FOB vs CFR vs CIF for Iran Importers — Which Incoterm to Choose?

FOB, CFR and CIF are the three most common Incoterms for Iran-India trade. Each defines who pays freight and insurance, and when risk transfers. Choosing the right Incoterm affects your cost, risk and control over the shipment. This guide compares the three for Iranian importers.

Why buy from India

Iran imports large volumes of agro, packaging, textile, chemical and pharma products from India. Whatever the product, the choice of Incoterm (FOB, CFR or CIF) determines who manages freight and insurance — and the cost allocation between buyer and seller.

Common challenges for Iranian importers

• Confusion about who pays freight under each Incoterm.
• Assuming CIF includes all-risk insurance (it includes only minimum cover).
• Not understanding when risk transfers.
• Wrong Incoterm stated on the BL / invoice leading to LC discrepancies.
• Disputes about destination charges.

How Blueroute Exim helps

We work on FOB, CFR and CIF terms. We discuss your preference before issuing the Proforma Invoice and apply the correct Incoterm on the PI, BL, invoice and all documents. We also confirm destination charges transparently.

FOB — Free On Board

• **Freight**: Buyer pays ocean freight.
• **Insurance**: Buyer buys insurance (optional but recommended).
• **Risk transfer**: When cargo is on board the vessel at the port of loading (Mundra, Nhava Sheva, etc.).
• **Origin charges (seller)**: THC, CHA, documentation, factory-to-port trucking, BL.
• **Destination charges (buyer)**: THC, clearance, duties, port handling at Bandar Abbas.
• **Use case**: Buyer has a nominated forwarder or wants to control freight.
• **Best for**: Iranian buyers with established forwarder relationships.

CFR — Cost and Freight

• **Freight**: Seller pays ocean freight to the destination port (Bandar Abbas).
• **Insurance**: Buyer buys insurance (optional but recommended).
• **Risk transfer**: When cargo is on board the vessel at the port of loading.
• **Origin charges (seller)**: THC, CHA, documentation, factory-to-port trucking, BL, ocean freight.
• **Destination charges (buyer)**: THC, clearance, duties, port handling at Bandar Abbas.
• **Use case**: Buyer wants the exporter to manage freight but wants to control insurance.
• **Best for**: Iranian buyers who want a single India-side partner for freight but want to control insurance.

CIF — Cost, Insurance and Freight

• **Freight**: Seller pays ocean freight to Bandar Abbas.
• **Insurance**: Seller buys minimum cover (Institute Cargo Clauses C) for 110% of CIF value.
• **Risk transfer**: When cargo is on board the vessel at the port of loading.
• **Origin charges (seller)**: THC, CHA, documentation, factory-to-port trucking, BL, ocean freight, insurance.
• **Destination charges (buyer)**: THC, clearance, duties, port handling at Bandar Abbas.
• **Use case**: Buyer wants a fully managed shipment.
• **Best for**: New buyers, smaller buyers, or buyers without a freight forwarder of their own.

> Note: CIF includes only minimum insurance (Clauses C). For all-risk cover (Clauses A), the buyer should buy their own insurance under FOB or CFR, or request CIP (which includes Clauses A).

Comparison at a glance

| Aspect | FOB | CFR | CIF | |---|---|---|---| | Ocean freight | Buyer | Seller | Seller | | Insurance | Buyer | Buyer | Seller (Clauses C) | | Risk transfer | On board at origin | On board at origin | On board at origin | | Destination charges | Buyer | Buyer | Buyer | | LC documents required | BL marked "freight collect" | BL marked "freight prepaid" + insurance (if buyer has it) | BL marked "freight prepaid" + insurance policy from seller |

Step-by-step process

1. 1**Discuss Incoterm preference** with Blueroute Exim before PI issuance.
2. 2**PI issued** with the chosen Incoterm + named port (e.g., "FOB Mundra Port, Incoterms 2020").
3. 3**Payment arranged** — TT, LC, or rupee.
4. 4**Production and PSI**.
5. 5**Booking and stuffing** — under FOB, buyer's forwarder books; under CFR / CIF, we book.
6. 6**Customs filing and BL issue** — BL marked "freight collect" (FOB) or "freight prepaid" (CFR / CIF).
7. 7**Insurance** — under CIF, we buy Clauses C insurance; share policy.
8. 8**Documents delivered** — bank-to-bank or courier.

Required documents

• Proforma Invoice (with Incoterm + named port).
• Commercial invoice (with Incoterm).
• Packing list.
• Bill of Lading (marked freight collect or prepaid).
• Certificate of Origin.
• Certificate of Analysis (where applicable).
• Insurance certificate (under CIF or if buyer buys under FOB/CFR).
• Pre-shipment inspection certificate (if requested).

Payment — bank compliant only

• Advance TT.
• 50% advance + 50% before BL release.
• LC at sight (with Incoterm clearly stated).
• Rupee payment through permitted Iranian bank accounts.

No crypto. No hawala.

Quality assurance

• Supplier verification before any order.
• Sample approval before bulk production.
• Independent PSI on every shipment.
• Lab testing for food, pharma, chemicals.
• Stuffing photographs and seal numbers shared.

Why choose Blueroute Exim

• We work on FOB, CFR and CIF terms.
• Incoterm correctly stated on PI, BL, invoice and all documents.
• Transparent destination charge disclosure.
• Bank-compliant payment only.
• Based in Surat, Gujarat — close to Mundra and Nhava Sheva.
• Business hours: Monday to Friday, 10:00 AM – 5:30 PM IST.
• Contact: +91 93132 01754, info@bluerouteexim.in.

Key Takeaways

• FOB = buyer pays freight; CFR = seller pays freight; CIF = seller pays freight + minimum insurance.
• Under all three, destination charges are on the buyer.
• Risk transfers on board at the port of loading (for bulk / break-bulk).
• CIF includes only minimum (Clauses C) insurance — for all-risk, buy separately or use CIP.
• Always state Incoterm + named port + version on the PI: "FOB Mundra Port, Incoterms 2020".

If you want help choosing the right Incoterm for your next import, contact Blueroute Exim at info@bluerouteexim.in or +91 93132 01754.