International shipments get a little more complicated than domestic shipments. There are certain terms used to outline the cost the supplier or buyer pays regarding shipments.
If you see the three letters CNF together, with regards to shipping, the acronym stands for “Cost Net Freight.” It’s a shipping agreement where the seller pays for delivering the item to the port closest to the buyer, but it doesn’t include the cost of insurance. Therefore, the buyer must pay for the insurance from its point of origin to its final destination. If you see CIF, that’s like CNF but requires the seller to purchase insurance for shipping the item to the destination port.
Other shipping terms include FOB and EXW.
FOB stands for “Free on Board” or “Freight on Board.” This includes the cost of delivering items to the nearest port but then the buyer is responsible for shipping the rest of the way. EXW is known as “Ex-Works” or “the Ex-Factory price” and refers to just the cost of the product and nothing else. Therefore no shipping costs or export fees are included in this price.
When companies import items from other countries, they not only pay shipping fees, but also have to deal with things like import duties, docking charges and even fuel surcharges. There may also be warehouse storage fees involved, a customs clearance fee, or a “value added tax.” So, besides the CNF price, there are many other costs to importing products as you can see.
The United States exports and imports several trillion dollars of goods each year, and many of these goods go through the country’s seaports. The top 10 port complexes in the U.S. include Miami, Houston, and Los Angeles. Interestingly, Laredo, Texas makes the top 10, too, though it’s not a place the average American would think of as an international shipping powerhouse.