CFR

What Is CFR (Cost and Freight) in Incoterms® 2020?

CFR (Cost and Freight) is a key term under the Incoterms® 2020 rules, issued by the International Chamber of Commerce (ICC), and is commonly used in international sea and inland waterway transport. Under the CFR rule, the seller is responsible for arranging and paying the costs of transporting goods to the port of destination. However, the risk transfers to the buyer as soon as the goods are loaded onboard the vessel at the port of shipment. Unlike CIP or CIF, the seller is not required to provide insurance for the goods during transit.

Seller’s Responsibilities

• Delivery of Goods: Deliver goods and load them on board the vessel at the port of shipment, at the agreed time and in line with contract specifications.
• Export Packaging: Properly pack the goods suitable for international transportation.
• Export Clearance: Obtain all necessary export licences and complete export customs formalities.
• Origin Charges: Bear costs related to export packing, handling, and loading at the origin port.
• Main Carriage (Freight): Arrange and pay for carriage of the goods to the named port of destination.
• Documentation: Provide the buyer with the commercial invoice and the standard transport document (such as bill of lading) for claiming goods.
• Notification: Notify the buyer that the goods have been delivered onboard.
• No Insurance Obligation: Seller does not have to provide or pay for marine insurance.

Buyer’s Responsibilities

• Import Formalities: Handle import customs clearance at destination and pay all applicable duties, taxes, and fees.
• Unloading Charges: Bear costs of unloading the goods from the vessel at the destination port, unless agreed otherwise.
• Onward Transport: Arrange and pay for delivery from the port of destination to the final destination/warehouse.
• Insurance: Procure insurance cover for the goods if desired, as the risk transfers at the port of shipment.
• Risk: Assume all risks of loss or damage to the goods from the moment they are placed onboard the vessel at the port of shipment.

CFR Responsibilities Table

Key Notes

• Risk vs. Cost Split: Under CFR, the seller pays transport to the destination port, but the risk shifts to the buyer once goods are loaded on board at the port of origin.
• Best for bulk sea shipments: Ideal for bulk cargo, raw materials, or goods traditionally shipped by sea. Not suitable for containerized cargo – CPT or FOB/FCA may be more appropriate for those.
• Insurance is buyer’s responsibility: Unlike CIF, seller does not cover insurance.

Incoterms 2020: Core Points Comparison Table

Term	Applicable Mode of Transport	Point of Risk Transfer	Seller's Responsibility	Buyer's Responsibility
EXW	Any mode	Upon delivery at seller’s premises	Only makes goods available; not responsible for transportation, clearance, or insurance	Responsible for all transportation, clearance, insurance costs, and risks
FCA	Any mode	Upon delivery to the carrier	Handles export clearance, delivers goods to carrier	Arranges transportation, pays all subsequent charges, assumes risk
CPT	Any mode	Upon delivery to the first carrier	Pays carriage to named destination, handles export clearance	Responsible for unloading at destination, import clearance, insurance costs, and risks
CIP	Any mode	Upon delivery to the first carrier	Pays carriage and insurance to named destination, handles export clearance	Responsible for unloading at destination, import clearance, assumes remaining risks
DAP	Any mode	Upon delivery at destination (not unloaded)	Bears costs and risks to the named destination, not responsible for unloading	Responsible for unloading, import clearance, and all related costs and risks
DPU	Any mode	After unloading at destination	Bears costs and risks for transportation and unloading at destination	Responsible for import clearance costs and risks
DDP	Any mode	Upon delivery at destination (duty paid)	Bears all costs (including import duties and taxes) and risks	Only needs to receive the goods
FOB	Sea / Inland waterway	When goods are loaded on board the vessel	Handles export clearance, pays loading charges	Arranges main carriage, pays freight and insurance, assumes risk post-loading
CFR	Sea / Inland waterway	When goods are loaded on board the vessel	Pays carriage to port of destination, handles export clearance	Handles insurance, import clearance, assumes risk after loading
CIF	Sea / Inland waterway	When goods are loaded on board the vessel	Pays carriage and insurance to destination port, handles export clearance	Responsible for import clearance, assumes risk after loading

Source: ICC Incoterms® 2020 – CFR Rule