What is CFR?
Cost and Freight, or CFR is a legal, international trade term, which specifies in a contract, that the seller is required to arrange for the carriage of goods by sea to a port of destination and provide the buyer with the documents necessary to obtain them from the carrier. Thus, the seller is responsible for the carriage of goods to the named port of destination. CFR is a term used strictly for cargo transported by sea or inland waterways.
When is risk transferred to the buyer from the seller in CFR?
Risk is transferred to the buyer when the goods are loaded on board the ship in the country of export. The shipper is responsible for origin charges which may include export clearance, freight costs for carriage to named port, truck loading, etc. The shipper is not responsible for insurance or delivery to the final destination from the port (door).
When should CFR be used, as opposed to CIF and CPT?
If the buyer requires the seller to purchase insurance, the Incoterm CIF would apply. CFR should only be used for non-containerized ocean shipments and inland waterway transport. Incoterm CPT would apply to all other modes of transport.