CFR (Cost and Freight) is one of the Incoterms (International Commercial Terms). It means the seller is responsible for delivering the goods to the named port of destination and paying the freight, but the risk of loss or damage to the goods transfers to the buyer when the goods pass the ship's rail at the port of shipment. CFR applies only to sea or inland waterway transport. Usage scenarios: the seller has stable shipping schedules and freight advantages, while the buyer arranges insurance. Precautions: the seller must give timely shipping notice so the buyer can insure; if the seller fails to notify, it may bear the resulting risks. Difference from CIF: under CFR the seller does not arrange insurance, while under CIF the seller pays the insurance premium. Compared with FOB: under CFR the seller bears the freight, while under FOB the buyer bears the freight. Compared with CPT: CFR applies only to water transport, while CPT applies to any mode of transport. Foreign trade practitioners should clearly define the risk transfer point, cost bearing, and notification obligations to avoid disputes caused by misunderstanding.
📝 Examples
1. We quote on CFR Shanghai terms at USD 500 per ton, with freight borne by us, but the risk after the goods pass the ship's rail at the port of shipment is for your account. (Note: the seller pays freight to Shanghai, and risk transfers at the port of shipment.)
2. According to the contract, this batch of equipment is traded on CFR New York terms, and we must notify the buyer within 48 hours after shipment so that it can arrange insurance. (Note: emphasizes the seller's notification obligation to ensure the buyer can insure in time.)
💡 Foreign Trade Tips
Foreign trade terms are the foundation of international business communication
Trade practices may vary slightly by country; pay attention when using them
When using terms in contracts, specify the applicable version (e.g., Incoterms 2020)
For unfamiliar terms, use GlobalSync's multilingual email helper to confirm with your partner