The CNF incoterm, short for Cost and Freight, is a sea-shipping term in which the seller pays ocean freight to the named destination port but stops carrying risk for the goods the moment they are loaded onto the vessel at the origin port. The International Chamber of Commerce renamed the term CFR in its 1990 Incoterms revision, and CFR is the correct designation under Incoterms 2020, but “CNF” is still used routinely in contracts, quotes, and customs paperwork across Asia, Africa, and the Middle East. Whichever label appears in your paperwork, the rules are the same.
Why CNF Is Now Called CFR
CNF began as “C&F” in older Incoterms editions. The ICC changed the abbreviation to CFR in 1990 to reduce confusion with CIF (Cost, Insurance, and Freight), which looks and sounds similar but carries very different insurance obligations. For legal and documentation purposes today, CFR is the current name. If a counterparty writes “CNF” in a draft contract, treat it as CFR and apply the Incoterms 2020 rules.
CFR is one of only four Incoterms restricted to sea and inland waterway transport. It cannot be used for air freight, trucking, or multimodal shipments where a container is picked up at a warehouse rather than delivered to a port. For containerized goods moving door-to-port or door-to-door, the ICC recommends CPT (Carriage Paid To), which works across all transport modes.
How Cost and Risk Split Under CNF
The most important thing to understand about CNF is that cost and risk do not travel together. The seller pays freight all the way to the destination port. The seller’s risk for loss or damage ends the moment goods cross onto the ship at the loading port. The cargo could sink mid-ocean, and legally the buyer bears that loss, even though the seller arranged and paid for the voyage.
Everything that happens during the ocean crossing, at transshipment points, or during discharge at the destination port is the buyer’s exposure. The seller’s freight payment covers the transportation cost. It says nothing about who suffers if something goes wrong during transit. Buyers who assume “seller pays freight” also means “seller carries the goods to me” have misread the term.
What the Seller Must Do
The seller’s job under CNF breaks into three parts: prepare the goods, get them on board, and pay the freight.
On the export side, the seller obtains any required export licenses, completes export customs formalities, and pays export duties or taxes charged by the country of origin. The seller must also package the goods appropriately for a sea voyage, which for bulk commodities often means specialized containers, dunnage, or moisture protection.
Delivery is physical placement of the goods on board the vessel at the agreed port of shipment. Loading costs, terminal handling charges at the origin port, and any security-related transport fees are the seller’s expense. Delivery is complete when the cargo is on the ship, and that is the moment risk transfers.
The seller then contracts and pays for freight to the named destination port. If the shipping contract also covers unloading at the destination, that cost sits with the seller too. The seller is not required to purchase any marine cargo insurance. That absence is what separates CFR from CIF.
What the Buyer Must Do
The buyer’s responsibilities begin the instant goods are loaded, even though the cargo may be weeks away from arrival. From that loading moment forward, the buyer carries all risk of loss or damage.
At the destination port, the buyer pays for unloading (unless the seller’s freight contract already includes discharge), import customs clearance, import duties, taxes, and any local port fees. Customs brokerage fees for a formal entry typically run $150 to $400, and destination terminal handling charges vary by port, carrier, and container size.
Delays at the destination port hit the buyer directly. If cargo sits uncollected beyond the carrier’s free time allowance, demurrage builds fast. At major ports, demurrage on a standard dry container commonly runs $270 to $365 per day, and at congested gateways like New York, rates can reach $520 or more per day after the first week. Prompt customs clearance and pickup arrangements are essential to avoiding fees that can exceed the freight cost itself.
Insurance Is the Buyer’s Problem
Because the seller has no obligation to insure the goods under CNF, the buyer must arrange and pay for marine cargo insurance independently. This is where the term creates its biggest practical trap. The buyer assumes loss exposure from the moment of loading at a port thousands of miles away, and any gap between loading and the buyer’s policy taking effect leaves the cargo unprotected.
Marine cargo policies typically fall into three tiers based on the Institute Cargo Clauses. Clause A is all-risks cover, excluding only causes like deliberate misconduct, ordinary wear, inherent vice, and delay. Clause B covers named perils including fire, explosion, vessel sinking, collision, earthquake, and washing overboard. Clause C is the narrowest, limited to major catastrophic events; theft, piracy, water damage from waves, and individual package losses are not covered.
Marine cargo insurance premiums generally run between 0.3% and 0.5% of the invoice value for standard goods. On a $100,000 shipment, that is $300 to $500 for comprehensive Clause A coverage against losses that could wipe out the entire purchase. For most CNF shipments, Clause A is worth the added cost.
How CNF Compares to CIF and FOB
Three sea-freight incoterms dominate ocean shipping: FOB, CFR (CNF), and CIF. All three transfer risk at the same point (loading onto the vessel), but they split freight and insurance differently.
CNF Versus CIF
CIF is identical to CNF except the seller must also purchase marine cargo insurance for the buyer’s benefit. The minimum required coverage under CIF is Institute Cargo Clauses C, which covers only major perils like fire, sinking, and collision. That minimum can leave significant gaps, so buyers under CIF contracts often purchase additional insurance anyway. Under CNF the buyer arranges all insurance; under CIF the seller provides at least a baseline policy. Risk still transfers at the loading port under both.
CNF Versus FOB
FOB (Free On Board) flips the freight responsibility. Risk transfers at the same point as CNF, when goods are loaded onto the vessel, but the buyer pays for ocean freight rather than the seller. FOB gives the buyer more control: the buyer selects the carrier, negotiates freight rates, and manages the voyage. Under CNF, the seller makes those choices, which can be a disadvantage for buyers who have preferred carriers or specific routing needs. FOB tends to suit buyers with strong freight relationships or high volumes; CNF suits buyers who prefer a landed-cost quote without managing shipping logistics. Neither term includes insurance.
Documents the Seller Must Provide
The seller must hand over documents sufficient for the buyer to take delivery and clear customs. A CNF transaction requires three core documents at minimum.
The commercial invoice is the primary record of the transaction, listing the goods, quantities, unit prices, total value, and the agreed incoterm. U.S. Customs and Border Protection, for example, requires commercial invoices to include an adequate description of the merchandise, quantities, and values before authorizing release of imported goods. Other countries impose similar requirements.
The bill of lading serves three functions at once: it is a receipt confirming the carrier took possession of the goods, a contract of carriage between the seller and the shipping line, and a document of title that the buyer needs to claim the cargo at the destination port. Without a valid bill of lading, the buyer cannot collect the shipment. Electronic bills of lading are increasingly accepted under frameworks like the UNCITRAL Model Law on Electronic Transferable Records and the UK’s Electronic Trade Documents Act 2023, but before specifying an electronic bill in a CNF contract, confirm that your bank, carrier, and customs authority accept the format.
Export licenses and certificates of origin complete the standard package. Delays in transmitting documents can strand cargo at the destination and trigger storage charges, so the seller should send them promptly.
Writing a CNF Clause Correctly
A CNF designation in a sales contract must include the named port of destination. The correct format is “CFR [port name],” such as “CFR Rotterdam” or “CFR Shanghai.” Leaving out the destination port, or naming a vague geographic area instead of a specific port, creates ambiguity about where the seller’s freight obligation ends and can generate disputes over who pays for onward transport.
Specify the latest shipment date or a shipment window in the contract. The seller’s delivery obligation is fulfilled at the loading port, not at the destination, so buyers who need goods by a specific date should back-calculate from expected transit time and write that deadline into the contract rather than relying on the seller’s shipping schedule.
One detail is worth negotiating explicitly: whether unloading costs at the destination port are included in the freight. Some ocean freight contracts include discharge, others do not. If the sales contract is silent, disputes over who pays for unloading are common and expensive. Spelling out “CFR Rotterdam, discharge at seller’s cost” or “CFR Rotterdam, discharge at buyer’s cost” eliminates the ambiguity.
Extra Filings for U.S. Imports
Buyers importing into the United States under CNF face federal filing obligations beyond standard customs clearance. The Importer Security Filing, commonly called “10+2,” must be submitted to U.S. Customs and Border Protection no later than 24 hours before the cargo is loaded onto a vessel bound for the United States. This is the buyer’s responsibility, and the deadline is tied to loading, not arrival. Late or incomplete filings can trigger liquidated damages of $5,000 per shipment. Coordinating with the seller on loading schedules is essential, because the buyer needs accurate shipment details before the vessel departs the origin port.
On the export side, U.S.-origin shipments valued over $2,500 per commodity classification require Electronic Export Information filing through the Automated Export System before departure. That obligation typically falls on the seller or their freight forwarder, but buyers should confirm it has been completed to avoid holds or penalties downstream.