CFR terms of delivery, explained in simple language

CFR – Cost and Freight (named place)

CFR means Cost and Freight

CFR means of delivery terms is used for the movement of goods by sea and inland water ways.  CFR terms under Incoterms 2000 are known as Marine restricted mode of delivery terms.

Under CFR term, the seller delivers the goods to the buyer at the named destination port in Buyer’s country. So the cost of movement of goods till Vessel berths at the named destination port is on account of Seller.  However, the risk of movement of goods transfers from seller to buyer immediately upon the goods gone on board the vessel at load port in Buyer’s Country.  So the costs and risks under CFR terms don’t transfer equally from Seller to Buyer.

Under CFR terms in export import trade, the exporter is liable to bear all expenses and risks for packaging the goods and pre carriage till the goods reaches on board the vessel.  The exporter also meets the risks and costs of export documentation, handling charges at port of loading and export clearance charges.  The responsibility to pay the cost of main carriage to the named destination port at Importer’s country is also under Exporter’s account.  

The buyer is responsible for the cost of import customs clearance, port handling charges, import documentation, statutory import duty and taxes if applicable, on carriage charges from named destination port to his premises.  The buyer is responsible to undertake the risks of goods from the point where the goods gone on board the vessel at the first load port in Seller’s country.

Who has to arrange Insurance under CFR terms of delivery under Incoterms 2020?  As explained earlier, the CFR Incoterms 2020 does not talk about insurance; neither the seller nor buyer is responsible to arrange insurance on movement of goods.  However, the buyer or seller may cover insurance if mutually agreed in Sale Contract.

Under CFR terms of delivery of goods, the seller is in charge of deciding Carrier and has control over main carriage.

Usually, CFR terms of delivery is used to move goods by Sea especially on FCL basis.  The CFR  terms also is widely used  for break bulk cargo movement.Click here to read about Ex-works, FOB,FCA,CPT,CIP,DAP,DPU,DDP,FAS,CFR and CIF  under INCO TERMMS 2020

CFR – Cost and Freight (named Place)

The above information about CFR is as per Inco terms 2020 designed by ICC for movement of goods. You may share your thoughts about Cost and FReight below:

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