Maritime and Inland Waterway transport only
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:
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.
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.
Ex Works (EXW) Click here
Free Carrier (FCA) Click here
Free Alongside Ship (FAS) Click here
Free on Board (FOB) Click here
Cost and Freight (CFR) Click here
Cost, Insurance and Freight (CIF) Click here
Carriage paid to (CPT) Click here
Carriage Insurance paid to (CIP) Click here
Delivered at Terminal (DAT) Click here
Delivered at place (DAP) Click here
Delivered Duty Paid (DDP) Click here
Incoterms Checklist Click here