China Sourcing Blog

International trade needs clear rules. Misunderstandings cause problems. They lead to delays. They cost money. Incoterms solve this problem. CIP is one of these rules. It stands for “Carriage and Insurance Paid To”. It is a common term for all types of shipments. This guide will explain CIP in simple terms. 1. What does CIP stand for in Shipping Terms? CIP means “Carriage and Insurance Paid To”. The seller delivers the goods to a carrier. The seller chooses this carrier. The seller pays for transportation to a named destination. This destination is agreed with the buyer. The seller also buys insurance for the journey. The Key Concept: Risk vs. Cost This is very important. In CIP, risk and cost transfer at different times. Cost: The seller pays for the main transport and insurance to the destination. Risk: The risk transfers to the buyer much earlier. It happens when the seller

1. What Does FOB Mean in Shipping Terms? FOB stands for Free on Board. It is one of the oldest and most widely used Incoterms in global trade. Buyers and sellers choose FOB when they want a clear division of responsibilities at the port of shipment. Under FOB, the seller delivers the goods onto the vessel that has been nominated by the buyer. The loading point is critical. Once the goods are safely placed on board, the risk of loss or damage immediately shifts from the seller to the buyer. From this moment, the buyer takes full responsibility for the cargo. Key points to remember: FOB is suitable only for sea freight and inland waterway transport. It cannot be used for air shipments, courier parcels, or multimodal transport. In practice, FOB is especially common in China trade, because it gives overseas buyers more control over shipping arrangements and helps avoid

International trade relies on clear agreements. Incoterms define who pays for freight, who handles insurance, and when risk transfers. Among them, CPT and CFR are often compared. Buyers and sellers need to understand these terms to avoid costly mistakes. This guide explains CPT in detail while comparing it with CFR Incoterms and CIF. 1.What does CFR stand for in Shipping Terms? 1.1  Simple definition of CFR Incoterms CFR stands for Cost and Freight. It is one of the 11 Incoterms published by the International Chamber of Commerce (ICC). Under CFR, the seller pays for the cost of transporting goods to the port of destination. The term is widely used in bulk cargo shipments such as raw materials, chemicals, and agricultural goods. Key points: Why it matters: Example: A supplier in China sells 500 tons of steel to a buyer in Brazil. Under CFR terms, the supplier covers all freight charges

1. What does CIF stand for in Shipping Terms? CIF means Cost, Insurance, and Freight. It is one of the official Incoterms used in global trade. Under CIF, the seller pays the cost of the goods, the marine insurance, and the freight charges needed to bring the goods to the buyer’s destination port. However, even though the seller covers these expenses, the risk of loss or damage passes to the buyer once the goods are loaded on board the vessel. So, the seller pays for cost, freight, and insurance, but the buyer bears the risk during the main carriage. CIF is only valid for sea and inland waterway transport. It is not used for air, road, or rail shipments. 2. What are the Buyers and Sellers Responsibilities with CIF Agreements? Under CIF, responsibilities are divided clearly. Seller’s Responsibilities: Buyer’s Responsibilities: 3.Advantages and Disadvantages for the Buyer Advantages of CIF for

1.Why Incoterms Matter for B2B Buyers In international trade, clarity is everything. When you place a bulk order with a manufacturer overseas, the last thing you want is confusion about who is responsible for shipping, insurance, customs clearance, or delivery costs. That’s where Incoterms (International Commercial Terms) come in. Published by the International Chamber of Commerce (ICC), Incoterms provide a universal set of trade rules that define the responsibilities between buyers and sellers. They are widely used in contracts, invoices, and negotiations to avoid disputes. For B2B buyers, understanding Incoterms 2020 is not just a matter of compliance—it’s about managing risks, controlling costs, and securing smoother supply chains. Whether you are sourcing from China, Europe, or other markets, the right Incoterm can make or break your deal. This guide will help you understand what Incoterms are, the main categories of responsibility, and how to choose the best terms for your