Incoterm quick guide

CFR shipping terms explained

What does it mean to trade on CFR shipping terms? Keep reading to find out. This CFR quick guide clarifies the meaning of CFR and specifies the legal obligations of seller and buyer when trading on CFR shipping terms.

Within international commerce a number of trading terms (incoterms) have been agreed upon by almost all countries in the world. These Incoterms or International Commercial Terms work as legal contracts between seller and buyer, specifying responsibilities and obligations of the buyer and seller in a given trade. This common set of rules has undoubtedly been a clever move, as this means that it is always clear exactly who is responsible for any specific part of the transport at any given time in the transport process.

CFR – short for ‘Cost and Freight’ – is an international trading term, defining exactly when the cost, risk and ownership of a product transfers from the seller to the buyer. For CFR specifically the ownership transfers to the buyer at the port, airport or terminal at destination when the product is unloaded from the vessel, the aircraft or the train.

In practise, this means that seller must pay the costs and freight necessary to bring the goods to the named port, airport or terminal (depending on transport mode) at destination, and as the goods pass the ship’s rail, unload from the aircraft or train in the port, airport or terminal the risk, as well as any additional costs, transfers to buyer. Moreover, the CFR shipping term requires that seller clears the goods for export.

CFR quick guide

In this video Transporteca's Founder and CEO, Morten Laerkholm, sums up the basics of trading on CFR shipping terms.

When booking your transport online on Transporteca, selecting the CFR shipping option means that the transport price you see online includes all costs from your address at origin to the port, airport or terminal at destination. Besides the entire transport, it also includes the export customs clearance in your country.

For more information on the international trading terms, find our post on the subject here, or check our other Incoterm quick guides at the bottom of the page.

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