Incoterms
CFR (Cost and Freight)
Sea-only Incoterm under which the seller pays the freight to the destination port, but risk passes to the buyer once goods are on board.
In four languages
Under CFR the seller books and pays the sea freight to the named destination port, such as CFR Jebel Ali or CFR Sohar, and clears the goods for export. However, risk moves to the buyer when the goods are loaded on board in China, not when they arrive. The seller does not have to insure the goods, so the buyer should arrange its own cover. Destination terminal charges and local fees are for the buyer unless the seller's freight contract includes them. Example: a Kuwait importer buys CFR Shuwaikh because the supplier offers a low freight. On arrival the importer pays destination THC, the D/O fee and documentation charges, and the container is not insured because the importer did not arrange a policy. Under ICC guidance, CPT is the better choice for containers.
Questions
Who carries the risk during the voyage under CFR?
The buyer. Risk passes when the goods are on board at the port of loading, even though the seller pays the freight.
Do I need insurance if I buy CFR?
The seller is not required to insure under CFR, so the buyer should arrange its own cargo insurance.