How does CFR term of delivery work in Export Import business
Thursday, October 27, 2016     Category : Inco Terms

The information provided here is part of Guide on howtoexport and import 


 

 What is CFR terms of delivery?

 

CFR, C&F or CNF means Cost & Freight (followed by a destination). Here, the selling cost of export sale includes cost and freight of goods.

 

I will explain C&F ( also called CNF ) terms of delivery with a simple example.

 

How does CFR term of delivery work in Export Import business copyYou are a Machinery seller situated near Mumbai, India. The buyer is situated in New york. You are the seller of goods and you have contracted with the buyer and agreed to sell the goods on C&F New York price of USD 5700. Here the selling cost of goods is USD 5700 C&F New York. Here the seller arrange to carry the goods to Mumbai port and meet all expenses including customs clearance in Mumbai and pays the ocean freight or airfreight up to New York. In this case, the seller decides the shipping company or airlines to move goods from Mumbai to New York, as he is paying freight of consignment. In other words, all delivery expenses up to New York is borne by the seller. The buyer takes delivery of cargo after customs clearance in New York at his own cost. Insurance of the goods is met by the buyer in case of C&F transaction.

Detailed articles about Inco Terms of Delivery under export and import of International business  have been mentioned in  separate category – INCO TERMS – in this web site.  You can click here to read.

 

 

I hope, you have satisfied with the above example on CFR.  Do you have different thought on CFR term of delivery?

 

Write below your comments on Inco terms CFR:

 

 

 

The above information is a part of Online export import training guide 


 

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Comments

 
Cassie Says :
Wednesday, March 05, 2014
The buyer and the seller agreed on CFR term for the consignment. Meaning it is seller's responsibility to pay all charges cost till the goods reaches to it's final port of destination. I have noticed one commercial invoice on CFR term but I was wondering why it was mentioned there at the bottom of the invoice additional transportation charge added to the expenses of the buyer. It is no longer called CFR then, because the buyer reimburse the payment which the seller paid to the forwarder. Please help me clarify about this. I'm just so confused.
Surendran Kollerath Says :
Tuesday, March 11, 2014
Hi Cassie, Under a CFR terms of delivery, the salling price of goods include cost of goods and freight up to the destination mentioned.(not all expenses as you have mentioned). So seller is responsible to pay freight charges of consignment till the place mentioned on Commercial Invoice/ Bill of Lading/Airway bill. However, in certain circumstances, buyer can request seller to pay additional transportation cost from the destination port mentioned to the final destination of place which is re-imbursed by buyer to seller. For example, If a buyer situates in Bangalore,India and the sale contracted as port of discharge as Chennai,India which is the nearest sea port to Bangalore, the document could be CFR Chennai, India or CFR Bangalore, India. If contract between buyer and seller is CFR Chennai, the responsibility to pay freight by seller is only up to Chennai. However, if terms of delivery contracted is under CFR Bangalore, seller has to pay freight up to Bangalore. However,in some cases, although sale agreement is CFR Bangalore, buyer would have paid freight up to Chennai due to convenience of carrier who may have service accordingly. Here, seller may request buyer to pay freight up to Bangalore and he reimburse the same to buyer later.
Faisal khan Says :
Monday, March 02, 2015
I work in an org where we procure goods mostly on CNF basis but I wonder why seller put additional freight and packing charges in the invoice. In my point of view he should quote the items inclusive of freight. If we have to pay the freight then the term should be FOB instead of CNF or CFR. In most of the cases my company reimburses the freight, why?? I'm unable to understand , and freight charges are separately mentioned on the invoice. I'm so much confused, pls help me out whether we have to reimburse the freight or not on CFR basis?
P.mohan Says :
Thursday, July 14, 2016
I am planning to import materials from China. This is my first import.l need what are the steps to be required. I discussed the price and got Fob price. But not very clear with terms and conditions.
 

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