The FOB and CIF terms used in internal trade were inherited from Incoterms (International Commercial Terms) rules. The rules are laid down by the International Chamber of Commerce and are intended to contribute to the development of international trade and facilitate precise interpretation of the terms used in purchase and sales contracts. 

In Brazilian internal trade, FOB means that the buyer is responsible for collecting the goods from the place specified by the seller.   Under CIF terms, the seller undertakes to deliver the goods to the place specified by the buyer, with all delivery expenses paid, including freight and insurance.       

Some companies use the term ”FOB directed”, a Brazilian invention, and the objective in this case is to maximize the volume of deliveries and minimize costs. Under this sales model, the sender does neither have the obligation to pay the freight nor the insurance, but undertakes to perform the tasks, through a transporting company of which it is a client, and transfers the freight cost to the buyer, alternatively the transporting company may charge the buyer directly.  With regard to insurance, the shipment should be declared under the master trucker’s liability insurance policy (RCTR-C) contracted by the transporting company or by the buyer as a policyholder, but, in no case, may it be contracted by the seller.

According to Decree-law 73 and SUSEP’s Circulars, trucker’s liability insurance (RCTR-C) is obligatory. Art. 13 of Law 11442, which governs truckers’ activities, establishes that  insurance against cargo loss or damage should be placed by the party contracting the services (shipper), thereby exempting the trucker from the responsibility of contracting this insurance, or then directly by the trucker if the shipper does not contract the insurance. CNSP’s Resolution 219/2010, under articles  1, § 4, 19 and 20, specifies that trucker’s liability insurance policies (RCTR-C) can be contracted by third-parties, i.e. the shippers, and sets forth the respective rules.

It is important to emphasize that under FOB terms the buyer, regardless of the trucker’s obligations, must also contract obligatory transport insurance on the basis provided for in law.   

Count on CredRisk Marine for assistance in contracting your Transportation Insurance. We are an independent insurance broker focused on specialized solutions for the supply chain.   

To enable you to find out the cost of your Cargo insurance, we have provided an online calculator, which will allow you to have a base value for your plans. Do your simulation now: