Answer
These are standard international commercial terms (Incoterms) that outline exactly when financial risk, transport costs, and marine insurance liabilities shift from the seller to the buyer:
FOB (Free On Board):
The Split: The seller is responsible for all costs, export clearances, and risks up until the cargo physically passes over the ship's rail at the designated load port.
The Liability: The moment the cargo sits inside the ship's hold, the buyer assumes full financial responsibility. The buyer must book and pay for the ocean voyage freight, arrange the marine insurance policy, handle unloading fees, and shoulder any loss or damage risks that occur during the sea transit.
CIF (Cost, Insurance, and Freight):
The Split: The seller is legally bound to arrange and pay for the entire transit package. This means the seller covers the cost of the cargo, books and pays for the main ocean freight voyage, and provides a mandatory marine insurance policy to protect against transit loss or damage.
The Liability: Although the seller pays for this entire chain until it reaches the destination discharge port, the actual transfer of risk for damage still shifts to the buyer the moment the cargo is loaded at the initial shipment port. Once the vessel safely arrives at the designated discharge port, all subsequent unloading costs and local customs charges shift to the buyer.