01Obligations under CFR
Seller: Export clearance, loading, main sea freight to destination port.
Buyer: Risk from loading on board, insurance, import clearance, on-carriage.
The precise split of the 10 obligation pairs (A1–A10 / B1–B10) is binding under the ICC Incoterms 2020 rules.
02Risk and cost transfer
Risk transfer: When loaded on board at port of shipment.
Cost transfer: Seller pays freight to destination port.
For several Incoterms, the risk and cost points do not coincide — this is the biggest source of misunderstanding in international trade. Cargo insurance should always be aligned with the risk transfer point, not the cost transfer point.
03When to use CFR
Classic term for bulk and project cargo by sea. Note that risk transfers earlier than cost — always check insurance coverage.
Before choosing, verify: Can both parties operationally handle customs, carriage and insurance in the respective country? Are there tax implications (e.g. VAT under DDP)? Which documents (commercial invoice, certificate of origin, B/L, CMR, AWB) are required?
04Common pitfalls
1) Mode mismatch: CFR is only for sea / inland waterway — do not use for containers in multimodal transport.
2) On-board notation: For sea Incoterms, a correct on-board notation on the B/L is critical for letter-of-credit settlement.
3) Insurance cover: Explicitly agree ICC A / B / C and the sum insured.
Preguntas frecuentes
What does CFR mean in practice?
Seller pays freight to destination port; risk transfers on board at port of shipment. Applicable to sea and inland waterway only. Risk transfer: When loaded on board at port of shipment.
Who pays cargo insurance under CFR?
No mandatory insurance. The buyer bears the risk from the transfer point onwards and should insure accordingly.
Is CFR suitable for containers?
Not ideal. For containers, the ICC recommends the multimodal terms FCA (instead of FOB), CPT (instead of CFR) or CIP (instead of CIF).