GLOSSARY
CFR (Cost and Freight)
An Incoterms 2020 rule where the seller pays freight to the destination port but risk transfers when goods load onto the vessel.
Cost and Freight is an Incoterms 2020 rule for sea and inland waterway shipments where the seller contracts and pays for freight to the named port of destination, but risk passes to the buyer once goods are loaded on the vessel at the port of shipment.
Why it matters
CFR creates a split between cost responsibility and risk transfer. The seller handles freight costs, yet the buyer bears loss or damage from the moment cargo crosses the ship's rail. This mismatch means buyers should arrange marine cargo insurance themselves, since the seller has no obligation to insure once risk has passed.
For operators quoting CFR, confirm the named destination port precisely. Ambiguity in port selection can trigger disputes over demurrage or diversion costs. The ICC Incoterms 2020 rules specify that CFR applies only to waterborne transport.