- February 23, 2020
- CrozBorder University
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- Areca plates CIF price
How CIF price calculated in the areca palm plate export?
We’ve already seen the components of the FOB price in the article FOB prices for Areca palm leaf plates. This article will walk you through the various line items that is a part of CIF price for areca palm plates in international trade.
CIF price is the most used incoterm in international trade next to FOB. Here we will walk you through various components of the CIF price.
CIF prices = Cost of the Goods + Insurance + Sea Freight + Other charges(in any)
Cost of Goods:
This price component includes the cost of goods, inland transport, and other charges associated with on-boarding on to the vessel.
Insurance:
Insurance covers all the risks that arise during sea transit. The premium for this marine insurance is %0.05 of the CIF price. And in the event of a claim(if goods lost or damaged), you can get up to 90% of the total transaction value.
Normal practice is to insure the shipment for 110% of the total commercial value so that you can claim 99% of the total cost.
Freight Charges:
The freight charge is the cost involved in transporting the Areca palm leaf plates from the origin port to the destination port. The shipping line charges freight on the volume basis.
Apart from sea freight, there are few other charges from shipping line but varies applicable only in cerain situation.
- Automated Manifest System(AMS) – It is a security fee and applicable if your destination is a US port.
- Entry Summary Declaration(ENS) – Applicable if you are sending your cargo to any of the EU ports. The shipping line has to declare a summary of the goods inbound to EU customs. So they charge a fee for this.
- Fuel Adjustment Factor(FAF) – It is a shipping line surcharge to manage the fluctuating cost of the fuel.
- Container Seal Charges(CSC) – It is a charge for sealing the container.
- Weighing charges.
- New bunker factor.
- Chassis management fees.
- VGM(Verified gross mass) fees.
Risks:
The risk passes once the seller puts the cargo on to the vessel. Seller is also responsible for insuring the shipment and delivering it at the destination port.
Rathi co-founded CrozBorder Exports in the year 2017 and deals with manufacturing, consolidating and supplying eco-friendly products(Areca plates) to global customers.