CFR incurs more significant risk and responsibility for the seller who pays for the carriage of the goods up to the named port of destination.
The risk is transferred to the buyer at the country of export. Specifically, when the goods have been loaded on board the ship.
The shipper pays for export clearance and freight costs to the selected port. Furthermore, he is responsible for any damage to the goods on board the ship until the port of final destination.
The buyer pays for local delivery from the port to the final destination and is responsible for purchasing insurance. If the buyer requires the seller to obtain insurance, the parties should consider the Incoterm CIF instead.
CFR should only be used for non-containerised sea freight and inland waterway transport. For all other modes of transportation – and for containerised goods – it should be replaced with CPT, as specified in a critical change in Incoterms 2020.
