CFR Incoterms: What It Is + 9 Best Practices

CFR Incoterms—Cost and Freight—remain one of the most widely used Incoterms in global shipping. The problem? Plenty of people still don’t fully grasp what CFR really requires from the seller, what risks shift to the buyer, and how to avoid the profit-draining mistakes that come from assuming “freight prepaid” means “problem solved.”

This guide was written for people like you—people on the front lines of international trade, where vessel schedules, cargo handoffs, and delayed documents can make or break your day.

We’ll cover what CFR actually is, when it works best, who’s on the hook for what, and how to use this term effectively in your operations.

What Is CFR Incoterms?

Cost and Freight (CFR) is a shipping term that splits transport obligations and costs between the seller and the buyer. CFR is considered one of the most commonly used Incoterms, particularly for international trade involving sea and inland waterway transport. 

With CFR, the seller is responsible for delivering goods to the shipping vessel at the origin port, covering freight costs to the destination port, and managing export clearance. Once the cargo is loaded and moving, the risk transfers to the buyer.

Think of CFR as a handshake at the dock. The seller delivers the goods to the vessel and pays to get them to the buyer’s port, but once those goods are physically on the ship, they’re no longer the seller’s problem. If something goes wrong during the voyage—bad weather, piracy, engine failure—the buyer absorbs the fallout.

The International Chamber of Commerce maintains this and all international commercial terms, and they’re designed to reduce misunderstandings. But CFR, like all Incoterms rules, only works if both parties understand where responsibility, risk, and cost split.

When Should CFR Be Used?

You won’t use CFR for just any shipment. This term is best suited for non-containerized goods, like bulk cargo—coal, grain, steel, raw materials—typically loaded by the ton rather than in a neatly sealed 40-foot box.

Let’s say you’re moving 10,000 metric tons of soybeans to Asia. You’ve got the bulk vessel lined up, your loading port is familiar with the commodity, and the buyer has their own team handling the inland journey once it hits port. In this case, CFR is a practical, clean choice. It gives the seller control over freight and avoids double-handling charges or negotiation delays.

CFR is commonly used when:

• The seller carries longstanding relationships with shipping lines or charterers
• There’s access to a port with inland waterway or open-sea shipping routes
• The buyer prefers to handle the inland leg of the journey themselves, post-arrival

It’s not ideal for containerized cargo. Containers involve terminal handling, multi-leg logistics, and often require tighter control over delivery. Terms like FCA (Free Carrier) or FOB (Freight on Board) offer more flexibility and reduce surprises when working with container freight.

So is CFR most appropriate? When you’re shipping high-volume, low-complexity goods on vessels you or your client already trust. It’s a favorite in international trade circles because it simplifies contracts and freight booking—as long as the buyer knows what they’re inheriting once that ship leaves the dock.

Who Is Responsible for What in CFR?

This is where CFR makes or breaks your operation. The clearest advantage of CFR is knowing exactly what’s yours to manage—and what isn’t.

Seller’s Obligations

If you’re the seller, here’s your playbook:

• Arrange and pay for freight to the named port of destination
• Cover transportation costs and loading charges
• Handle export clearance and all export formalities, including any pre-shipment inspection
• Seller loads the goods onto the vessel—at their expense and risk
• Deliver a commercial invoice and required shipping documents
• Bear all the costs and risks until the cargo is loaded onboard
• Select and manage the shipping vessel, which often means securing a better rate or schedule than the buyer could on their own

That last part is important. CFR is often chosen when the seller arranges shipping better or faster than the buyer could. It’s a value-add, but it also means you’re committing to seeing the cargo safely onto the ship.

Buyer’s Responsibilities

Once those goods are on board, it’s the buyer’s show:

• Cover and obtain insurance for the sea leg
• Handle import clearance, tariffs, duties, and compliance checks at the destination port
• Arrange for discharge, inland freight, and delivery to the final destination
• Take on all risk once the goods leave the origin port
• Prepare for any additional costs (like demurrage or storage) if delays occur

CFR hinges on one simple but vital principle: whoever controls the goods during a particular part of the journey should bear the risk and cost.

9 Best Practices for Using CFR in International Shipping

A well-executed CFR transaction depends on clarity, timing, and preparation. Below are some best practices to help you navigate CFR agreements with confidence and avoid the common pitfalls that plague vessel agents and logistics managers alike.

1. Clear Communication

From the moment negotiations begin, it’s critical to ensure every party understands what’s being agreed to. Define who’s doing what and when, and be crystal clear about the named port of destination, delivery timeline, and payment expectations. Even seasoned professionals can make assumptions that lead to miscommunication. Don’t leave any room for interpretation—document everything in writing and confirm mutual understanding across the board.

2. Thorough Planning

Planning should go beyond booking freight. It includes coordinating stowage plans, securing dock space, understanding the vessel schedule, and ensuring proper cargo handling procedures. Sellers should confirm loading requirements in advance and work closely with stevedores or port authorities. For buyers, knowing the expected time of arrival helps with downstream planning like customs processing and inland transport.

3. Accurate Documentation

Sloppy paperwork is one of the fastest ways to derail an otherwise smooth CFR shipment. Sellers must double-check every field on the commercial invoice, bill of lading, packing list, and any required export/import licenses. Accuracy ensures customs clearance won’t be delayed and prevents disputes over what was actually shipped. For buyers, having complete and correctly prepared documents is essential to clear the goods at destination.

4. Adherence to Regulations

Each country has its own set of export and import clearance rules. Ensure your shipment is compliant by consulting local regulations on both ends. For example, some countries require pre-shipment inspection before loading can take place. Others mandate specific labeling or packaging standards. Missing a minor regulation can result in major delays, fines, or rejected cargo.

5. Insurance

Since CFR doesn’t cover insurance, it’s up to the buyer to obtain insurance that protects the goods from the moment they’re loaded on board. That means choosing a policy that covers marine risks—think rough seas, mechanical failures, theft, or even geopolitical events. Don’t wait until the vessel is en route; lock down a policy as soon as the contract is signed.

6. Freight Forwarder Support

New to international shipping? Even seasoned shippers benefit from using a freight forwarder—especially one with CFR experience. A good forwarder handles documentation, monitors shipment status, and communicates with the carrier, terminal, and customs broker. They’re a safety net for both the seller and buyer, and often spot issues before they become expensive problems.

7. Cost Transparency

Surprise charges can turn a profitable shipment into a loss. Make sure both parties have full visibility into freight costs, terminal handling fees, inland drayage, and other related expenses. Outline who pays what, and when, in the sales contract. This avoids disputes, particularly if port conditions change or additional services are required on short notice.

8. Risk Assessment

Every route has its quirks—weather, congestion, labor unrest, piracy. Conduct a risk assessment before committing to CFR. What could go wrong after loading? What’s the buyer’s plan for delays or damage? Are there backup ports or carriers in play? A little foresight here helps both parties make informed decisions and take reasonable precautions.

9. Choose the Right Incoterm

Just because CFR is common doesn’t mean it’s always the best choice. Ask yourself: is this containerized cargo? Does the buyer have limited import experience? Would FOB or CIF make more sense given the nature of the shipment? Match the term to the situation, not the other way around. In cases where neither party wants to take on certain responsibilities, consider alternatives like EXW or FAS.

When used thoughtfully, CFR can offer a clean division of responsibilities and costs. But it only works when both parties fully understand the implications—and prepare accordingly.

Conclusion on CFR Incoterms

CFR Incoterms remain a trusted option for high-volume, non-containerized shipments—especially when sellers want to control freight while buyers manage downstream logistics. But as with any trade term, the devil’s in the details. Understanding where cost and freight responsibilities begin and end is only half the battle. Ensuring documentation, communication, and planning are aligned is what turns a CFR agreement from a liability into a reliable framework.

Our platform, Base, supports vessel agents and logistics teams by giving you the tools to stay in control of costs, documents, and communication across each leg of the journey. From job tracking to invoice visibility, Base helps you keep stakeholders aligned—without the email back-and-forth or spreadsheet chaos.

Whether you’re using CFR or considering alternatives like CIF or FOB, Base brings structure to the most complex shipping workflows—so nothing gets lost in translation between the dock and the destination.

Key Takeaways

• CFR stands for Cost and Freight, where the seller pays for the transport to the destination port, but risk transfers to the buyer when goods are loaded at the origin port.
• Best used for bulk cargo or non-containerized goods shipped by sea or inland waterway transport.
• The seller arranges and covers the main freight costs, manages export clearance, and loads the goods onto the shipping vessel.
• The buyer is responsible for insurance, import clearance, unloading, and final inland delivery.
• Platforms like Base help you stay on top of freight costs, project workflows, and documentation so CFR transactions stay organized and on track.

Frequently Asked Questions