Incoterms CFR: Cost and Freight

Named Place Requirement: Port of Destination

Applies to: Sea and inland waterway only Sea and inland waterway only

Cost and FreightClick to enlarge

What is CFR in shipping?

Under CFR terms (short for “Cost and Freight”), the seller is required to clear the goods for export, deliver them onboard the ship at the port of departure, and pay for transport of the goods to the named port of destination. 

The risk passes from seller to buyer when the seller delivers the goods onboard the ship. 

The buyer is responsible for paying all additional transport costs from the port of destination, including import clearance and duties. 

Only use CFR for ocean or inland waterway transport. 

If the freight is containerized and to be delivered to a terminal only, use CPT instead.

Risk and cost transferRisk and cost transfer from seller to buyer at different points.

CFR Shipping | Incoterms Obligations

Seller’s Obligations

  • Goods, commercial invoice and documentation
  • Export packaging and marking
  • Export licenses and customs formalities
  • Pre-carriage and delivery
  • Loading charges
  • Delivery at named port of destination
  • Proof of delivery
  • Cost of pre-shipment inspection

Buyer’s Obligations

  • Payment for goods as specified in sales contract
  • Risk starting with onboard delivery
  • Discharge and onward carriage
  • Import formalities and duties
  • Cost of pre-shipment inspection (for import clearance)

Get CFR shipping guidance from Incoterms 2020 experts

AIT’s global network of experienced transportation management professionals is well-versed in the Incoterms rules and all shipping terms. Have a question about CFR shipping? Contact a representative today.

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Incoterms 2020 Overview of Risk and Cost Transfer