CFR and CIF are essentially the same term with one addition — CIF is CFR plus a seller-arranged minimum insurance requirement.
| CFR — Cost and Freight | CIF — Cost, Insurance and Freight | |
|---|---|---|
| Transport mode | Sea/inland waterway only | Sea/inland waterway only |
| Risk transfers | On board the vessel at the port of shipment | On board the vessel at the port of shipment |
Both CFR and CIF require the seller to pay ocean freight to the named destination port, with risk transferring to the buyer once goods are on board the vessel at origin — identical in every respect except one: CIF additionally requires the seller to arrange minimum cargo insurance for the buyer's benefit. Under CFR, insurance is left entirely to whichever party wants to arrange it.
The buyer is arranging their own cargo insurance separately (common for larger importers with blanket policies covering all their shipments regardless of Incoterm).
You want the insurance requirement built into the sale terms, so there's no question of whether the cargo is covered during the ocean leg.
Insurance. CFR and CIF are identical on transport mode, cost allocation for freight, and risk-transfer point — CIF simply adds a requirement for the seller to arrange minimum cargo insurance to the destination, which CFR doesn't include.
The freight cost is the same, but CIF includes the cost of minimum insurance in the seller's price, so a CIF quote will typically be slightly higher than an equivalent CFR quote for the insurance premium alone.
CIF is generally more common, since most buyers prefer having insurance coverage built into the terms rather than needing to arrange it themselves — but CFR remains standard among large importers who already have blanket cargo insurance policies in place.
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