Cost And Freight (Cfr)

Cost and Freight (CFR) Cost and Freight (CFR) is an Incoterm used in international sales contracts for goods transported by sea or inland waterways. It defines which party is responsible for arranging and paying for carriage, and when the risk of loss or damage passes from the seller to the buyer. How CFR works
* Seller obligations
* Arrange and pay for transport of the goods to the named port of destination.
* Deliver the goods, clear them for export, and load them onto the vessel.
* Provide the buyer with the transport documents needed to take possession at destination.
* Buyer obligations
* Bear the risk of loss or damage once the goods are loaded on board the vessel at the port of shipment.
* Arrange and pay for marine insurance (if desired), unloading, import clearance, duties, and onward transport from the destination port.
* Scope
* CFR applies only to sea and inland waterway transport.
* When CFR appears in a contract, its rules create binding legal obligations between buyer and seller.
Key points
* CFR requires the seller to pay the costs of carriage to the destination port but does not require the seller to insure the goods during transit.
* Risk transfers from seller to buyer when the goods are placed on board the vessel at the port of shipment.
* CFR is distinct from CIF (Cost, Insurance, and Freight), where the seller must also procure and pay for marine insurance.
Similar Incoterms
* Free Alongside Ship (FAS) — seller’s responsibility ends when goods are delivered alongside the vessel; buyer bears loading risk and costs from that point.
* Free On Board (FOB) — seller must load goods onto the vessel; risk transfers once goods are on board.
* Cost, Insurance, and Freight (CIF) — like CFR but the seller must procure and pay for minimum marine insurance until arrival at the destination port.
Practical implications
* Sellers handle export logistics and freight booking, which simplifies the buyer’s procurement process.
* Buyers should arrange marine insurance and plan for import formalities, port handling, and inland transport from the destination port.
* Clearly specifying the named port of destination and the precise Incoterm version in the contract reduces disputes.
Bottom line CFR balances responsibilities: the seller pays for carriage to the destination port and handles export and loading, while the buyer assumes the transit risk from the moment the goods are loaded on board and must arrange insurance and all costs beyond the arrival port. Use CFR only for sea or inland waterway shipments and specify the named destination port to ensure clarity. Explore More Resources