CFR Incoterms 2020 — Cost and Freight
The seller pays freight to the destination port, but you carry the risk from origin.
CFR
Cost and Freight
Sea & inland waterway onlyWhat it means for the buyer
The seller pays freight to the destination port, but you carry the risk from origin.
Supply chain & cost split
SellerBuyer
- 1Export packagingS
- 2Loading at originS
- 3Pre-carriageS
- 4Export clearanceS
- 5Origin terminal (THC)S
- 6Main carriageS
- 7InsuranceB
- 8Destination terminal (THC)B
- 9Import clearanceB
- 10Delivery & unloadingB
Seller paysBuyer paysRisk passes to buyerSeller's paid carriage ends here
Where the risk transfers
On board the vessel at the port of shipment — the seller pays freight to destination, but risk has already passed to the buyer.
Cost ≠ risk — read this
CFR is a C-term: the seller books and pays the main carriage all the way to destination, but the risk of loss or damage transfers to the buyer much earlier — at origin. If the cargo is damaged in transit, it is the buyer's loss even though the seller arranged the freight. Insure the journey accordingly.
Who pays for what
| Supply-chain stage | Who pays |
|---|---|
| Export packagingPacking and marking the goods for international transport. | Seller |
| Loading at originLoading the goods onto the first vehicle at the seller's premises. | Seller |
| Pre-carriageInland transport to the terminal or port of departure. | Seller |
| Export clearanceExport customs formalities and duties in the origin country. | Seller |
| Origin terminal (THC)Terminal handling charges at the port or terminal of departure. | Seller |
| Main carriageThe main international leg — ocean freight or air / road carriage. | Seller |
| InsuranceCargo insurance covering the main carriage. | Buyer |
| Destination terminal (THC)Terminal handling charges at the arrival port or terminal. | Buyer |
| Import clearanceImport customs clearance, duties and taxes at destination. | Buyer |
| Delivery & unloadingOnward delivery to the final point and unloading. | Buyer |
Frequently asked questions
- Who pays for the main freight under CFR?
- Under CFR (Cost and Freight) the seller books and pays the main carriage to the agreed destination.
- When does risk transfer under CFR?
- On board the vessel at the port of shipment — the seller pays freight to destination, but risk has already passed to the buyer.
- Is CFR suitable for air or container shipments?
- No. CFR is written for sea and inland-waterway transport only. For containerised or air freight use FCA, CPT or CIP instead.
Shipping under CFR? Line up your fulfillment.
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