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  • WTO launches new edition of Handbook on the TRIPS Agreement November 27, 2020
    The WTO launched today (27 November) the second edition of “A Handbook on the WTO TRIPS Agreement”, which describes the historical and legal background to the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS), its role in the organization and its institutional framework. The publication coincides with the 25th anniversary of the entry into […]
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  • WTO to host first Trade for Peace Week November 25, 2020
    The WTO will host the first edition of the Trade for Peace Week from 30 November to 4 December 2020. Ten virtual panel sessions will explore the nexus between trade and peace, with the focus on fragile and conflict-affected countries in accession which want to use trade and economic integration to promote sustainable and inclusive […]
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  • DDG Agah at ITC Joint Advisory Group: Open trade and economic inclusion key to post-COVID recovery November 25, 2020
    In remarks on 25 November to the 54th session of the Joint Advisory Group that oversees the work of the International Trade Centre (ITC), WTO Deputy Director-General Yonov Frederick Agah argued that open international trade, together with efforts to ensure the benefits from economic activity are widely shared, would be necessary to repair the social […]
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  • DDG Wolff: “WTO reform is both necessary and feasible” November 24, 2020
    Speaking at the “1+6” roundtable meeting presided by Chinese Premier Li Keqiang on 24 November, Deputy Director-General Alan Wolff urged WTO members to begin serious engagement on improving the WTO, arguing there was enough common ground to reach major new agreements. He also called on China to participate actively and contribute positively to planning far-reaching […]
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Cost and Freight CFR



 

Maritime and Inland Waterway transport only

Cost and Freight

With the Cost and Freight (CFR) Incoterms rule, the Seller must bear all the costs of transport up to the port of destination. This includes the pre-carriage transport, main transport costs and terminal handling costs (depending on liner terms).

In addition, the Seller is liable for the export custom clearance formalities (export licence for instance).

However, as soon as the goods are on board the ship, the delivery is deemed completed and the risks (damage and loss) are transferred to the Buyer.

Accordingly, the buyer is liable for import custom duties, terminal handling costs at the port of arrival (depending on liner terms) and post-routing transport costs.

Although there is no formal obligation regarding insurance coverage, upon buyer’s request the seller must provide any information needed for insuring the goods (at the buyer’s expense).

Furthermore, the Seller has the obligation to provide the transport documents needed by the buyer for claiming the goods from the carrier in the port of destination.

Moreover, any pre-shipment inspection required by law in the seller’s country, is at the seller’s expense.

 

Usual Documents required:

Commercial Invoice

Documents as agreed in the contract

Transport documents (Clean Bill of lading with the mention “freight prepaid” and full set of originals when issued in negotiable form)

 

The Seller must assist the Buyer for obtaining documents that might be required for the importation.

Note that the related costs engendered by such assistance are at the buyer’s expense.

Caution:

Make sure the port of departure (transfer of risk from seller to buyer) and the exact point in the port of arrival are precisely specified in the sales contract (paid for by the seller).

When should I use the Cost and Freight (CFR) Incoterms?

This Incoterm is recommended when the Seller trades produces and raw materials (such as commodities for instance) and where he has an easy access to bulk cargo (dry or liquid)

However for containerised goods, usually handed over to the carrier before the loading aboard the vessel, CFR is not fit for purpose and CPT (Carriage paid to) should be considered instead.