival.

Because of these characteristics, the price of transport is already included in the value of the product. That is, the customer makes only one payment, in which the ICMS is collected (the same is described in the invoice, specifying the amount linked to the delivery).

FOB

FOB freight refers to the acronym “Free on Board”, which means “Free on Board”. Unlike the previous case, it provides that all transactions are the responsibility of the consumer, which includes freight and insurance costs.

In other words, the supplier is only responsible for taking care of the shipment of the product. The costs since the item leaves the sender are the customer’s responsibility, who must also take care of its tracking and take the necessary measures in case of delays or problems in delivery.

As the freight price is already paid by the customer separately, there is no addition to the value of the goods. However, it is also described in the note, so that the FOB is included in the tax base.

What defines the choice between CIF and FOB freight?

CIF and FOB freight have their own advantages and disadvantages. Your choice usually varies according to the type of product sold and the characteristics of the business itself.

Often, CIF freight is used in B2C sales or outbound transactions for multiple buyers. FOB is more common in B2B, in higher value loads. The biggest example is when a company has several suppliers and collects the goods via its own carrier.

–

And you, have you ever sold or purchased auto parts in your store for CIF and FOB shipping models? Now that you’ve mastered yet another feature of your customers’ area, guarantee the best products to retain them once and for all! Explore the unique benefits that only Robustec Mooring Straps offer.