Watch: CFR Incoterms Explained
CFR means Cost and Freight. Under CFR, the seller clears the goods for export, loads them aboard the vessel and pays for transportation to the named destination port.
Although the seller pays the ocean-freight cost, cargo risk transfers to the buyer when the goods are aboard the vessel at the origin port.
Video Transcript
“What does CFR mean in international shipping?
This 30-second guide explains Cost and Freight under Incoterms® 2020, including the seller’s transportation obligations and the point where cargo risk transfers to the buyer.
Under CFR, the seller clears the goods for export, loads them aboard the vessel and pays for ocean freight to the named destination port.
However, risk transfers to the buyer once the goods are aboard the vessel at the origin port—not when they reach the destination.
The buyer handles import clearance, pays applicable duties and taxes, and covers unloading costs not included in the seller’s carriage contract.
Unlike CIF, CFR does not require the seller to obtain cargo insurance.
CFR applies only to sea and inland waterway transport.
Always identify the named destination port and agreed port of shipment in the sales contract.”
How CFR Divides Costs and Risk
The seller completes export clearance, delivers the goods aboard the vessel and pays the agreed freight charges to the named destination port.
The buyer assumes cargo risk once the goods are aboard the vessel at the port of shipment. The buyer also handles import customs clearance, applicable duties and taxes, and unloading expenses that are not included in the seller’s transportation contract.
Neither party is required by CFR to arrange cargo insurance. The buyer should therefore consider obtaining suitable coverage from the point where risk transfers.
Read the complete CFR Incoterm guide for detailed information about transportation costs, customs responsibilities and risk transfer.
You can also explore all Incoterms® to compare CFR with CIF, FOB and other international trade rules.
Incoterms® is a registered trademark of the International Chamber of Commerce.
