Cost and Freight (CFR)

Cost and Freight (CFR) is the Incoterms 2020 sea rule under which the seller clears export, loads the goods on board and pays the ocean freight to the named destination port, while risk passes to the buyer as soon as the goods are on board at the port of shipment. Neither party is obliged to insure. It is CIF without the insurance, and it goes back to the first Incoterms in 1936, which listed it as "C&F".

Cost to destination, risk from origin

This is the point CFR buyers most often miss. "CFR Savannah" means the seller pays the ocean freight to Savannah, not that it is responsible for the cargo until it gets there. From the moment the goods are on board at origin the buyer carries the risk, over a voyage the seller booked and on a vessel the buyer did not choose. With no insurance obligation on either side, a buyer who does not insure is uncovered for the whole ocean leg.

Who does what under CFR

• Seller: export clearance, origin charges, loading on board, the ocean freight to the named port, and prompt notice to the buyer that the goods are loaded
• Buyer: cargo insurance if it wants cover, the Importer Security Filing, import clearance, duty and delivery from the port
• Discharge and destination terminal charges: the buyer's, unless the seller's contract of carriage includes them

CFR is a sea rule, and not a container rule

CFR is one of four rules for sea and inland waterway transport only, with FAS, FOB and CIF. It was written for cargo the seller loads directly onto the ship, such as bulk and breakbulk. A container is handed to the carrier at a terminal days before loading, and ICC guidance is that the sea rules do not fit that; the any-mode rule with the same cost-and-risk shape is CPT. For air freight, CFR does not apply at all. The Incoterms explainer sets CFR, CIF and CPT side by side.

CFR vs CIF vs FOB

All three deliver on board at the port of shipment, so the buyer's risk is identical. Under FOB the buyer books the ocean freight; under CFR the seller does; under CIF the seller also buys minimum insurance cover (Institute Cargo Clauses (C)) for the buyer. A CFR price is only comparable with an FOB price once the freight is stripped out.

CFR on a US import: release and customs value

• Cargo release. The seller's forwarder issues the bill of lading to the seller, and under a letter of credit or payment against documents, release waits on the seller handing over the documents while free time at the terminal keeps running
• Customs value. US transaction value excludes the international freight (19 U.S.C. 1401a(b)(4), 19 CFR 152.102(f)), so the ocean freight inside a CFR price is deducted. CBP's position is that the deduction must be the actual freight paid, not an estimate, and if the actual cost cannot be verified it is not excluded. Ask the seller to show the freight as its own line on the invoice or to hand over the freight invoice

Duty, including Section 301, Section 232 and any other additional duties in force, is assessed on that value; estimate it in the tariff simulator.

Buying CFR through Airlift

Already buying CFR? Airlift can file the ISF, coordinate the entry through our licensed customs-broker network (customs clearance), handle delivery from the port and arrange cargo insurance from the load port, since CFR leaves you uninsured. Would rather control the ocean leg? Ask your supplier for an FOB or FCA price, and compare it with our ocean freight quote in rate search: we then issue the house bill of lading to you.