Under CFR the seller pays the ocean freight to the named destination port, but the risk passes to the buyer once the goods are on board at the port of shipment.
CFR Cost and Freight
Sea and inland waterway only
| Step | CFR |
|---|---|
| Export packing and marking | Seller |
| Loading at the seller's premises | Seller |
| Export customs clearance | Seller |
| Transport to the port or terminal | Seller |
| Terminal charges and loading at origin | SellerRisk passes to the buyer here |
| Main carriage (ocean or air freight) | Seller |
| Cargo insurance | Not required by the rule |
| Unloading at destination terminal | Buyer, unless in the freight contract |
| Transport to the named place | Buyer |
| Unloading at the named place | Buyer |
| Import clearance, duties and taxes | Buyer |
CFR (Cost and Freight) means the seller delivers the goods on board the vessel at the port of shipment and pays the freight to the named port of destination. Risk passes to the buyer when the goods are on board, at origin, even though the seller has paid the voyage. CFR is a sea and inland waterway rule. It is sometimes written C&F or CNF in older contracts.
CFR splits cost and risk at two different places:
So if the ship sinks, the buyer bears the loss, even though the seller booked and paid the freight. The buyer needs its own cargo insurance from the port of shipment.
| Seller | Buyer |
|---|---|
| Books and pays the sea freight to the named destination port | Bears the risk from on board at the port of shipment |
| Loads the goods on board and clears export | Insures the cargo if it wants cover (no obligation either way) |
| Gives the buyer the transport document, usually a bill of lading | Pays unloading at destination, unless the freight contract includes it |
| Tells the buyer the goods are shipped | Clears import and pays duties and taxes |
An Indian rice exporter sells "CFR Jebel Ali, UAE, Incoterms® 2020". The exporter books the ship from Mundra and pays the freight. Once the bags are on board in Mundra, they are the buyer's risk. The buyer in Dubai insures the shipment, receives the bill of lading, pays the destination charges and clears import.
The only difference is insurance. Under CIF the seller must also buy cargo insurance for the buyer's benefit. Under CFR nobody has to insure, so the buyer should arrange cover from the port of shipment. Buyers in some countries prefer CFR because they must or want to insure with local insurers.
For container shipments the ICC recommends CPT, the any mode version of CFR. Under CPT risk passes when the container is handed to the first carrier at the terminal, which reflects when the seller actually loses control of it.
Whatever the rule, the seller provides a commercial invoice that names the Incoterm and place, and usually a packing list. For quotes before the order, use a proforma invoice with the same rule written on it.
CFR means Cost and Freight. The seller pays the sea freight to the named destination port, but risk passes to the buyer once the goods are on board at the port of shipment.
Nobody is obliged to. Because the buyer bears the risk from loading, the buyer usually buys cargo insurance. Under CIF the seller must insure.
Yes. C&F and CNF are older, informal ways of writing Cost and Freight. The official Incoterms code is CFR.
The buyer, unless the seller's freight contract includes them. If the seller has paid unloading costs under its contract of carriage, it cannot charge them to the buyer unless agreed.
It is often used, but the ICC recommends CPT for containers, because risk then passes when the container is handed to the carrier at the terminal.