Trade & Incoterms
CFR (Cost and Freight)
An Incoterm where the seller pays costs and freight to bring goods to the named port of destination. Risk transfers when goods are on board at the port of shipment. Insurance is the buyer responsibility unless agreed otherwise.
In depth
CFR is a sea and inland waterway rule in which the seller contracts and pays for carriage to the named port of destination but does not insure the cargo. The critical feature is that cost and risk split at different points: the seller pays freight all the way to destination, yet risk transfers to the buyer as soon as the goods are on board at the port of shipment. A buyer under CFR who does not arrange their own marine insurance is uncovered for the entire ocean leg despite not having paid for it. CFR is CIF without the insurance obligation, and like FOB it is unsuitable for containerised cargo, where CPT is the correct equivalent.
Key points
- Seller pays freight to destination; risk passes at origin on loading
- No insurance obligation on either party — the buyer should arrange cover
- Sea and inland waterway only; use CPT for containers
- Cost and risk transfer points deliberately differ