Incoterms CFR - Cost and Freight (2024)

FAQs

What does the CFR Incoterms rule mean Cost and Freight? ›

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.

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.

To calculate Cost Per Cfm, divide the total cost by the cubic feet per minute of flow.

With CFR, the seller must arrange and pay all costs to ship the product to a destination port, at which point the buyer becomes responsible.

The CFR Incoterm is a delivery term for ship cargo and can be used for both deep-sea and inland waterway transport. This Incoterm is supplemented by an indication of the port of destination. Example: "Cost and freight to free port Hamburg". Common abbreviations for this Incoterm are also C&F, C and F, C+F.

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.

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.

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

Disadvantages. The seller will usually have to pay the freight before obtaining the bill of lading, thus typically before they have received payment from the buyer.

Risk Transfer

The risk of goods is transferred to the buyer as soon as the goods are loaded onboard by the seller. As such, any extraneous charges or levies imposed on the goods due to neglect or delays, such as shipping demurrage charges, unforseen taxes etc are to be borne by the importer.

How to calculate CFR value? ›

Calculating the CFR Price: The CFR price is a composite of various costs. At its core, it includes the price of the goods, all freight costs associated with transporting the goods to the destination port, and other associated charges like pre shipment inspection.

Cost and freight (CFR) is an expense associated with cargo transported by sea or inland waterways. If CFR is included in a transaction, the seller must arrange and pay for transporting the cargo to a specified port.

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 seller is also responsible for any customs export documentation and export licences if needed.

Cost and freight (CFR) is an expense associated with cargo transported by sea or inland waterways. If CFR is included in a transaction, the seller must arrange and pay for transporting the cargo to a specified port.

CFR/C&F - Cost and Freight (named port of destination)

CFR is intended only for transporting goods by sea or inland waterway. Supplier pays export duty, packaging the goods and transportation of the cargo to the port, loads the goods on board, hires and pays the ship and provides the relevant documentation.

CFR is almost identical to the Cost, Insurance, and Freight (CIF) Incoterm. However, the difference is that insurance is mandatory under CIF and must be provided by the seller. On the other hand, insurance is optional for the CFR Incoterm.