What is Cost and Freight?
Cost and Freight (CFR) is an Incoterms 2020 rule under which the seller clears the goods for export, contracts and pays for sea carriage to the named port of destination, and delivers by placing the goods on board the vessel at the port of shipment. Risk passes to the buyer once the goods are on board at origin, even though the seller pays freight to destination, so CFR has two critical points: the risk point at loading and the cost point at destination. The seller has no obligation to insure the cargo; a buyer who wants cover must arrange it from loading. ICC limits CFR to sea and inland waterway transport and describes it as suited to bulk or non-containerised goods. The buyer handles import clearance, duties and any destination costs not included in the seller's contract of carriage.
Why it matters for forwarders
Forwarders usually meet CFR at destination, handling imports for a buyer whose overseas seller chose the carrier and the freight terms. Disputes arise when buyers assume that freight paid means all charges are paid: destination terminal handling and other costs are for the buyer unless they were part of the seller's carriage contract. Because risk passes on board at origin, a loss at sea falls on the buyer even though the buyer did not choose the carrier, so cargo insurance should start at loading. For containers handed to the carrier at a terminal before loading, CFR leaves a gap between handover and on-board loading during which risk still sits with the seller; CPT fits that situation better. Under letters of credit, CFR shipments usually call for a clean on-board bill of lading showing freight prepaid.