CFR: Cost and Freight (Incoterms® 2020)
Under CFR the seller pays the sea freight to the named port of destination, but risk passes to the buyer when the goods are loaded on board at the port of shipment.
Quick facts
How to write it
CFR + the named port of destination + Incoterms 2020, for example: CFR Chittagong Incoterms 2020.
What the seller does
- Clears the goods for export.
- Contracts and pays sea freight to the named port of destination.
- Loads the goods on board, which is when delivery and risk pass.
- Gives the buyer the bill of lading so it can claim the goods.
What the buyer does
- Takes the risk once the goods are on board at the port of shipment.
- Insures the goods at sea if it wants cover; it is not required.
- Pays unloading and destination charges not included in the freight.
- Clears the goods for import and pays duties and taxes.
When to use it
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.
Common mistakes
- The buyer assuming the seller carries the risk at sea. It does not, so the buyer should insure.
- Using CFR for containers handed over at a terminal. Consider CPT.
- Disputes over destination terminal charges. Agree which charges the freight includes.
CFR vs CIF
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.
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.
All 11 Incoterms 2020 rules
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.
Is CFR the same as C&F or CNF?
Yes, C&F and CNF are old informal names for the same idea, but only "CFR" is the official Incoterms code. Write CFR with the port and the edition.