CFRCost and Freight
CFR (Cost and Freight) means the seller pays the sea freight to the named port of destination, but risk passes to the buyer as soon as the goods are on board at the port of shipment. The seller has no duty to insure. It is for sea and inland waterway only.
Where CFR hands over
The orange marker is where risk passes to the buyer. Blue bars are the seller's, yellow the buyer's.
CFR at a glance
- Transport
- Sea and waterwayNot for containers handed over at a terminal
- Risk passes
- On board vessel
- Main carriage
- Seller paysand arranges the contract
- Insurance
- No obligationthe party at risk usually insures
- Delivery point
- On board the vessel at the port of shipment, although the seller pays freight to the destination port.
| Job | Who |
|---|---|
| Export clearance | Seller |
| Loading at origin | Seller |
| Main carriage | Seller |
| Insurance | No obligation |
| Unloading at destination | Buyer, unless in seller's freight contract |
| Import clearance and duties | Buyer |
When to use CFR
Use CFR when
- The seller can buy sea freight more cheaply than the buyer
- The buyer insures the voyage under its own policy
- Non-containerised sea cargo
Avoid CFR when
- Containers (use CPT)
- The buyer expects the seller to carry the voyage risk
- Destination charges are not settled in the freight contract
Common CFR mistakes
The cost point (destination port) and the risk point (on board at origin) are different places. The buyer carries the risk of the whole sea voyage on a ship the seller chose, so the buyer should insure.
Unloading and terminal charges at destination are the buyer's unless the seller's freight contract includes them, which causes frequent disputes.
As with FOB, CPT is the better rule for containerised goods.
CFR beside its neighbours
CIF is CFR plus insurance arranged by the seller for the buyer's benefit. Read about CIF.
All eleven rules
Incoterms® is a registered trademark of the International Chamber of Commerce (ICC). CartonMath is not affiliated with or endorsed by the ICC. This is a plain-language summary; the full rules are published by the ICC and the contract wording governs.
Common questions
What does CFR mean?
CFR (Cost and Freight) means the seller pays the sea freight to the named port of destination, but risk passes to the buyer as soon as the goods are on board at the port of shipment. The seller has no duty to insure. It is for sea and inland waterway only.
When does risk pass under CFR?
On board the vessel at the port of shipment, although the seller pays freight to the destination port.
Who pays the main freight under CFR?
The seller arranges and pays the main carriage.
Who pays import duties under CFR?
The buyer clears the goods for import and pays any duties and taxes under CFR.
Can CFR be used for container shipments?
CFR is a sea and inland waterway rule. For containers, the ICC recommends CPT instead, because containers are handed over at a terminal before loading.