CFR (Cost and Freight)
Maritime Incoterm whereby the seller pays freight to the destination port, but risk transfers to the buyer once goods are placed on board the vessel at the port of shipment.
Definition and Principle
CFR (Cost and Freight) is a Group C Incoterm exclusively for sea or inland waterway transport. The seller contracts for sea carriage and pays freight to the named port of destination. However, risk transfers to the buyer once the goods are placed on board the vessel at the port of shipment.
Dissociation of Risk and Cost
Like all Group C Incoterms, CFR features a dissociation:
- Risk transfer: when goods are placed on board at the port of shipment
- Cost transfer: at the named port of destination
The seller pays for sea transport but no longer bears risk once goods are on board.
Seller's Obligations
- Clear the goods for export
- Load the goods on board the vessel
- Contract for carriage and pay sea freight to the destination port
- Provide transport documents to the buyer
Insurance
The seller is not obliged to procure insurance for the buyer's account. The buyer must arrange their own insurance if desired. If the buyer wants the seller to insure the goods, they should opt for CIF.
Practical Usage
CFR is commonly used in commodity and bulk cargo trade by sea. Like FOB, it is not recommended for containerised transport (prefer CPT).