Trade knowledge / Incoterms CFR: Spotlight on Cost and Freight
Date: 2017-05-02
Incoterms CFR: Spotlight on Cost and Freight
Incoterms are the official International Chamber of Commerce (ICC) rules for the explanation of trade terms. Incoterms 2010 is adhered to by all major trading nations of the world, and it is the authoritative text for determining how costs and risks are allocated to the parties conducting international transactions. Incoterms facilitate the conduct of international business by defining the responsibilities of the involved participants.
This is the ninth article in our series investigating the basic meaning of all 11 Incoterms. We’ve also covered the following:
Free Carrier (FCA)
Delivered At Place (DAP)
Delivered Duty Paid (DDP)
Carriage Paid To (CPT)
Cost, Insurance and Freight (CIF)
Carriage and Insurance Paid To (CIP)
Free On Board (FOB)
Ex Works (EXW)
Today, we’re discussing the Incoterm CFR, also known as Cost and Freight.What Does the Cost and Freight (CFR) Trade Term Mean?
CFR means “the seller delivers the goods on board the vessel or procures the goods already so delivered.” (The full text of the 2010 edition of the Incoterms rules is available athttp://store.iccwbo.org/.)
When Can CFR Be Used?
CFR can be used only for goods transported by sea or inland waterway.
Benefits and Considerations of CFR
With CFR, the seller enters into a contract of carriage and prepays the freight costs.
The seller delivers the goods, cleared for export, loaded on board the vessel.
Risk transfers from seller to buyer once the goods are loaded on board (before the main carriage takes place).
CFR is best used in situations where the seller has direct access to the vessel for loading, i.e., bulk cargos or non-containerized goods. For containerized goods, consider CPT instead. (Incoterms Explained)
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