Incoterms® 2020Modes: Sea, Inland Waterway
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). Insurance is not an obligation under CFR - the buyer decides.
Good for LC
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 |
Watch outs
- Risk-Freight Gap: seller pays freight to destination but risk transfers at origin. Buyer must insure from port of loading.
- LC must not require insurance certificate - buyer insures under CFR.
Under a letter of credit
Seller provides B/L + invoice. No insurance cert. Common for bulk commodities.