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 separate. The seller books and pays for carriage to the named destination port. But risk passes when the goods are on board at the origin port, the same moment as under FOB.
So cargo lost at sea is the buyer's loss, even though the seller booked and paid for the voyage. That is not a flaw in the rule. It is what the rule says. Most people assume the opposite, because the term names the destination.
CFR does not require anyone to insure. A buyer under CFR who has not arranged cargo insurance is uninsured for the whole main carriage. That is the leg where the largest single losses happen.
The named place in CFR is the destination. In the F rules it is the origin. It is easy and expensive to read "CFR Rotterdam" as meaning risk passes in Rotterdam. It does not. 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.