A practical guide to CFR shipping — including seller and buyer responsibilities, ocean freight, risk transfer, CFR vs CIF and FOB, and shipping from China.
SEE CFR RESPONSIBILITIESUnder CFR (Cost and Freight), the seller delivers the goods on board the vessel at the port of shipment and pays the cost of ocean carriage to the named port of destination.
The key point is that cost and risk transfer at different places. The seller pays freight to the destination port, but the buyer bears the risk once the goods are on board the vessel at origin.
The seller contracts and pays carriage to the named destination port.
Risk passes to the buyer when the goods are on board the vessel at the port of shipment.
CFR does not require the seller to obtain cargo insurance for the buyer.
CFR requires the seller to handle export and pay the ocean freight, while the buyer takes transit risk after on-board delivery and manages the import side.
Under CFR, the seller pays the ocean freight to the destination port, but the seller does not keep the cargo risk throughout the voyage.
This cost-versus-risk split is the defining feature of CFR and should be understood before comparing a supplier's CFR quote with FOB or CIF.
| COST / TASK | SELLER | BUYER |
|---|---|---|
| Goods & export packaging | YES | — |
| Origin transport to port | YES | — |
| Export customs clearance | YES | — |
| Delivery on board the vessel | YES | — |
| Ocean freight to named destination port | YES | — |
| Cargo insurance | Not required by CFR | Optional / Buyer choice |
| Import customs clearance | — | YES |
| Import duties & taxes | — | YES |
| Onward delivery after destination port | — | YES |
CFR and CIF have the same delivery and risk-transfer point. The main difference is cargo insurance.
Seller pays ocean freight to the destination port but has no Incoterms® obligation to buy cargo insurance for the buyer.
INSURANCENOT REQUIREDSeller pays ocean freight and obtains the insurance required under the CIF rule.
INSURANCESELLER ARRANGES REQUIRED COVERBoth CFR and FOB transfer risk when the goods are on board the vessel at origin. The difference is who arranges and pays the main ocean carriage.
Seller delivers on board and clears export. Buyer selects and pays the ocean carrier.
Seller delivers on board and also contracts and pays the ocean freight to destination port.
CFR is limited to sea and inland waterway transport and uses an on-board vessel delivery point. CPT can be used for any mode or multimodal transport and transfers risk when the goods are delivered to the carrier.
Risk transfers on board the vessel at the port of shipment.
Risk transfers when the goods are delivered to the carrier at the agreed point.
If containerized cargo is handed to a carrier or terminal before vessel loading, CPT may better reflect the actual delivery arrangement than CFR.
CFR is often quoted by Chinese suppliers for ocean shipments where the supplier books and pays the sea freight to the destination port while the buyer manages import and onward delivery.
Goods and export packaging are prepared.
Seller arranges movement to the Chinese port.
Seller completes China export formalities.
Risk transfers to the buyer at this point.
Carriage continues to the named destination port.
Buyer clears customs, pays duties and arranges onward delivery.
CFR does not require either party to obtain cargo insurance under the Incoterms® rule. Because risk transfers to the buyer on board at origin, the buyer should consider whether separate cargo insurance is appropriate for the voyage.
Insurance needs depend on cargo value, fragility, theft exposure, route and the buyer's risk tolerance.
CFR uses a named port of destination because that is where the seller-paid carriage extends. The port of shipment should also be clear because that is where risk transfers.
The supplier arranges export clearance, loads the cargo on board and pays the ocean freight to Los Angeles.
Risk transfers to the buyer once the cargo is on board at Yantian. The buyer can arrange cargo insurance separately and is responsible for U.S. import clearance, duties, taxes and onward delivery.
SELLER PAYS THE FREIGHT — BUYER BEARS THE VOYAGE RISK.Exact documentation depends on cargo, route and regulatory requirements.
CFR means Cost and Freight. The seller delivers the goods on board the vessel and pays ocean freight to the named destination port.
Risk transfers when the goods are on board the vessel at the port of shipment, not when they arrive at the destination port.
The seller contracts and pays the ocean freight to the named port of destination.
No. CFR does not require the seller to obtain cargo insurance. The buyer may arrange insurance separately.
The buyer is responsible for import clearance and applicable import duties and taxes.
No. CFR is only for sea and inland waterway transport. CPT is a related seller-paid-carriage rule that can be used for air and multimodal transport.
Both require the seller to pay ocean freight to the destination port and both transfer risk on board at origin. CIF additionally requires seller-arranged cargo insurance.
Under FOB, the buyer arranges and pays the ocean freight. Under CFR, the seller arranges and pays it. Both transfer risk on board at origin.
Send us the supplier location, origin port, CFR destination port, cargo details and final delivery address. We can compare the total logistics structure and quote alternative freight options.
GET A FREE QUOTEThis page is a general educational summary and is not the official ICC Incoterms® 2020 text or legal, insurance, tax or customs advice. The named ports, sales contract and actual delivery process matter. Refer to the official ICC rules when incorporating CFR into a contract.
ChengYu Ship can help you compare supplier-arranged CFR freight with alternative ocean, customs and final-delivery solutions.
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