The CNF Incoterm (Cost and Freight) is one of the most commonly used trade terms in ocean freight. It outlines who pays for transport and when the risk shifts from seller to buyer.
This complete guide will walk you through everything you need to know about CNF Incoterm, including shipping procedures, advantages, disadvantages, and how it compares to other terms.
1.What is CNF Incoterm?
CNF Incoterm, also referred to as Cost and Freight, means the seller pays for the cost of transporting goods to the destination port, but the risk shifts to the buyer once goods are loaded onto the vessel at the origin port.
Note: CNF is widely used in practice, especially in Asia, but the official ICC term is CFR (Cost and Freight). However, CNF Incoterm is still understood in global shipping.
2. Core Responsibilities Under CNF Incoterm
| Responsibility | Seller | Buyer |
|---|---|---|
| Inland transport in export country | ✅ | ❌ |
| Export customs clearance | ✅ | ❌ |
| Port handling in origin | ✅ | ❌ |
| Main sea freight (to port) | ✅ | ❌ |
| Marine insurance | ❌ | ✅ |
| Unloading at destination port | ❌ | ✅ |
| Import customs clearance | ❌ | ✅ |
| Final inland transport | ❌ | ✅ |
3. CNF Incoterm Shipping Process (Step-by-Step)
- Buyer and seller agree to use CNF terms in the contract.
- Seller arranges inland transport to the port of origin.
- Seller handles export customs clearance and required documentation.
- Goods are loaded onto the vessel — this is the point where risk transfers to the buyer.
- Seller pays for ocean freight to the agreed destination port.
- Buyer takes over, managing unloading, import clearance, and final delivery.
This sequence shows why strong coordination in freight and risk transfer is essential when using CNF.
4.Advantages of CNF Incoterm
✅ Simplifies international freight for the buyer – seller handles shipping
✅ Lower upfront cost for buyer, as sea freight is prepaid
✅ Good for buyers with strong destination agents
✅ Ideal for bulk shipments or low-margin cargo where control of cost matters
✅ Compatible with Letter of Credit (L/C) payment terms
5.Disadvantages of CNF Incoterm
⚠️ Risk transfers early – buyer is liable once goods are onboard
⚠️ No insurance coverage included by default
⚠️ Port delays or damage are the buyer’s responsibility
⚠️ Less control for the buyer over freight carrier choice
⚠️ Not suitable for door-to-door or multimodal shipping
6.Transportation Breakdown Under CNF Incoterm
Ocean Freight (Main Stage)
The most critical component of CNF Incoterm is the sea freight stage. Sellers must:
- Book container space on vessels
- Manage port handling
- Provide bills of lading to the buyer
Inland Transport (Pre- and Post-Carriage)
- Pre-Carriage: Seller arranges inland delivery to port (e.g., trucking to Shanghai Port)
- Post-Carriage: Buyer must organize customs and delivery from the destination port to their warehouse
Export & Import Documents
Seller must provide:
- Commercial invoice
- Packing list
- Bill of lading
- Export clearance documents
Buyer must handle:
- Import license
- Duty/tax paperwork
- Local delivery instructions
7.When Should You Use CNF Incoterm?
Use CNF Incoterm if:
- You’re shipping via ocean freight only
- You have experience with import procedures
- You want to control customs and inland delivery
- You prefer the seller to manage export logistics and international freight
Avoid CNF Incoterm if:
- You’re using air freight or multimodal routes
- You want door-to-door service
- You’re unfamiliar with customs regulations
8.CNF Incoterm vs Other Terms
| Term | Freight Paid By | Risk Transfers At | Suitable For |
|---|---|---|---|
| CNF | Seller | Port of origin (onboard ship) | Ocean freight, experienced buyer |
| FOB | Buyer | Port of origin (onboard ship) | Buyers with freight agents |
| CIF | Seller | Port of origin (onboard ship) | Buyers needing seller insurance |
| DAP | Seller | Final delivery point | Door-to-door |
| EXW | Buyer | Seller’s warehouse | Maximum buyer control |
9.CNF Incoterm Quick Facts
- CNF = Cost and Freight (Risk = Buyer, Freight = Seller)
- Only for sea freight
- Seller pays ocean freight
- Risk passes once loaded onto ship
- No insurance obligation
- Buyer handles destination costs
10.Real-World Example
A buyer in the UK imports LED screens from China under CNF Incoterm.
- Seller delivers goods to Ningbo Port and books sea freight to Southampton.
- Once goods are onboard, the risk transfers to the buyer.
- Buyer handles import duties and final delivery from the UK port to their warehouse.
This common scenario showcases how transportation costs and risks are split under CNF Incoterm.
11. Final Thoughts
The CNF Incoterm remains a powerful shipping option for ocean freight buyers who are comfortable handling destination logistics but want sellers to manage the export process. It offers cost transparency and structured responsibility, but buyers must understand where risk truly begins.
If you frequently import via sea, mastering CNF Incoterm can lead to smoother shipments and smarter logistics decisions.
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FAQ:
Q1.How should I insure goods if shipping under CNF?
Buyers must purchase marine cargo insurance independently. It’s best to insure from the port of origin, since that’s when the risk transfers from seller to buyer.
Q2.How does the CNF Incoterm impact customs clearance timelines?
CNF only covers transport to the port, so buyers must coordinate early with customs brokers to avoid delays. Late preparation can result in demurrage or storage fees.
Q3.How can I reduce costs under CNF Incoterm?
Negotiate freight transparency with the seller and compare market freight rates from independent forwarders.
Q4.What insurance options do I have under CNF Incoterm?
Since the seller isn’t responsible for insurance, how can you protect your cargo during transit? You’ll need to arrange marine insurance separately to cover potential loss or damage.
Q5.Why choose CNF Incoterm over CIF or FOB?
Do you want control over insurance while having the seller handle shipping? CNF offers that balance — unlike CIF (which includes seller insurance) or FOB (where the buyer manages freight).