Cost and Freight (CFR) is an international commercial term (Incoterm) where the seller is responsible for paying the transportation costs to bring the goods to the buyer’s designated port of destination. However, the risk of loss or damage transfers to the buyer once the goods are loaded onto the shipping vessel.
A furniture exporter in Italy agrees to a CFR term with a U.S. importer. The exporter covers the freight cost to the Port of New York, but once the goods are loaded onto the ship in Italy, the risk shifts to the U.S. importer, even though the seller is paying for the transportation.
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Under CFR, the seller pays shipping costs but does not insure the goods. Under CIF (Cost, Insurance, and Freight), the seller also provides insurance coverage for the goods until arrival at the destination port.
Risk transfers to the buyer as soon as the goods are loaded onto the vessel at the port of shipment, even though the seller continues to pay for the freight costs.
No. CFR is intended for sea or inland waterway transport. For air freight or multimodal shipments, other Incoterms like CIP or CPT are typically used.
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