CFR

CFR (Cost and Freight) is one of the four sea-and-inland-waterway-only Incoterms. The seller contracts and pays for ocean freight to the named destination port, but risk transfers from seller to buyer when the goods are on board the vessel at the port of shipment — the same risk transfer point as FOB.

Under CFR, the seller must:

• Contract and pay for ocean carriage to the named destination port
• Deliver the goods on board the vessel at the port of shipment
• Handle export clearance
• Provide the buyer with the transport document (typically an on-board bill of lading)

Under CFR, the buyer must:

• Bear the risk of loss from the moment the goods are on board the vessel at origin (despite the seller paying freight)
• Arrange cargo insurance (CFR does not require seller insurance — that's CIF)
• Pay unloading charges at the destination port (unless included in the freight contract)
• Handle import clearance and pay duties at destination

The split between cost and risk under CFR is identical to CPT — the seller pays freight to destination, but risk transfers earlier. This frequently catches buyers off guard: if cargo is damaged in mid-voyage and the buyer hasn't arranged its own insurance, the buyer bears the loss despite not having paid the freight.

For high-value or fragile cargo, buyers often prefer CIF (which obligates the seller to procure marine insurance) or CIP (the multimodal equivalent with all-risks cover under Incoterms 2020). CFR is most appropriate when the buyer has strong insurance arrangements of its own.