What is Shipping Term FOB, CNF, CIF and Difference B/w FCL / LCL

Last Updated: April 2, 2019
Category: Export

  • What does FOB mean in a shipping term? & What is mean by FOB price?
  • What is the difference between CIF and CNF in shipping terms?
  • What is the difference between FCL and LCL?
What is Shipping Term FOB, C&F, CIF And Difference B/w FCL / LCL

In order to find Out the answers of these questions read Below: 

1. FOB (Free On Board):

FOB means Free On Board Or Freight On Board. FOB origin indicates that consignee owns the goods in transit; The cost of movement of goods on board of Airlines or on board of ship is borne by the seller. Rest of all expenses to arrive the goods at the buyer’s premise has to be met by the buyer.

FOB Price
Free on board(freight on board) price means a price which includes goods plus the services of loading those goods onto some vehicle or vessel at a named location, sometimes put in parentheses after the f.o.b.

2. CIF And CNF Shipping Terms:

  • CIF Shipping Term:  Under CIF terms of delivery in export business, Cost Insurance and Freight included in the selling cost of goods. In Short, all delivery expenses up to a predetermined destination is borne by the Seller (Exporter).
  • CNF Shipping Term:  The term CNF or CFR ( Cost and Freight shipping terms) mean seller pay for the freight and cost to the destination port. It means that the seller pays for transportation to the Port of Loading (POL).

Let’s have a look on below example to understand the C&F terms of delivery Clearly.

Let suppose you are a garments seller situated in Pakistan. The buyer is situated in Los Angeles. You are the seller of goods and you have contracted with the buyer and agreed to sell the goods on C&F Los Angeles price of  USD 56,000. Here the selling cost of goods is USD 56,000 C&F Los Angeles. Here the seller(exporter) arrange to carry the goods to port and meet all expenses including customs clearance and pays the ocean freight or airfreight up to Los Angeles. In this case, the seller decides the shipping company or airlines to move goods from Karachi to Los Angeles, as he is paying the freight of consignment. In other words, all delivery expenses up to Los Angeles is borne by the seller. The buyer takes delivery of cargo after customs clearance in Los Angeles at his own cost. Insurance of the goods is met by the buyer in case of C&F transaction.

3. FCL and LCL Difference:

  • FCL (Full Container-Load): An ocean-shipping and inter-modal industry term; a full container(Twenty or Forty-Foot) load shipment is when a shipper contracts for the transportation of an entire container. The vast majority of inter-modal and ocean freight is contracted in this manner. Historically, FCL also stands for full carload which is the primary business of all modern railroads and is the railroad equivalent of TL trucking.
  • LCL (Less-Than-Container Load): An ocean-shipping and intermodal industry term; LTL equivalent in container shipping. Container freight stations at ports serve as consolidation and deconsolidation terminals. Historically, LCL also stands for less-than-carload. Before the prominence of interstate trucking, railroads offered less-than-carload (LCL) service but this business has largely disappeared.

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