CFR/C&F - Cost and Freight (named port of destination)

The meaning of it is that the delivery is completed for the supplier when the product is on board the ship hired by the supplier to a port of destination. CFR is intended only for transporting goods by sea or inland waterway. Supplier pays export duty, packaging the goods and transportation of the cargo to the port, loads the goods on board, hires and pays the ship and provides the relevant documentation. Recipient unloads the vessel, delivers the goods to the destination, insures the goods, pays import duty, relevant certificates, licenses, etc. CFR is designed to transport goods in bulk or in containers, and also for transportation of heavy equipment.

Who covers the logistics charges?

Distribution of costs according to the Incoterm negotiated in the contract. Classification according to the increased level of obligations for the seller.

Seller’s Obligations

• Goods, commercial invoice and documentation
• Export packaging and marking
• Export licenses and customs formalities
• Pre-carriage and delivery
• Loading charges
• Delivery at named port of destination
• Proof of delivery
• Cost of pre-shipment inspection

Buyer’s Obligations

• Payment for goods as specified in sales contract
• Risk starting with onboard delivery
• Discharge and onward carriage
• Import formalities and duties
• Cost of pre-shipment inspection (for import clearance)

Bottom Line

The CFR rule, like the CIP, CPT and CIF rules, imposes basic costs on the seller. The obligations in this rule are also relatively similar to the obligations of the seller in the FOB rule. There is, however, a fundamental difference between them. In the case of the Incoterms CFR rule, the seller is responsible for transport. It means that the exporter finds the carrier, negotiates the appropriate contract and pays for the transport. In addition, it is recommended to use CPT rule if more than one mode of transport is used.