Cost and Freight (CFR)
An Incoterm where the seller pays for the cost of goods and freight to the named destination port. Unlike CIF, insurance is not included and must be arranged by the buyer.
Cost and Freight (CFR), sometimes written as CNF or C&F in older contracts, is similar to CIF but without insurance. The seller pays for manufacturing and ocean freight to the named destination port, but the buyer must arrange their own marine cargo insurance. Risk transfers to the buyer at the port of origin, just as with FOB and CIF.
CFR is less commonly used than FOB or CIF in modern trade, but you may encounter it when suppliers quote prices. Some suppliers default to CFR because it avoids the hassle of arranging insurance while still offering an "all-in" feel to the price. However, this creates a dangerous gap: if your goods are damaged or lost at sea and you forgot to arrange insurance, the loss is entirely yours.
The practical difference between CFR and CIF is typically small in cost (marine cargo insurance adds roughly 0.3-0.5% to the invoice value), but the consequences of being uninsured can be catastrophic. If you receive a CFR quote, either ask the supplier to convert it to CIF, or immediately arrange your own cargo insurance through your freight forwarder or an insurance broker.
Why it matters
If offered CFR terms, always arrange your own marine cargo insurance immediately. The cost is minimal (0.3-0.5% of invoice value) compared to the risk of an uninsured shipment loss.
Practical Tip
If offered CFR terms, always arrange your own marine cargo insurance immediately. The cost is minimal (0.3-0.5% of invoice value) compared to the risk of an uninsured shipment loss.
You'll hear this when…
When requesting quotes
“"Please provide your best CFR price for 500 units shipped to Los Angeles."”
When reviewing shipping documents
“"The bill of lading shows the goods were transferred under Cost and Freight (CFR) terms at the port of Shenzhen."”
When negotiating payment
“"We'd like to confirm whether your quoted price is on Cost and Freight (CFR) basis before finalizing the purchase order."”
Related Terms
Cost, Insurance, and Freight
CIFAn Incoterm where the seller pays for cost of goods, insurance, and freight to the named destination port. Risk transfers to the buyer once goods are loaded on the vessel at origin.
Free on Board
FOBAn Incoterm where the seller delivers goods on board the vessel at the named port of shipment. Risk transfers from seller to buyer once goods pass the ship's rail.
Incoterms
A set of 11 internationally recognized trade terms published by the International Chamber of Commerce (ICC) that define the responsibilities, costs, and risks between buyers and sellers in international transactions.
Landed Cost
The total cost of a product delivered to your warehouse, including the product price, shipping, insurance, customs duties, customs broker fees, and drayage. The true cost you must use for pricing and margin calculations.
This term appears in every Bottlecap report.
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