CFR
Cost and FreightCFR
Incoterms 2020
Sea / inland waterway
When goods pass the ship's rail at port of shipment (NOT at destination)
Cost responsibility
Seller pays freight to destination port. Risk transfers at loading port.
Seller obligations
- S1Export clearance
- S2Main sea freight to destination port
- S3Loading onto vessel
Buyer obligations
- B1Insurance (seller does NOT insure under CFR)
- B2Import clearance
- B3Import duties and taxes
- B4Unloading at destination
When to use CFR
When the seller arranges and pays for sea freight but doesn't want destination risk. Common in commodity trades where the seller has freight contracts.
When NOT to use CFR
When insurance should be included (use CIF). Multi-modal transport (use CPT). When buyer wants control over shipping line selection.
Common mistakes with CFR
- !Buyer assuming they're covered for loss during transit — CFR has no insurance obligation on the seller
- !Confusing the cost point (destination) with the risk point (loading port)