Certified Supply Chain Professional (CSCP) Practice Exam

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What does CIF stand for in shipping terms?

Carriage Insurance Freight
Cost Insurance Freight
Customs Insurance Freight
Cost Included Freight

The correct answer is: Cost Insurance Freight

CIF stands for Cost Insurance Freight. This term is widely used in international shipping and refers to the responsibility of the seller to cover the costs associated with transporting goods to a specified destination. Specifically, it encompasses the cost of the goods themselves, insurance to protect the cargo during transit, and freight charges for transporting the goods by sea. In the CIF term, the seller assumes the risk and expense of insuring the goods against loss or damage until the goods reach the port of destination. This means that the seller is responsible for arranging and paying for shipping, as well as securing cargo insurance, which provides financial protection during the transit process. Understanding CIF is crucial for parties involved in international trade, as it outlines who is responsible for costs and risk at various points in the shipping process. It facilitates clearer contractual obligations and helps prevent misunderstandings regarding liability for loss or damage during shipment.