CFR (Cost and Freight)


A CEMT (Conference of European Ministers of Transport) permit is a special license that lets businesses move goods from one country to another within a group of countries called CEMT countries. It's like a passport for goods, making it easier to take products across borders without needing a bunch of different permits. This is done to make trade simpler and to help businesses save time and paperwork.

— sennder Team


CFR simplifies international trade transactions by clearly stating who (seller or buyer) is responsible for what during the shipping process. This clarity helps in reducing potential disputes and misunderstandings, ensuring a smoother and more efficient shipping process.
The primary distinction between CFR and other Incoterms like FOB (Free On Board) and CIF (Cost, Insurance, and Freight) lies in the point of risk transfer and the coverage of insurance: Under CFR, the risk transfers to the buyer once the goods are loaded onto the vessel at the port of origin, but neither the seller nor the buyer is obligated to insure the goods​5​. In FOB terms, both the cost and the risk transfer at the point of export​​. CIF is similar to CFR; however, under CIF, the seller is also required to provide insurance coverage for the goods during transit​​.
CFR is typically utilized for ocean or inland waterway transportation, especially for bulk and non-containerized cargo. It's not suitable for other modes of transport like air freight or road freight. Also, under CFR, insurance for the goods is optional, which might be a limitation for buyers who prefer having insurance coverage as part of their risk management strategy​​.

Example or usage in road freight logistics:

In a scenario where a manufacturer in Country A agrees to sell a shipment of goods to a buyer in Country B under CFR terms, the manufacturer will arrange and pay for transporting the goods to the designated port in Country A and the cost of loading the goods onto the vessel. The risk of loss or damage transfers to the buyer once the goods are on board. The buyer then takes over, arranging and paying for any further transportation, insurance, and customs clearance to get the goods to their final destination.

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