Cost and Freight (CFR): A Guide for Trade Agreements

Cost and Freight (CFR) is an Incoterm used in international shipping that requires the seller to arrange and pay for transport to a specified destination port. Under CFR, the seller covers shipping costs, clears the goods for export, and loads them onto the vessel, but the buyer is responsible for marine insurance during transit. Risk transfers from seller to buyer when the goods are loaded onto the ship, before the main carriage begins. The article explains that Incoterms—published and updated by the ICC—help standardize contract terms and reduce confusion about delivery, costs, and the point where risk shifts. It also compares CFR with related terms used for sea or inland waterways, noting differences with FAS, FOB, and CIF, particularly insurance responsibilities. CFR places duties on both parties while limiting the seller’s insurance obligations.