Cost and Freight (CFR), also known as Cost and Freight (CNF) or Cost & Freight (C&F), is a widely used international shipping term that falls under Incoterms (International Commercial Terms) defined by the International Chamber of Commerce. It specifies the responsibilities and obligations of both the seller and the buyer in an international sales contract involving sea transportation.

Key Elements of CFR

Seller’s Responsibilities: To arrange and pay for transportation to the destination port, transfer risk to the buyer once goods pass the ship’s rail, and provide the required shipping documents.

Transport Arrangement: The seller is responsible for arranging and paying for the transportation of the goods to the agreed port of destination.

Risk Transfer: The risk of loss or damage to the goods transfers from the seller to the buyer once the goods pass the ship’s rail at the port of shipment. This means that while the seller pays for the transportation costs, the risk is with the buyer during the main carriage.

Documentation: The seller must provide the buyer with the necessary shipping documents needed to obtain the goods from the carrier upon arrival at the destination port. These documents typically include a bill of lading that serves as a receipt of shipment when the goods are delivered to the predetermined port.

Buyer’s Responsibilities: To handle customs clearance, pay import duties, and cover costs and risks for unloading and transporting the goods from the destination port.

Costs Beyond Delivery: Once the goods have been delivered to the port of destination, the buyer is responsible for all costs and risks. This includes unloading costs and any further transportation costs from the port to the final destination.

Customs and Import Duties: The buyer handles the customs clearance of the goods and pays any applicable duties and taxes.