What is CFR (Cost and Freight)?
Cost and Freight (CFR) is a sea and inland waterway Incoterms rule under which the seller pays the cost of the goods and the freight to the named destination port. Unlike CIF, the seller has no obligation to insure the cargo. Risk passes to the buyer when the goods are on board at the port of shipment.
At a glance
| Term | CFR |
|---|---|
| Definition | Cost and Freight — seller pays freight to the destination port, but does not insure; risk passes on board at loading. |
| Category | Logistics & delivery |
| Related terms | Incoterms, EXW (Ex Works), FCA, FOB, CIF, DAP, DDP, B/L (Bill of Lading), Laycan, Demurrage |
What it is used for
CFR suits buyers who prefer to place their own marine insurance — often under an open cover policy at better rates — while still getting a single price delivered to their port without chartering a vessel themselves.
Key points
- The seller contracts and pays for carriage to the named destination port and clears the goods for export.
- The seller does not have to insure the goods; if the buyer wants cover, the buyer arranges it.
- Risk transfers on board at the port of shipment, even though the seller pays freight to destination.
- Import clearance, duties, discharge costs not included in the freight contract, and onward delivery fall on the buyer.
What to watch for
- A CFR buyer bears the voyage risk with no policy in place unless they buy one. Check your open cover attaches at the load port, not at arrival.
- Confirm who pays discharge. Under liner terms it is in the freight; under FIO terms the buyer pays it at destination.
- CFR is for conventional sea freight, not containers — CPT is the multimodal equivalent.
Frequently asked questions
If the cargo is lost at sea under CFR, who bears it?
The buyer, because risk passed on board at the load port. With no insurance obligation on the seller, the buyer recovers only if they insured the voyage themselves.
What is the difference between CFR and CIF?
They are identical except for insurance. Under CIF the seller must provide at least Institute Cargo Clauses (C) cover; under CFR the seller provides none.
Why choose CFR over CIF?
Buyers with their own annual marine policy usually get wider cover for less than a seller's minimum ICC(C) policy, so paying for the seller's insurance would duplicate it.
Related terms
Lodfy verifies every company on the platform — registration, ownership and sanctions screening — before they can trade.