CFR (Cost and Freight): CFR (Cost and Freight) is an international trade term under Incoterms where the seller is responsible for paying the cost of transporting goods to the destination port. However, the risk transfers from the seller to the buyer once the goods are loaded onto the shipping vessel.
How It Works:
- The seller prepares and packages the goods for export.
- The seller arranges and pays for transportation to the destination port.
- Once the goods are loaded onto the vessel, the risk transfers to the buyer.
- The buyer is responsible for insurance, unloading, and further transportation.
- The buyer completes customs clearance and final delivery.
Benefits:
- Simplifies logistics for buyers as the seller arranges shipping.
- Provides clear division of cost and risk between buyer and seller.
- Commonly used in sea freight transactions.
- Helps buyers estimate import costs more easily.
Example:
An exporter in India sells goods to a buyer in Singapore under CFR terms. The exporter pays for shipping to the Singapore port, but once the goods are loaded onto the ship, the risk shifts to the buyer.