What is CNF (Cost and Freight) in Business? Meaning, Process, and Example

Introduction

CNF (Cost and Freight) is an international trade term where the seller is responsible for delivering goods to a specified port and covering the cost of transportation. However, the buyer is responsible for insurance and further costs after the goods arrive at the destination port.

Meaning of CNF

CNF is commonly used in global trade agreements and is defined under Incoterms (International Commercial Terms). It ensures that the seller arranges and pays for the shipment but does not cover insurance—the buyer must handle that part.

Real-Life Example

Imagine an Indian exporter selling textile goods to a buyer in Germany under a CNF agreement.

• The exporter pays for transporting the goods from India to the German port.
• Once the goods reach the port, the buyer takes responsibility for insurance, customs clearance, and further transportation.

How CNF Works

1. Seller's Responsibility:

   • Arranges shipping from the warehouse to the destination port.
   • Pays for freight charges.
   • Ensures proper export documentation.

2. Buyer's Responsibility:

   • Pays for insurance, import duties, and inland transport after arrival.
   • Manages customs clearance at the destination.
   • Handles local delivery to the final location.

Key Features of CNF

✅ Seller pays for freight costs but not insurance.
✅ Buyer takes responsibility once the goods reach the port.
✅ Common in international trade for bulk shipments.
✅ Defined under Incoterms, ensuring clarity in trade agreements.

CNF vs. CIF vs. FOB

Term	Who Pays Freight?	Who Pays Insurance?	When Risk Transfers?
CNF (Cost & Freight)	Seller	Buyer	At destination port
CIF (Cost, Insurance & Freight)	Seller	Seller	At destination port
FOB (Free on Board)	Buyer	Buyer	Once shipped