Is it possible to use CIF incoterms with air shipments?

Incoterms 2010 is the newest set of rules, which regulates international trade terms. 

There are 11 different trade terms defined in Incoterms 2010 rules. 

Each trade term defined in incoterms 2010 rule have a unique characteristics. 

As a result an exporter or importer must understand the differences between trade terms in detail.

What does CIF trade terms mean according to Incoterms 2010 rules and what are the key characteristics of CIF incoterms?

CIF means "Cost, Insurance and Freight" according to Incoterms 2010 rules. “Cost, Insurance and Freight” means that the exporter delivers the goods on board the vessel at the port of loading as determined by the sales contract.

Alternatively exporter can procures the goods already shipped on board a vessel as per CIF trade terms. 

This is a common practice in crude oil market.

Main Characteristics of CIF Incoterms
  • Freight must be arranged by the exporter and freight amount must be paid by exporter as well. 
  • The exporter also contracts for insurance cover against the importer’s risk of loss of or damage to the goods during the carriage. 
  • Exporter's obligation of supply of insurance policy is only on minimum cover, which is known as Institute Cargo Clauses C. Importer can increase the cover scope by paying the additional insurance premium. 
  • Risk passes and costs are transferred at different places under CIF Incoterms 2010 trade terms. 
  • Under CIF Incoterms risk passes from exporter to importer when the goods are shipped on board a vessel at the port of loading. 
  • Under CIF Incoterms costs are transferred from exporter to importer when the goods are discharged from a vessel at the port of destination.

Is it possible to use CIF incoterms with air shipments

You may have already seen CIF Narita International Airport, Tokyo, Japan Incoterms 2010 or CIF Heathrow Airport, London, UK Incoterms 2010 phrases on one of the shipping documents you have encounter so far.

But both of these expressions are false, because CIF incoterms rule is to be used only for sea or inland waterway transport. as a result you cannot use CIF trade term with air shipments, land shipments or rails shipments.