CFR: Cost and Freight (Incoterms® 2020)
CFR (Cost and Freight) means 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. The seller does not have to insure them.
Quick facts
Where risk and costs pass from the seller to the buyer
SellerBuyer
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.
Seller and buyer obligations, article by article (A1–A10 / B1–B10)
Incoterms 2020 gives each side ten matching articles. Here they are in plain language; the ICC text and your contract decide.
| Seller (A) | Buyer (B) | |
|---|---|---|
| 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. | Pay the price as the contract requires. Documents may be paper or electronic if agreed or customary. |
| A2/B2 Delivery and taking delivery | Deliver by placing the goods on board the ship at the port of shipment, or procure goods so delivered. | Take delivery when the goods are on board, and receive them from the carrier at the named port of destination. |
| 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 from loading, so loss at sea is the buyer's risk. |
| A4/B4 Carriage | Contract or procure carriage on usual terms, by the usual route, in a ship of the type normally used, from the port of shipment to the named port of destination; meet transport-related security requirements. | No obligation to the seller. |
| A5/B5 Insurance | No obligation to insure. At the buyer's request, risk and cost, give the information the buyer needs to buy insurance. | No obligation to insure. The buyer bears the risk from delivery, so it usually buys cargo insurance for itself. |
| A6/B6 Delivery or transport document | Provide, at its cost, the usual transport document to the agreed port of destination. It must cover the goods, be dated within the shipment period, let the buyer claim the goods at destination and, unless agreed otherwise, sell them in transit; a negotiable bill of lading goes to the buyer as a full set of originals. | Accept the transport document if it conforms to the contract. |
| A7/B7 Export and import clearance | Carry out and pay for export clearance. Where applicable, help the buyer, at its request, risk and cost, with documents and information for transit and import clearance. | Carry out and pay for transit and import formalities. |
| A8/B8 Checking, packaging, marking | Pay for the checks (quality, measuring, weighing, counting) needed to deliver, and pack and mark the goods for the transport, unless the trade customarily ships them unpacked or the parties agreed specific packing. | No obligation to the seller. |
| 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 from delivery except those on the seller under the carriage contract, unloading at the port of destination including lighterage and wharfage unless the carriage contract puts them on the seller, and import duties and taxes. |
| A10/B10 Notices | Notify the buyer that the goods have been delivered, and give any notice the buyer needs to receive them. | If entitled to decide the shipping time or the point of receipt in the port of destination, give the seller sufficient notice. |
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
Guides on this topic
Common questions
What is the full form and meaning of CFR?
CFR stands for Cost and Freight, one of the 11 Incoterms® 2020 rules. Transport: Sea and inland waterway. Delivery and risk pass to the buyer: On board the ship at the port of shipment. Main freight paid by: Seller. Insurance: Not required. Export clearance: Seller. Import clearance and duties: Buyer.
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.
Who pays THC (terminal handling charges) under CFR?
The seller pays the carriage to the destination, but under Incoterms 2020 articles A9/B9 it pays unloading costs at destination only if they were for its account under its contract of carriage. Carriers and terminals often bill destination THC to the consignee, so state in the quote and contract who pays origin and destination THC.
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