07 drawbacks for exporter when contracting CFR terms of delivery

CFR, Disadvantages to Seller (Exporter).

Are you and exporter and ready to face the following challenges when agreeing delivery terms on CFR basis?   Gently go ahead to contract CFR delivery terms with your buyer.

The following 07 demerits help you to understand better about CFR delivery terms and how does it adversely affect the exporter.  This information surely helps every exporter for better handling of trade thereby strengthens business relationship with his buyer.


01. One of the disadvantages for importer under CFR delivery terms is that; since the importer undertakes on carriage from destination named port to his final destination under CFR terms of delivery, the exporter does not have control over tracking data of shipment till arriving goods at final destination.


02. Although the risk of main carriage ends when cargo loaded on board the vessel, under CFR delivery rules, the Seller has to pay ocean freight till the named destination contracted. This is a demerit for exporter under CFR delivery terms.  The exporter should have sound knowledge and experience about the ocean carriers and their service to serve the importer for good business relationship.


03. Another demerit for exporter under CFR terms is that;  if any port congestion, vessel shortage or vessel cancellation occurs at loading port, under CFR terms of delivery in export import business, the exporter is responsible to bear such costs and risks. Difficulty in meeting delivery time with buyer may also be faced.


04. Under CFR delivery terms, the seller has no control over on carriage till final destination of importer under CFR terms of delivery under international trade. This is a disadvantage for seller when contract of carriage is on CFR basis.


05. Under CFR rules in export import biz, the exporter should have sound knowledge and experience in handling export regulations, export documentation, export taxes if any against his product failing which the exporter is liable to pay additional expenses than anticipated. This is another demerit for buyer under export import trade where delivery rules are on CFR basis.

06. One of the another disadvantages for exporter under CFR terms is that the exporter does not have any control over safety of goods, once the cargo is loaded in to Vessel, when goods are moved under CFR delivery rules.  So, the seller cannot assure the safety of goods sold, from that point to final destination including unloading of cargo at importer’s premises as the importer is responsible for all such movement of goods.


07. Compared to other inco terms except DDP,  under CFR rules, the exporter does not want to learn import clearance, import government regulations in buyer’s country.  This reason may lack exporter to enter into a sale contract where the buyer specifically ask for DDP terms of delivery. This is another demerit for exporter under CFR terms.

 So in our point of view, every exporter and importer should learn and experience government rules and regulations of both exporting and importing country for strengthening their business.  


The above details are about the disadvantages for a buyer when he contracts delivery terms on CFR basis.

You may add your views about challenges faced by an exporter under CFR terms of delivery.

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