Free The CFR Incoterm "Cost and Freight" requires the seller to deliver the goods on board the vessel or to procure the goods already so delivered. CFR differs from FOB in that the seller bears the costs of transporting the goods by ship to the port of destination. However, the risk of damage and loss is already transferred to the buyer as soon as the goods are on board the ship. However, the buyer does not bear the further transport costs until the ship arrives at the port of destination.
Frequently asked questions
When is the CFR delivery used?
The CFR Incoterm is a delivery term for ship cargo and can be used for both deep-sea and inland waterway transport. This Incoterm is supplemented by an indication of the port of destination.
Example: "Cost and freight to free port Hamburg".
Common abbreviations for this Incoterm are also C&F, C and F, C+F.
Can CFR also be agreed for air freight traffic?
CFR cannot be used analogously for air freight traffic, as it will not be possible for the seller to deliver the goods "on board" a ship.
Alternatives for air transport would be CPT or FCA with the addition of "freight to be paid by the seller"). CFR may only be used in the usual way and manner - i.e. by ship. Calling at several ports en route as well as reloading the goods may well be customary.
Where is the place of delivery for CFR?
For the seller, the place of delivery is the port of destination of the goods. The ocean carrier is the agent of the seller. The seller concludes the sea freight contract and bears the costs for this. However, the buyer bears the risks of the transport from the moment the goods are loaded onto the ship and is thus responsible for the insurance.
Who bears the costs with CFR?
With CFR, the seller bears the transport costs. If you as the buyer want to be sure that the seller also bears the unloading costs, it would be better to agree "CFR landed". The term "landed" is often interpreted differently in different trade sectors. Therefore, please define clearly what is meant by "landed". If unexpected costs arise on the sea route due to delays of the ship, be it due to ice, war, delays in ports en route, the buyer shall bear the costs for this.
When is the transfer of risk with CFR?
"Cost and Freight" is identical to FOB as far as the passing of risk is concerned. The risk passes to the buyer when the goods are loaded on board the ship. It is advisable for the buyer to insure the goods from the port of loading. If the seller is to take over the insurance, the CIF Incoterm would have to be chosen accordingly. Internationally active importers usually have a discounted global policy that covers all transactions. Therefore, CIF or CIP is usually of no interest to them.
What should be considered for delivery CFR?
Please note that some risks are not covered by insurance policies, even if they include "full coverage". If there are delays in transit due to strikes, piracy, war, political restrictions that prevent or delay transport, an additional agreement would be necessary.
Do you still have questions about the transport of your goods? Please contact us. We will be happy to help you with your transport management!
Source: Incoterms® 2020 by International Chamber of Commerce
The Incoterms® are a central set of rules for international trade. They do not constitute a complete sales contract, but become part of the contract. All previous versions of the Incoterms® remain valid. Unless a year is specified, the following shall apply upon application:
Until 31 December 2019, Incoterms® 2010 shall apply.
As of 1 January 2020, Incoterms® 2020 shall apply.
Older Incoterms® may also apply, provided the relevant year is indicated.
Note: This page is for information purposes. For a detailed explanation, please refer to the International Chamber of Commerce (ICC) publication INCOTERMS® 2020. For a complete and detailed description of all rights and obligations arising from the use of the above Incoterms®, please refer to the official text of the ICC. Only the text version published by the ICC is binding!