CFR - Cost and Freight
CFR (Cost and Freight) is one of the 11 rules published by the ICC in Incoterms® 2020. Risk passes on board vessel at port of loading (same as FOB). Neither party must arrange insurance for the other under CFR.
ICC has started work on Incoterms 2030; Incoterms 2020 remains current.
CFR defines where the seller delivers and how seller and buyer divide transport responsibilities, costs and transit risk. Use it with a precise named place or port and the words Incoterms 2020. The rule does not replace the sale contract, determine ownership or establish payment terms.
Risk transfer point
On board vessel at port of loading (same as FOB)
Who does what under CFR
| Obligation | Party |
|---|---|
| Export Packaging | Seller |
| Inland Transport (Origin) | Seller |
| Export Clearance | Seller |
| Loading on Vessel | Seller |
| Main Carriage (Freight) | Seller |
| Insurance | Buyer |
| Destination Charges | Buyer |
| Import Clearance | Buyer |
| Import Duty | Buyer |
A1 to A10 / B1 to B10 obligations
Practical summary, not a reproduction of the ICC rule text. A identifies seller obligations; B identifies buyer obligations. Read the full rule for exceptions, assistance duties and notice consequences.
| Article | Seller (A) | Buyer (B) |
|---|---|---|
| A1/B1 General obligations | Supply conforming goods and commercial invoice. | Pay the price agreed in the sale contract. |
| A2/B2 Delivery / taking delivery | On board vessel at port of loading (same as FOB) | Take delivery when the seller delivers under A2. |
| A3/B3 Transfer of risks | Bear loss or damage until delivery under A2, subject to the rule's exceptions. | Bear loss or damage after delivery; failure to give required notices can shift risk earlier. |
| A4/B4 Carriage | Contract carriage to the named destination. | No obligation to contract main carriage. |
| A5/B5 Insurance | No obligation to insure for the buyer; provide required assistance. | No obligation to insure for the seller; supply requested information where required. |
| A6/B6 Delivery / transport document | Provide the delivery evidence or transport document required by this rule. | Accept compliant delivery evidence; assist where the rule requires. |
| A7/B7 Export / import clearance | Handle export formalities; assist with transit/import information. | Handle transit and import formalities. |
| A8/B8 Checking / packaging / marking | Pay checking costs necessary for delivery; suitably package and mark goods unless normally transported unpackaged. | No corresponding packaging obligation to the seller. |
| A9/B9 Allocation of costs | Pay allocated costs through delivery and any carriage/insurance expressly required by the rule. | Pay allocated costs after delivery, subject to costs expressly allocated to the seller. |
| A10/B10 Notices | Give notices needed for the buyer to take delivery. | Give timely notices where entitled to determine shipment time, destination or delivery point. |
Documents to arrange
- Commercial invoice and contract-compliant evidence that the goods conform.
- Transport or delivery document appropriate to the route, such as a bill of lading, air waybill or multimodal document.
- Export/import declarations, origin evidence and permits where legally required, supplied by the responsible party or with the assistance required by the rule.
A packing list or origin certificate may be required by the contract, bank or customs authority; not every such document is automatically required by every Incoterms rule.
Letter of credit suitability
An LC can be used if the required documents match the seller's delivery and transport responsibilities. Do not require documents the seller cannot obtain; agree carrier cooperation and presentation deadlines before shipment.
Incoterms do not govern bank acceptance. A credit subject to UCP 600 has its own documentary requirements; the issuing bank and beneficiary should align these with the sale contract.
Illustrative numeric example: CFR
Assume the agreed CFR contract price is USD 10,000 and a separate buyer-side service costs USD 200, outside the seller's obligations. The buyer's budget is USD 10,200 before any other buyer-allocated costs. These assumed figures illustrate budgeting, not market freight or tax rates. Paying that service does not change the delivery point: risk transfers on board vessel at port of loading (same as fob).
Frequently asked questions
Where does risk transfer under CFR?
On board vessel at port of loading (same as FOB). Name the precise delivery place or port in the contract; payment of freight does not by itself determine risk transfer.
Who pays main carriage under CFR?
Seller arranges and pays the main carriage. Identify any terminal or unloading charges included in the carriage contract to avoid paying twice.
Is insurance compulsory under CFR?
Neither party is required by this rule to arrange cargo insurance for the other. The party bearing transit risk should consider suitable cover.
Who handles import clearance under CFR?
Buyer handles import clearance and buyer pays import duties. Local law still determines who may act as importer.
Does CFR determine payment or ownership?
No. Incoterms allocate delivery obligations, costs and risk, not title to the goods, payment timing or bank examination standards. Agree those separately in the sale contract and any letter of credit.
Primary reference: ICC Incoterms 2020. Consult the official rule text for contractual use.