CFR, or Cost and Freight, is an international trade term specified in the Incoterms rules published by the International Chamber of Commerce (ICC). CFR is often used in maritime shipping transactions, and it outlines the responsibilities, costs, and risks between the seller and the buyer.

Delivery Point

In a CFR transaction, the seller is responsible for delivering the goods on board the vessel at the specified port of shipment. The seller is also responsible for the cost of the sea freight to transport the goods to the named destination port.

Seller's Responsibilities

Under CFR, the seller is responsible for:

• Packaging and preparing the goods for export.
• Transporting the goods to the named port of shipment.
• Loading the goods onto the vessel.
• Paying for the sea freight to the named destination port.
• Providing the buyer with any necessary documents, like invoices, export licenses, or other documentation.

Buyer's Responsibilities

• Unloading the goods from the vessel at the named destination port.
• Paying for all costs and risks from the destination port to the final destination.
• Handling import customs formalities, duties, taxes, and clearances.

Transfer of Risk

Risk is transferred from the seller to the buyer when the goods are on board the vessel at the specified port of shipment. The seller is responsible for the goods and their condition during the sea voyage, but once they are offloaded at the destination port, the buyer assumes the risks associated with the goods.

CFR is a commonly used Incoterm for international trade involving maritime shipping. It's suitable when the seller can secure favourable freight rates and wishes to include the cost of sea freight in the selling price. The buyer, in turn, has more control over the transportation and costs from the destination port to the final destination. Clear specification of the named destination port and a well-defined agreement between the parties are essential for a successful CFR transaction.