CFR vs CIF (Incoterms 2020)
They are the same except for insurance. Under CIF the seller must also buy minimum ICC (C) insurance for 110% of the value; under CFR nobody has to.
Side by side
| CFR · Cost and Freight | CIF · Cost, Insurance and Freight | |
|---|---|---|
| Transport | Sea and inland waterway | Sea and inland waterway |
| Delivery and risk pass to the buyer | On board the ship at the port of shipment | On board the ship at the port of shipment |
| Main freight paid by | Seller | Seller |
| Insurance Different | Not required | Seller must insure: ICC (C), 110% of value |
| Export clearance | Seller | Seller |
| Import clearance and duties | Buyer | Buyer |
| Unloading at destination | Buyer | Buyer |
Where risk and costs pass from the seller to the buyer
SellerBuyer
Origin → Main carriage → Destination. Simplified diagram: the exact point is the named place written after the rule. The costs line shows who pays the main carriage and, under DDP, the import duties and taxes.
Seller's obligations compared (A1–A10)
| CFR | CIF | |
|---|---|---|
| A1/B1 General obligations | Provide the goods and the commercial invoice as the contract requires, plus any other proof of conformity it asks for. Documents may be paper or electronic if agreed or customary. | Provide the goods and the commercial invoice as the contract requires, plus any other proof of conformity it asks for. Documents may be paper or electronic if agreed or customary. |
| A3/B3 Transfer of risks | Bears all risk until the goods are on board, even though it pays freight to the destination port. | Bears all risk until the goods are on board. |
| A5/B5 Insurance | No obligation to insure. At the buyer's request, risk and cost, give the information the buyer needs to buy insurance. | Buy cargo insurance at its own cost covering at least Institute Cargo Clauses (C), for at least 110% of the contract price in the contract currency, from delivery to at least the named port of destination, and give the buyer the policy or certificate. At the buyer's request and cost, add wider cover such as Clauses (A) or (B), war or strikes cover, if available. |
| A9/B9 Allocation of costs | Pay all costs until the goods are on board, the loading and sea freight, any unloading at the port of discharge and transit costs that the carriage contract puts on the seller, the transport document and export clearance. | Pay all costs until the goods are on board, the loading and sea freight, the insurance premium, any unloading at the port of discharge and transit costs that the carriage contract puts on the seller, the transport document and export clearance. |
When to use each rule
CFR
CFR suits sea shipments of bulk commodities and general cargo when the seller can get better freight rates than the buyer. For containers, CPT is the any-mode equivalent the ICC recommends.
CIF
CIF is common for commodities and for sales paid by letter of credit, where the bank wants to see an insurance document. It is for sea and inland waterway only; for containers the ICC recommends CIP.
Compare other rules
A plain-language summary of Incoterms® 2020 for everyday use. The full rules are published by the International Chamber of Commerce (ICC), and your contract wording decides. Incoterms® is a registered trademark of the ICC.
Guides on this topic
Common questions
Who insures the goods under CFR?
No one is obliged to. Because the buyer carries the risk from loading, the buyer usually arranges cargo insurance.
What insurance does CIF require?
Cargo insurance on at least Institute Cargo Clauses (C) terms for 110% of the contract value, in the contract currency, covering the goods from delivery to at least the port of destination.
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