CFR — Cost and Freight
The seller pays the freight to the destination port, but risk passes on board at origin. There is no insurance obligation.
- Group
- C — Main carriage paid
- Transport mode
- Sea and inland waterway only. Delivery is measured against a vessel, so it does not describe a container handover.
- Named place
- The port of destination the seller has paid the freight to.
- Main carriage paid by
- Seller
- Risk passes
- On board at the origin port
- Export clearance
- Seller
- Import clearance and duties
- Buyer
- Seller must insure
- No obligation on either party. Arrange your own cover.
- Unloading at destination
- Buyer.
CFR is the first rule where cost and risk part company, and the split is the whole point. The seller contracts and pays for carriage to the named destination port. Risk, however, passes when the goods are on board at the origin port — the same moment as FOB.
So a cargo lost mid-ocean is the buyer's loss, on a voyage the seller booked and paid for. That is not a defect in the rule; it is what the rule says. It is simply the opposite of what most people assume from a term that names the destination.
CFR imposes no insurance obligation on anybody. A buyer under CFR who has not arranged cargo insurance is uninsured for the entire main carriage, which is the leg where the largest single losses happen.
The named place in CFR is the destination, unlike in the F rules where it is the origin. Reading "CFR Rotterdam" as a risk transfer point in Rotterdam is a natural and expensive misreading — risk passed at the load port.
Always write the rule with its named place and the version — CFR [named place], Incoterms 2020. The rule says nothing about when ownership transfers; that is for your sales contract.