All Incoterms 2020 rules

CFR Cost and Freight

The seller pays the freight to the destination port — but risk already passed when the goods were loaded.

Sea and inland waterway only

CFR is the first of the four rules where cost and risk part company. The seller clears the goods for export, loads them on board and pays the freight through to the named port of destination. Risk, however, passes to the buyer the moment the goods are on board at origin — so if the cargo is lost mid-ocean it is the buyer’s loss, on a voyage the seller paid for.

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Risk passes at
On board the vessel
Export clearance
Seller
Import duty & taxes
Buyer
Cargo insurance
Not required

The journey, stage by stage

Every stage of the shipment in order, and who pays for it.

  1. 1 Packing the goods for export Seller pays
  2. 2 Loading onto the collecting vehicle Seller pays
  3. 3 Inland carriage to the port or terminal Seller pays
  4. 4 Export customs formalities Seller pays
  5. 5 Terminal handling at origin Seller pays
  6. 6 Loading onto the main carrier Seller pays
  7. Risk passes to the buyer The moment the goods are on board the vessel at the port of shipment — not on arrival. The seller still pays for 1 more stage below this line.
  8. 7 The international freight Seller pays
  9. 8 Terminal handling at destination Whether discharge and terminal handling at destination are already inside the freight the seller booked depends on that contract of carriage. It is the most common double-billing dispute on the four C-rules, and the reason this cell is not a flat yes or no. Per contract
  10. 9 Import customs, duty and taxes Buyer pays
  11. 10 Inland carriage to the final destination Buyer pays
  12. 11 Unloading at the final destination Buyer pays

What the seller does

  • Pack the goods, clear them for export and load them on board.
  • Contract the carriage and pay the freight to the named port of destination.
  • Hand over the transport document that lets the buyer claim the goods there.

What the buyer does

  • Carry the risk from the moment the goods are on board at origin.
  • Pay discharge and terminal charges at destination unless the freight contract already covers them.
  • Clear the goods for import and pay duty and taxes.
  • Arrange its own insurance — nobody else has to.

Use it when

  • Bulk cargo where the seller has the better freight rate.
  • Buyers who want a landed-at-port price but will handle import themselves.

Watch out for

  • Two ports are named in a CFR contract — shipment and destination — and they do different jobs. Risk passes at the first; cost is paid to the second.
  • Who pays terminal handling at the destination port depends on the freight contract the seller signed. Say so in the sales contract or expect to be billed twice.

CFR is CIF without the insurance. If the goods are containerised, the equivalent any-mode rule is CPT.

Compare with

CIF Cost, Insurance and Freight FOB Free On Board CPT Carriage Paid To

Sources for this page

Every payer cell on these pages was checked against several published references, and the two cells those references disagree on are drawn as “per contract” rather than resolved by picking a side. This is a summary for orientation, not legal advice — the contract and the ICC text govern.

  1. Incoterms® 2020 International Chamber of Commerce

    The rules themselves. The authoritative text is ICC publication no. 723E, which is not free — this page is a summary of it, not a copy.

  2. Incoterms Wikipedia

    Risk transfer point, export and import clearance and the insurance clauses for each of the eleven rules; the 2010 to 2020 changes; what the rules do not cover.

Selling or buying on CFR terms? Follow the shipment from handover to arrival — whoever holds the number can track it.

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CFR FAQ

CFR is the first of the four rules where cost and risk part company. The seller clears the goods for export, loads them on board and pays the freight through to the named port of destination. Risk, however, passes to the buyer the moment the goods are on board at origin — so if the cargo is lost mid-ocean it is the buyer’s loss, on a voyage the seller paid for.

Risk passes to the buyer the moment the goods are on board the vessel at the port of shipment — not on arrival. The seller then goes on paying for the journey well past that point, which is what makes CFR easy to misread: paying for a leg and carrying the risk on it are two different things here.

The seller pays the freight through to the named port of destination. Export clearance is the seller’s and import duty and taxes are the buyer’s. Neither side is obliged to insure the cargo.

Whoever contracted the carriage holds the transport document, and its number is what a lookup needs. Enter a bill of lading, booking or container number in the container tracking app, an air waybill in the air cargo tracker, or make the same lookup one REST call with the API reference.

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