CFR – Cost and Freight ... (named port of destination)

Characteristics

In CFR the seller clears goods for exports and delivers when goods are on board. The seller pays for freight to transport the goods until the final port of destination. However, the risk transfer occurs when goods are on board.

This term is used in ocean and inland waterway transportation. The contract must specify the exact port of destination. If shipment is containerized, it is preferred to use CPT. This term is usually applied when goods are in bulk cargo like grains and oil, oversized cargo or cargo that exceeds the normal dimensions to fit inside a container.



Incoterms 2010 CFR

Explained

Deliver happens in the port of loading, risk for seller ends at port of origin. In addition to this, seller must arrange international freight transportation and provide all documentation to buyer. Seller must also clear exports customs. In summary, seller arranges transportation under buyers risk, therefore it is recommended that buyer gets additional insurance coverage.

This term is exclusively used on ocean transportation. This term is commonly used for agricultural or chemical products where seller has expertise and buying power on loading and transportation until port of discharge.

Incoterms 2010 CFR - delivery

Examples

Buying chemicals from China: CFR Port of Rotterdam

Seller and Buyer obligations

THE SELLER'S OBLIGATIONS
THE BUYER'S OBLIGATIONS
1. Provision of goods
The seller must deliver the goods, provide commercial invoice, provide evidence of conformity or proof of delivery
1. Payment
The buyer must pay the price of goods as agreed in the contract of sale
2. Licences, authorisations and formalities
The seller must provide export licenses or local authorizations for exporting goods.
2. Licences, authorisations and formalities
The buyer must get any export license and import permit for the export of goods
3. Contracts of carriage and insurance
Contract of carriage of goods from the point of delivery to the named port of destination. No obligation to provide insurance, but to provide information to buyer to obtain insurance.
3. Contracts of carriage and insurance
Contract of carriage without obligation. Contract of insurance without obligation
4. Delivery
The seller must deliver the goods on board the ship
 4. Taking delivery
Take delivery of the goods at the agreed port of destination
5 Transfer of risks
The seller is responsible until goods passed the rail’s ship
5 Transfer of risks
The buyer must bear all risks of loss of or damage from the time the goods have been delivered on board
6. Costs
The seller must pay: All cost until delivery on board, loading cost and carriage until port of destination, all export duties and taxes and customs formalities
6. Costs
The buyer pays for all cost relating since goods are on board, unloading cost unless they are included in the contract of carriage, customs and taxes at destination as well as formalities
7. Notice to the buyer
The seller must notify the buyer that goods have been delivered
7. Notice to the seller
The buyer must provide time of shipment and port of destination
8. Proof of delivery, transport document or equivalent electronic message
At his own expense, transport documentation with on board date in full set when originals are printed.
8. Proof of delivery, transport document or equivalent electronic message
Accept sellers transportation document in comformity
9. Packing
The seller must bear the cost of checking, quality control, measuring, weighing, counting, packing of goods and marking. If special package is required, the buyer must inform and the seller and agreed on extra expenses
9. Inspection
Unless it’s a mandatory at origin, pay any pre-shipment inspection
10. Other
Assist obtaining additional information required by the seller
10. Other
Pay all expenses for obtaining additional documents.