C&F (Cost and Freight)

C&F, or Cost and Freight (officially designated CFR under Incoterms 2020), is a trade term where the seller pays for the cost of the goods and the ocean freight to the named destination port. The seller’s financial responsibility covers everything from manufacturing through loading onto the vessel and the ocean crossing itself. However, risk transfers from seller to buyer the moment the goods are loaded on board the vessel at the origin port. This split between cost responsibility and risk responsibility is what makes CFR distinct from other Incoterms.

How C&F Differs from FOB and CIF

Under FOB (Free on Board), the seller delivers goods on board the vessel and that is where both cost and risk transfer. The buyer arranges and pays for ocean freight. Under C&F/CFR, the seller arranges and pays for ocean freight, but risk still transfers at the origin port when goods are loaded. Under CIF (Cost, Insurance, and Freight), the seller pays for ocean freight and marine insurance, with risk transferring at origin just like CFR.

The practical difference between C&F and CIF is insurance. Under C&F, the buyer is responsible for arranging marine cargo insurance. Under CIF, the seller provides it. Since the risk of loss or damage during the ocean voyage falls on the buyer under both C&F and CIF, the buyer under C&F terms should purchase their own marine insurance policy to cover the transit. Failing to do so means the buyer absorbs the full loss if a container is damaged or lost at sea.

When C&F Is Used

C&F is common in bulk commodity trades (grain, coal, iron ore) and in transactions where the buyer prefers the seller to handle ocean freight logistics. Chinese and Southeast Asian suppliers frequently quote C&F prices to U.S. importers because the supplier already has established relationships with ocean carriers and can negotiate competitive freight rates based on their shipping volume.

For an FBA seller importing consumer goods from Shenzhen to Long Beach, a C&F quote might read: “$8.50 per unit C&F Long Beach.” This means the $8.50 includes the product cost and ocean freight to the Port of Long Beach. The buyer still pays for marine insurance, destination port charges (terminal handling, wharfage, harbor maintenance fees), customs clearance, duties, drayage from port to warehouse, and any domestic transportation.

Calculating Landed Cost Under C&F

Starting with a C&F price of $40,000 for a 40-foot container of goods delivered to Long Beach, the buyer’s additional costs include marine insurance ($120 to $200 based on cargo value), destination terminal handling ($300 to $500), customs duties (varies by HS code, assume 5% on a $35,000 product value = $1,750), Merchandise Processing Fee ($575 max), Harbor Maintenance Fee (0.125% of value = $43.75), customs broker fee ($150 to $250), drayage from port to warehouse ($350 to $700), and prep center fees. Total landed cost might reach $43,500 to $44,500 depending on specific charges.

One common mistake is assuming the C&F price includes all destination costs. It does not. The “freight” in C&F covers only the ocean freight from origin port to destination port. Everything that happens after the vessel arrives at the destination port is the buyer’s expense.

Documentation Under C&F

The seller under C&F terms must provide the buyer with a clean on-board bill of lading, a commercial invoice, and a packing list. The bill of lading proves that goods were loaded on the vessel and serves as the document needed to claim the cargo at the destination. The seller must also handle export customs clearance at the origin and provide any export licenses or certificates required by the origin country.

The seller is not required to provide a certificate of insurance under C&F (that obligation exists only under CIF). The buyer must arrange their own insurance and should do so before the goods are loaded at the origin port, since risk transfers at loading.

Practical Considerations

Buyers using C&F terms lose some control over freight routing and carrier selection. The seller chooses the shipping line and the routing, which might not always be the fastest or most direct option. Some sellers book the cheapest available carrier, which could mean a transshipment in Busan or Singapore that adds 5 to 10 days to the transit. Buyers who need specific transit times or direct-service vessels should specify these requirements in the purchase contract or consider using FOB terms and booking freight themselves.