CFR Incoterm (Cost and Freight)

What is the CFR Incoterm?

The CFR Incoterm or “Cost and Freight” is an incoterm that is exclusive to maritime shipping. It states that the seller is not only responsible for delivering the goods to the port specified by the buyer, but also bears the transportation costs of the goods to the destination port.

However, insurance costs are the responsibility of the buyer. Unlike many other Incoterms, the risk transfer point differs from the cost transfer point. Under the CFR Incoterm, the risk is transferred when the goods are loaded on board the shipping vessel at origin.

The CFR Incoterm should be used in situations where the seller has direct access to the vessel.

Seller’s obligations under the CFR Incoterm

• Delivery of goods and documents required

• Packaging and wrapping

• Inland transport in the country of origin

• Customs at origin

• Exit charge

• International freight

Buyer’s obligations under the CFR Incoterm

• Payment of the goods

• Insurance

• Arrival expenditures

• Customs on arrival

• Inland transport at the destination country

• Payment of fees