What is the CNF Trade Term?

CNF, which stands for Cost and Freight, is a trade term used in international shipping. Under this term, the seller is responsible for paying the transportation costs to deliver goods to a designated port of destination, but the buyer assumes the risk and responsibility once the goods are loaded onto the vessel at the port of departure.

To clarify, the seller is responsible for all costs up until the goods are placed on board the vessel, while the buyer takes on the risk for any loss, damage, or additional costs from that point onward.

Example of CNF in Practice:

In the case of shipping from China to the UAE under CNF terms:

• The seller in China will pay for all costs associated with transporting the goods to the UAE port, including loading, freight, and any port handling charges at the departure port.


• The buyer in the UAE assumes all risk once the goods are loaded onto the vessel in China. This means the buyer will be responsible for any damage, loss, or additional costs that occur during the voyage.


• Upon arrival at the destination port (in the UAE), the buyer will handle unloading, import customs clearance, and any further transportation costs within the UAE.

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Responsibilities Under CNF Terms

Seller's Responsibilities:

1. Production and Packaging: Ensuring that the goods are produced and packaged appropriately for shipment.


2. Export Customs Clearance: Handling any necessary export documentation and clearance in the country of origin.


3. Transport to Port: Arranging and paying for the transportation of goods to the designated loading port.


4. Freight Costs: Covering the costs for transporting the goods from the port of departure to the destination port.


5. Loading the Goods: Loading the goods onto the ship at the port of origin.


6. Risk until Goods are Loaded: The seller assumes responsibility for the goods up until they are loaded onto the vessel.

Buyer's Responsibilities:

1. Risk After Loading: The buyer assumes all risks and liabilities once the goods are loaded onto the vessel at the port of departure. This includes any potential damage or loss during the sea transport.


2. Unloading Charges: The buyer is responsible for paying unloading fees at the destination port.


3. Import Customs Clearance: The buyer must take care of all import duties, taxes, and necessary customs clearance upon arrival at the destination.


4. Domestic Transport: After customs clearance, the buyer will handle the domestic transportation of the goods from the destination port to the final location.


5. Optional Insurance: The buyer can choose to purchase insurance for the goods during transit, although the seller is not responsible for providing this under CNF.

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Key Points to Remember About CNF:

• The seller pays for shipping costs, but the buyer assumes all risks once the goods are loaded onto the ship.


• The buyer is responsible for unloading fees and import clearance at the destination port.


• CNF is similar to CFR (Cost and Freight), but the terms "CNF" and "CFR" are often used interchangeably.

In summary, CNF benefits the seller by limiting their risk to the time before the goods are loaded, while it places the burden of risk and responsibility during the transport on the buyer. It's important for both parties to fully understand their respective obligations under CNF terms to avoid disputes or unexpected costs.