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)

 

Costs

Risks

Warehouse services

Seller

Seller

Marking and labeling

Seller

Seller

Packing of Goods

Seller

Seller                                   

Loading at Seller’s premises

Seller

Seller

Transportation from Seller’s

premises to Load port

Seller

Seller

Unloading at Loading Port

Seller

Seller

Loading to Vessel

Seller

Seller

Export documentation

Seller

Seller

Export Customs Clearance

Seller

Seller

Export Taxes and duties (if any)

Seller

Seller

Handling  at Load Port

Seller

Seller

Main Carriage (Ocean Freight)

Seller

Buyer

Import Customs Clearance

Buyer

Buyer

Import Documentation

Buyer

Buyer

Import Taxes and Duties (if any)

Buyer

Buyer

Transportation from named place to final destination  of buyer

Buyer

Buyer

Unloading at named place

Buyer

Buyer

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:

Click here to read other delivery rules under Inco terms  

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FAS terms of delivery under Incoterms 2020     Explaining DDP in simple language under Incoterms 2020     DAP, Simply explained under Incoterms 2020     Describe DPU under Incoterms 2020     How to define CIP under Inco Terms 2020     What does CPT mean under Inco Terms 2020?     Meaning of FCA under Incoterms 2020     EXW,Ex Works under Inco terms 2020     Inco Terms, Different stage where risks and costs transfer from Seller to Buyer     Parties involved to use Incoterms directly and indirectly     Is it necessary to use trade mark of Incoterms under Sale contract     Mention year of Inco Terms under Sale contract     Inco Terms and Sale Contract between buyer and seller     Inco Terms 2020 Rules for Delivery of Goods         Buyer or Seller? Who pays Insurance under DAP Inco terms?     Who is responsible to pay Insurance under DPU Inco terms?     Who is liable to arrange insurance under CPT terms?     Under FCA Inco terms, Insurance is paid by buyer or seller?     Under EXW Ex works, who arranges Insurance?


Comments


kuldeep: This article is very good but one example with price of CFR calculation for clear under standing

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