ovrseasCFR: Cost and Freight
C-group rule · sea and inland waterway only · Incoterms® 2020
CFR (Cost and Freight) means the seller clears the goods for export and pays the sea freight to the named port of destination. Risk passes to the buyer once the goods are on board at the port of shipment — cost and risk split at different places.
- Risk passes
- When the goods are loaded on board at origin — even though the seller keeps paying to the destination.
- Main freight
- Paid by the seller
- Insurance
- Neither side is obliged to insure — agree who does
- Customs
- Export: Seller · Import: Buyer
Who pays what under CFR
| Export clearance | Seller |
|---|---|
| Carriage to port / terminal | Seller |
| Loading onto main carriage | Seller |
| Main carriage (freight) | Seller |
| Insurance | Neither obliged |
| Unloading at destination | Buyer Unless unloading is included in the seller’s carriage contract (liner terms, door-to-door rates) — then the seller pays it and cannot charge it on. |
| Import clearance | Buyer |
| Duties and import taxes | Buyer |
How to write CFR on your documents
The rule is only complete with its named place. The port of destination the seller pays freight to (risk still passes at the port of shipment).
CFR Rotterdam, Netherlands — Incoterms® 2020
Write it the same way on the quotation, the proforma, the commercial invoice and the shipping instructions — a different place on one document is a different deal.
Use CFR when
- Sea shipments of bulk or break-bulk where the seller has the better freight rate.
- The buyer arranges its own cargo insurance (CFR requires none).
Think twice when
- Containers — risk stays with the seller between handing the box to the terminal and loading. CPT fits better.
- The buyer assumes the freight-paying seller also carries the risk at sea — it does not. Say who insures.
Cost and risk split apart here. The seller pays freight for a voyage during which the buyer already carries the risk, and nobody is obliged to insure it.
Questions about CFR
- What does CFR mean in shipping?
- CFR (Cost and Freight) means the seller clears the goods for export and pays the sea freight to the named port of destination. Risk passes to the buyer once the goods are on board at the port of shipment — cost and risk split at different places.
- Where does risk pass under CFR?
- When the goods are loaded on board at origin — even though the seller keeps paying to the destination.
- Who pays the freight under CFR?
- The seller pays the main carriage — even though risk has already passed to the buyer at origin.
- Who pays import duties under CFR?
- The buyer. Import clearance, duties and taxes are the buyer’s under every rule except DDP.
- Can CFR be used for containers or air freight?
- CFR is written for sea and inland waterway transport. For containers the goods usually leave the seller at a terminal, so CPT normally fits better; for air it does not apply.
The documents where CFR is written
- Commercial invoice template
Customs and the buyer’s bank read the Incoterm here; it decides which costs belong in the invoice value.
- Proforma invoice template
The buyer opens a letter of credit or pays a deposit on these terms — the same rule must follow through.
- Quotation template
A price means nothing without its rule: «USD 12.50 FOB Busan» and «USD 12.50 DAP Dallas» are different offers.
Compare CFR with
Incoterms® is a registered trademark of the International Chamber of Commerce. This page is an independent summary of how costs and risk are allocated and is not affiliated with or endorsed by ICC. For contract drafting, use the official Incoterms® 2020 rules published by ICC.