Transportation Operations LINCS Practice Exam

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What is meant by 'Cost and Freight' in INCOTERMS?

The seller pays for shipping to the destination port
The buyer assumes all costs once goods are loaded
The costs are split evenly between seller and buyer
Shipping is provided free on board at the origin

The correct answer is: The seller pays for shipping to the destination port

'Cost and Freight' (often abbreviated as C&F or CNF) is an INCOTERM that signifies that the seller is responsible for paying the costs of shipping the goods to the destination port. This term indicates that while the seller covers the freight charges associated with transporting the goods, it is the buyer who assumes the risk once the goods are loaded onto the shipping vessel at the port of origin. The seller's obligation includes all costs related to getting the goods to the port of shipment and freight charges up to the destination port. This term specifically delineates the distribution of responsibilities related to shipping and risk, which is crucial for international trade transactions. Understanding this division helps both parties in a transaction clearly identify their respective responsibilities and financial obligations.