The key moment is loading, not arrival
FOB and CIF divide shipping costs differently, but they generally place the sea-transit risk on the buyer at the same point: when the goods are loaded aboard the vessel at the port of shipment. If the ship later sinks, the buyer may therefore bear the loss even though the cargo never reaches its destination.
That risk transfer is not the same as transfer of ownership. The sales contract determines when title passes; the shipping term addresses responsibilities such as delivery, costs, and risk.
CIF adds insurance, not a later risk shift
Under CIF—cost, insurance, and freight—the seller arranges and pays for carriage and cargo insurance to the named destination. But paying for the voyage does not generally mean the seller carries the risk until arrival. Once the goods are aboard, the buyer bears the transit risk and may need to claim under the insurance the seller arranged.
Under FOB, the seller’s delivery obligation generally ends when the goods are aboard at the named port, and the buyer arranges the main carriage and insurance. In either case, the contract’s exact wording and the applicable trade rules matter.
Why the distinction matters
A buyer who sees “CIF” on a contract might assume the seller remains responsible if the shipment is lost at sea. In practice, CIF separates who pays to arrange the journey from who bears the risk during it. That can determine whether the buyer seeks compensation from an insurer rather than demanding that the seller replace the cargo.
