CFR — Cost and Freight

Mode of transport

Sea and inland waterway only

Definition

The seller delivers the goods on board the vessel and pays the freight to the named port of destination. Risk passes on board at the port of shipment while costs run to destination.

Delivery point

On board the vessel at the port of shipment.

Risk transfer

On board at the port of shipment — not at the destination port.

Seller costs

• Export clearance, origin handling, loading
• Ocean freight to the named destination port

Buyer costs

• Insurance
• Discharge and destination terminal charges not included in freight
• Import clearance, duties and inland delivery

Insurance

No obligation; the buyer carries transit risk and should insure.

Export formalities

Seller's responsibility.

Import formalities

Buyer's responsibility.

Documents

• Commercial invoice, packing list
• On-board bill of lading to the destination port
• Certificate of origin and inspection documents

Best use cases

Commodity sales by sea where the seller has better freight rates but does not want to insure.

Common mistakes

• Thinking CFR means delivery at destination
• Not clarifying discharge and THC allocation
• Using CFR for containers instead of CPT

Practical example

CFR Mumbai, Incoterms® 2020.