Cost and freight

Cost and freight (CFR) is a trade term under which the seller pays for the goods and the freight to the destination port, while the buyer bears the insurance.

Cost and freight, usually written CFR, sits between FOB and CIF among the sea-freight Incoterms. Like CIF, the seller pays for shipping the goods to the named destination port; unlike CIF, the seller does not arrange or pay for marine insurance, leaving the buyer to cover that risk separately.

Risk passes from seller to buyer at the same point under CFR as it does under FOB and CIF: once the goods are loaded onto the vessel at the origin port, any loss or damage during the voyage is the buyer’s problem, even though the seller is still paying for the freight to get it there. This split between who pays for the voyage and who bears the risk of it can surprise buyers unfamiliar with how these terms actually work. See FOB, CIF and Incoterms.