Today, we’ll look at cost, insurance, and freight – CIF for logistics and shipping purposes. And this is one of the more common systems in terms of high-volume shipping and transportation. We’ll also check out some alternatives that might work better for you with the development of your moving business.
In the process of moving, the safety of the customer’s valuables is key. Up until the actual moving day, all the safety and state of the property remains in the hands of the customer. And if any harm comes to the items before the actual move, it falls on the back of the client. If it gets lost or needs to be stored or repaired before the move, that’s the client’s problem. All up until your company comes by and loads it onto a truck. Suddenly, all the responsibility shifts to your migration company and it’s employees.
International moving and shipping is the far end of the spectrum, in terms of complexity. The stakes are incredibly high and there are lots of tasks packed within the project: insurance, shipping, storage, theft, etc. And this goes for even the smallest of moves. In order to make it easier for everyone, there are some standard ways to ship and divide responsibilities. If you’re new to the importing and exporting game or just looking to make your small relocation business run better, it’s important to pick the right shipping method each and every time.
What is cost, insurance, and freight (CIF)?
CIF for logistics is a type of agreement in terms of shipping, stating the shipping company will be responsible for the items until they arrive at port and are claimed by you as the mover/client. The price of the shipper includes the:
- cost of the items (cost)
- the cost of insurance for the items while they are in transit (insurance)
- and the cost of shipping the items to port (freight)
As a buyer, you’re paying the seller to manage the whole shipping process, from port to port. There are a number of alternative methods of shipping agreements that assign more of the responsibility (and control) to your moving company. And this is something we’ll discuss later. Determining where these liabilities shift is a hugely important part of shipping and logistics. And together, this all bears an influence on moving industry trends.
What are the benefits of CIF for logistics and moving companies?
CIF is popular among smaller relocation businesses and those new to the shipping game. This is because it allows the buyer to manage a relatively small part of the process, leaving the bulk of the work to the seller.
You will find that larger moving companies make the decision to skip the appliance of CIF for logistics operations. So, they rather opt for shipping methods which provide them with more control over expenses. And that’s the catch with CIF – someone else sets the fees. The clear upside is the lack of work on the buyer’s part. All you have to do is show up and grab the goods, which can be the perfect solution for:
- a business just getting into a new country or
- one that doesn’t have the time or resources to manage the whole shipping process.
Alternative solutions to CIF for logistics
There are always other shipping arrangements that could save you money and make your shipping life easier. It all depends on your logistical capabilities and resources. Here are a few of the most commonly used alternatives to CIF:
Free on board (FOB)
Free on board (FOB) is one of the more popular alternatives to CIF for logistics. It provides your company with the opportunity to have more control over the entire process of transportation and shipping. In other words, you can use a freight forwarder or any other transportation solution of your choosing. If you already have insurance and shipping connections in place, FOB is a good choice for you.
And by controlling more of the process, you have the freedom to negotiate at every step, instead of having to effectively negotiate through the shipping company, as is the case with CIF.
Ex works (EXW)
For buyers in search of even more control, ex works (EXW) is about as basic as you can get. EXW basically offers that your items get packed and everything else is up to you. EXW is the sort of option a company might use if it has its own ground transportation in the country of origin or if it is collecting a series of shipments from a single region.
In these cases, it might be less expensive for the movers to collect items from a few factories at once using its own transport. They could then combine those collections at the port and make a single shipment under a single insurance agreement. Bear in mind that EXW is not for novices.
And the list goes on
These two represent the middle and minimal extreme of shipping, respectively. And besides these, there are pretty much setups which cover any type of situation that comes to mind.
- Free alongside (FAS) is the choice for you if you want things delivered to a ship but not put on the ship?
- Carriage paid to (CPT) can put your stuff in the hands of whomever you’d like.
Picking the right shipping option for your business
CIF for logistics is a solid option for businesses that haven’t had time to build a network of logistics providers and that are willing to pay for someone else’s expertise in the area.
If you’re learning the import-export business, cost, insurance, and freight lets you focus on buying and selling, without having to worry about finding new freight forwarders in foreign lands. Before you dive into the details of shipping and insuring, learn how to move the inventory you’re getting and what the market can bear for costs.
Once you’ve figured things out, you can start working on more efficient shipping. That’s going to be gravy, if you’re already running a successful business on the back of CIF shipping. Stay up-to-date and read more movers news to aid in the growth of your business.