CFR or “Cost and Freight” is an Incoterm exclusive to shipping. It states that the seller is responsible for not only delivering the goods to the port specified by the buyer, but also for the cost of transporting the goods to the destination port. However, insurance costs are the responsibility of the buyer. Unlike other Incoterms, here the risk transfer is not at the same point as the cost transfer, with CFR the risk transfer is made at the time that the goods have been loaded onto the ship at its place of origin.
If the point of risk exchange is not specified when the cargo crosses the ship’s rails, then the CPT Incotermshould be used instead.
Buyer’s obligations under CFR
- Delivery of goods and documents required
- Packaging and wrapping
- Inland transportation in the country of origin
- Customs at country of origin
- Exit charge
- International freight
Seller’s obligations under CFR
- Cost of the goods
- Arrival expenditures
- Customs upon arrival
- Inland transportation in the destination country
- Payment of fees