x You are participating in international transactions, trade, and commerce and are wondering what CNF is and what are the regulations? When should CNF conditions be used?
x Want to know what factors affect CNF fees? How to calculate CNF?
x Do you want to know if you need to pay attention to anything when using CNF conditions...?
Proship.vn we will answer what is CNF price? How to calculate CNF? What responsibilities and obligations do stakeholders have when participating under CNF conditions? What to keep in mind when using CNF... all will be clarified shortly.
What is CNF? When should CNF be used?
Sellers and buyers in international trade transactions wonder about CNF prices and when they should be used. Let's find the answer with Proship:
What is the CNF price?
CNF stands for Cost & Freight, which is cost and freight. A type of agreement used in the industry regarding the transportation of goods between a seller and a buyer. In particular, the seller will be responsible for paying for transportation of goods to the buyer's port (cost does not include insurance fees). At the same time, the seller is responsible for the risks of the goods before delivering them to the ship.
CNF (Cost and Freight) price includes the cost of goods and freight to the destination port. After the goods are delivered to the ship, the responsibility for the risk of the goods is transferred to the buyer.
When should CNF be used?
The CNF condition should be used when:
* For buyers:
- When starting international business to avoid trouble with the shipping process;
- Ideal when importing small quantities;
- There should be a reputable freight agent or customs broker at the port of entry to assist.
* For sellers:
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- Using CNF can increase profits because sales prices can be higher;
- Useful for international transactions when the buyer is unfamiliar with import procedures;
- When there are reliable forwarding and shipping partners, applying CNF prices will be more convenient.
What is the most accurate way to calculate CNF prices?
Join Proship to learn about the factors that affect CNF fees and how to calculate CNF fees:
Factors affecting CNF fees
Factors affecting CNF costs are:
- Goods price: Is the basic value of the product the seller provides;
- Insurance fee: Although CNF does not require insurance, if the buyer requests it, insurance costs will be charged additionally;
- Port fees and taxes: These fees often arise at export ports and import ports;
- Shipping fee: Includes costs to transport goods from the seller's warehouse to the delivery port;
- Other surcharges: May include fees such as handling fees, service fees, port storage fees, etc.
How to calculate CNF costs
What is CNF price? CNF price (Cost and Freight) includes 2 different parts that must be paid, specifically:
- C (Cost): Price of goods calculated according to Foreign Trade Contract.
- F (Freight): Is the cost of transporting goods to the previously agreed location and unloading point according to the Foreign Trade Contract agreement.
To calculate the CNF price, follow the following formula:
CNF price = C (Commodity price) + F (Shipping fee)
But when importing goods under CNF delivery conditions, the buyer (importer) needs to pay additional taxes and fees such as:
Import tax = Actual quantity of imported goods x Taxable value per unit of goods x Import tax rate
- Insurance fees;
- Customs clearance fees;
- Value added tax;
- Port security fees;
- Fuel surcharge (if any);
- Assembly fee (if any);
- Storage fee (if any).
Responsibilities and obligations of the parties when participating in CNF conditions
What is the CNF price has been answered by Proship, followed by the responsibilities and obligations of the parties when participating in CNF conditions. When buying and selling under CNF terms, the seller and buyer must ensure their obligations and responsibilities:
Responsibilities and obligations of the seller in CNF
Obligations and responsibilities of the seller:
- Take responsibility, risks and costs for obtaining import licenses and preparing customs procedures;
- Provide goods in accordance with the contract quantity and related documents;
- Sign contracts, pay ocean freight costs, and provide necessary information for cargo insurance;
- Ensure delivery on time and status, take responsibility for goods before export.
Responsibilities and obligations of the buyer in CNF
Buyer's obligations and responsibilities:
- Bear the responsibility and risks related to the goods after they have been transferred to the ship and upon receipt;
- Pay contractual fees, including shipping and storage fees before delivery on board the ship;
- Provide shipping information and bear costs related to receiving goods and import procedures;
- Bear the risks and costs to obtain import licenses, provide necessary information and receive goods on time.
Note when using CNF terms in international trade
When participating in international trade transactions using CNF terms, businesses need to pay attention to the following points:
Clear information
Make sure that all information related to the transaction, such as delivery time, destination port, and other costs, is clearly stated in the contract.
Transfer risk
Although the seller is responsible for transporting the goods to the port of destination, risk transfers from the seller to the buyer as soon as the goods are delivered to the carrier at the port of export. Businesses need to clearly determine this time to avoid loss or damage.
Unexpected costs
CNF includes freight and costs but does not include insurance or other costs at the destination port. Businesses need to note and predict these costs.
Compare the similarities and differences between CNF price and CFR price
What are the similarities and differences between CPT price and CNF price? Proship points out the following:
Similarities between CNF and CPT
The CFR and CPT terms both require the seller to hire a vessel or means of transport to a destination located in the buyer's country.
In both cases, the risk of the goods at sea is borne by the buyer. CFR and CPT both impose customs clearance obligations at both ends and both bear the costs of loading and unloading goods at both ends.
Differences between CNF and CPT
In addition to the similarities, there are also the following differences between CFR and CPT:
| CNF | CPT |
| Used for sea and inland waterways. | Used for all forms - mainly sea and air. |
| The seller's responsibility only ends when the goods are on the ship. | The seller's responsibility ends when the goods are delivered to the carrier (the seller's responsibility will end when they arrive at the carrier's requested location). |
What is CNF price and regulations on responsibilities and obligations of the seller and buyer when participating in Cost & Freight conditions have been shared by Proship. At the same time, relevant parties also need to clearly understand the impact factors as well as how to calculate CNF fees for convenience in international trade transactions. If you have any questions, contact 0909 344 247 for answers.
