Glossary term
CFR
Incoterms rule: the seller pays carriage to the named destination port, but risk passes when goods are on board at origin.
Cost and Freight. The seller contracts and pays for carriage to the named port of destination and clears the goods for export.
The trap is the split between cost and risk. Risk passes when the goods are on board at the port of shipment, not on arrival - so the buyer bears the risk of loss during a voyage the seller is paying for. A buyer under CFR who arranges no insurance is uninsured for the whole sea leg.
CFR is for sea and inland waterway transport only. Its containerised equivalent is CPT. Adding insurance to the seller’s obligations gives CIF.