The full form of C&F is Cost & Freight.
Understanding Cost & Freight (C&F)
C&F is a shipping agreement where the seller covers the cost of goods and the freight charges to a specified destination. However, it's important to note that the seller does not cover insurance. The responsibility for insurance coverage lies with the buyer. According to our reference: "(si ənd ɛf) or cost & freight. abbreviation. (Accounting: Commerce) C & F refers to a shipping contract which includes the cost of the goods and the freight, but not insurance. With a C & F contract, the price of the goods includes the cost of the goods and the freight to the named destination."
Key Aspects of a C&F Contract:
- Seller's Responsibilities: The seller is obligated to deliver the goods to the port of destination and pay for the freight costs.
- Buyer's Responsibilities: The buyer is responsible for arranging and paying for insurance coverage, as well as handling import duties, taxes, and other charges upon arrival.
- Risk Transfer: The risk of loss or damage to the goods transfers from the seller to the buyer once the goods are loaded onto the vessel at the port of origin.
Example:
Imagine a business in China selling machinery to a company in the United States under a C&F agreement. The Chinese company is responsible for the cost of the machinery and the freight charges to ship it to a port in Los Angeles. Once the machinery is loaded onto the ship in China, the responsibility for insuring the goods during transit rests with the US company. The US company also handles import duties and transportation from the Los Angeles port to their warehouse.
In Summary
The "C&F" acronym in international trade stands for "Cost and Freight," a shipping agreement where the seller covers the costs of the goods and their transportation to a specified port, excluding insurance, which remains the buyer's responsibility.
