Seller pays ocean freight to destination — but risk passes to the buyer when goods are on board at origin.
Cost and Freight (CFR) requires the seller to arrange and pay for ocean freight to the named destination port. Like FOB, however, risk transfers from seller to buyer when the goods are placed on board the vessel at the port of shipment. This means cost and risk are deliberately split: the seller pays freight all the way to the destination port, but the buyer bears the risk of loss or damage during the ocean voyage. CFR is a sea-and-inland-waterway-only term. The buyer must arrange cargo insurance to cover their risk during the ocean leg. CFR is similar to CIF, except that under CIF the seller also arranges minimum cargo insurance.
CFR suits buyers who have their own cargo insurance arrangements (e.g., an annual open cover policy) and want the seller to include freight in the quoted price while maintaining control over their own insurance. It is also used when the buyer's country has local insurance requirements (some countries mandate that imports be insured with domestic insurers). CFR is standard in many commodity trades where buyers have existing insurance facilities.
CFR is not appropriate for containerised freight — use CPT instead (the multimodal equivalent). Do not use CFR if the buyer does not understand that they bear transit risk despite the seller paying freight: the split can create disputes if cargo is damaged en route. If you want to include insurance, use CIF. If the buyer wants to control all freight costs and insurance, use FOB.
CFR and CIF are identical except that under CIF, the seller must arrange and pay for minimum cargo insurance (Institute Cargo Clauses C). Under CFR, insurance is the buyer's responsibility. If the buyer already has an open cover insurance policy, they may prefer CFR so they can insure the goods themselves under their own terms.
Under FOB, the buyer nominates the vessel and pays ocean freight. Under CFR, the seller pays ocean freight. In both cases, risk transfers to the buyer when goods are on board at the export port. CFR shifts freight cost responsibility from the buyer to the seller while keeping risk transfer at the same point as FOB.
No. Despite paying ocean freight, the seller's risk ends when the goods are loaded on the vessel at the export port. The buyer bears all risk of loss or damage during the ocean voyage. The buyer should arrange marine cargo insurance to cover this risk.
No. CFR is restricted to sea and inland waterway transport. The multimodal equivalent is CPT (Carriage Paid To), which can be used for any transport mode including air, road, and sea.
The named port of destination is where the seller's freight cost obligation ends — typically the destination country's sea port. For example: CFR Port of Lisbon, CFR Rotterdam, CFR Houston. The seller pays ocean freight to this port; the buyer arranges and pays for all costs from there onwards.
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