CFR Incoterm (Cost and Freight) - Use and Meaning | iContainers US (2024)

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CFR Incoterm (Cost and Freight) - Use and Meaning | iContainers US? ›

The CFR Incoterm or “Cost and Freight” is an Incoterm that is exclusive to ocean freight shipping. It states that the seller is not only responsible for delivering the goods to the port specified by the buyer, but also bears the transportation costs of the goods to the destination port.

Cost and freight (CFR) is a legal term used in foreign trade contracts. In a contract specifying that a sale is cost and freight, the seller is required to arrange for the carriage of goods by sea to a port of destination and provide the buyer with the documents necessary to obtain them from the carrier.

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 Incoterm in this blog is one of the Incoterms specifically for transport over water: Cost and Freight (CFR). When goods are bought or sold Cost and Freight (CFR) it means that the Seller is responsible for the delivery of the goods to a ship and loading the goods onto the ship.

The Code of Federal Regulations (CFR) is the codification of the general and permanent rules published in the Federal Register by the executive departments and agencies of the Federal Government. It is divided into 50 titles that represent broad areas subject to Federal regulation.

As discussed above, the buyer pays for insurance in CFR. He'll be liable for the goods right from the place of origin.

CFR price is calculated by considering the Cost of goods, labour, packaging, labelling, insurance, transportation, customs, checks, paperwork, taxes, and port fees.

The CFR Incoterm or “Cost and Freight” is an Incoterm that is exclusive to ocean freight shipping. It states that the seller is not only responsible for delivering the goods to the port specified by the buyer, but also bears the transportation costs of the goods to the destination port.

The primary difference between using cost and freight (CFR) and free on board (FOB) shipping lies in who must pay for various shipping or freight costs—the buyer or the seller. The terms refer to the point at which transfer of responsibility for goods shipped occurs, from the seller/shipper to the buyer/receiver.

Who pays duties and taxes on CFR? ›

Insurance: Unlike Cost, Insurance, and Freight (CIF), insurance under CFR is not the seller's obligation. The buyer may choose to obtain insurance, but it's not mandatory. Export Formalities: All export clearances, duties, and related costs fall under the seller's responsibilities.

Under CIF terms, the seller has to add the insurance premium to the final price, meaning the CIF price can be higher. Nevertheless, buyers are advised to add insurance coverage to their cargo to avoid complications, so the total price for the buyer can be similar to or higher than CFR.

What is Cost and Freight (CFR)? An Incoterms^® rule, applicable only to ocean or waterway transport, under which the seller pays the costs to export and ship the freight to the named port of destination.

Cost and Freight. The CFR Incoterm is one of the four Incoterms that are exclusively intended for transport by ship, with a clear focus on conventional sea transport. CFR is less suitable for container transport (but can be used in exceptional cases, more on this later).

Freight Collect is Ex-Works or FOB, which an importer pays ocean freight. And Freight Prepaid is CFR, C I F, DAP and DDP, which an exporter pays ocean freight.

Cost and freight (CFR) is a trade term that requires the seller to transport goods by sea to a required port.

The CFR Incoterm or “Cost and Freight” is an Incoterm that is exclusive to ocean freight shipping. It states that the seller is not only responsible for delivering the goods to the port specified by the buyer, but also bears the transportation costs of the goods to the destination port.