CFR vs CIF: Incoterms 2020 Compared
CFR vs CIF under Incoterms 2020: same freight and risk point, but CIF adds seller-bought ICC (C) marine insurance at 110%.
Quick Answer: CFR vs CIF
What CFR and CIF have in common
Both rules are for sea and inland waterway transport only. The seller clears export, loads the goods on board and pays freight to the destination port. Risk passes on board at the port of loading, so the buyer carries the sea risk even though the seller has paid the freight.
What CIF adds
Under CIF the seller must buy marine cover for the buyer's benefit, at least ICC (C), which covers named perils only (fire, sinking, collision, general average). It does not cover theft or water damage. Buyers of high-value cargo should ask for ICC (A) in the contract. Under a letter of credit the insurance document must be dated no later than the shipment date (UCP 600 Article 28(e)).
Containers: use CPT or CIP
The ICC advises against CFR and CIF for containers, because the seller hands the box to the carrier at a terminal days before loading. Use CPT or CIP instead so risk passes at handover. CFR and CIF remain standard for bulk commodities such as coal, grain and ore.
At a glance
| Point | CFR | CIF |
|---|---|---|
| Transport mode | Sea and inland waterway | Sea and inland waterway |
| Seller pays ocean freight | Yes | Yes |
| Risk passes | On board at loading port | On board at loading port |
| Seller must insure | No | Yes, ICC (C), 110% |
| LC insurance document | Not required | Required |
| Import clearance and duty | Buyer | Buyer |
Worked example
A cargo of 50,000 MT of coal at USD 110/MT FOB with freight of USD 18/MT gives a CFR price of USD 128/MT, or USD 6,400,000. For CIF the seller insures 110% of USD 6,400,000, which is USD 7,040,000; at an indicative premium of 0.05% that adds USD 3,520, about USD 0.07/MT.
Frequently asked questions
Who pays insurance under CFR?
No one is obliged to. The buyer carries the risk from loading, so it normally buys its own cover from the port of loading.
What insurance does CIF require?
At least Institute Cargo Clauses (C) for 110% of the contract price, unless the contract asks for more.
Is CIF good for letters of credit?
Yes. CIF gives the classic LC set: commercial invoice, on-board bill of lading and insurance certificate.
Frequently asked questions
Who pays insurance under CFR?#
No one is obliged to. The buyer carries the risk from loading, so it normally buys its own cover from the port of loading.
What insurance does CIF require?#
At least Institute Cargo Clauses (C) for 110% of the contract price, unless the contract asks for more.
Is CIF good for letters of credit?#
Yes. CIF gives the classic LC set: commercial invoice, on-board bill of lading and insurance certificate.