What Is the Difference Between FOB and CNF?

Freight on Board, or FOB, means goods are delivered to the shipper's nearest port while Cost and Freight, or CNF, means the price includes sea freight charges. Both of these are terms used when dealing with providers who are shipping their products overseas.

When purchasing supplies from companies located overseas, there are three basic ways the shipping costs are calculated. One choice is FOB. While it may seem inexpensive at first, there are other costs associated with it. The only thing included in FOB shipping is the cost of delivery of the goods to the nearest port to the company producing said goods. For example, if the company is located in China, then FOB costs would only cover delivering the goods to the nearest Chinese port. The buyer is responsible for all other fees involved in getting the goods from China to their ultimate destination.

With CNF shipping, the price includes delivery of the goods to the port nearest to the buyer. If the buyer lives in Orlando, for example, CNF shipping covers delivery to a port nearest to Orlando such as Miami or perhaps Ft. Lauderdale. There is also CIF shipping, which is similar to CNF. The main difference between the two of these is that CIF shipping includes insurance on the goods.

Regardless of shipping method chosen, the buyer is responsible for other basic charges. These may include customs fees, import duty and a fuel surcharge.