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
Seller’s obligations under CFR
Cost of the goods
Customs upon arrival
Inland transportation in the destination country
Payment of fees