The International Trade Blog International Sales & Marketing

Incoterms 2020 CFR: Spotlight on Cost and Freight

On: September 8, 2025 | By: David Noah | 6 min. read

Incoterms 2020 CFR: Spotlight On Cost and Freight | Shipping Solutions Incoterms 2020 rules are the latest revision of international trade terms published by the International Chamber of Commerce (ICC). They are recognized as the authoritative text for determining how costs and risks are allocated to the parties conducting international transactions.

Incoterms 2020 rules outline whether the seller or the buyer is responsible for, and must assume the cost of, specific standard tasks that are part of the international transport of goods. In addition, they identify when the risk or liability of the goods transfer from the seller to the buyer.

In this article, we’re discussing the Incoterm CFR, also known as Cost and Freight.

There are 11 trade terms available under the Incoterms 2020 rules that range from Ex Works (EXW), which conveys the least amount of responsibility and risk on the seller, to Delivered Duty Paid (DDP), which places the most responsibility and risk on the seller. The Incoterms 2020 Rules: Chart of Responsibilities and Transfer of Risk summarizes the seller and buyer responsibilities under each of the 11 terms.

For a summary of Incoterms 2020 and a short definition of each of the 11 terms, read An Introduction to Incoterms, or watch the video below.

Cost and Freight Responsibilities and Risk

Under the Incoterms 2020 rules, CFR means the risk or liability for the goods transfers from the seller to the buyer as soon as the goods are loaded on board the vessel at the port of export before carriage takes place. However, the seller is responsible for transportation costs until the goods arrive at the port of destination on the buyer's side. So, while the seller is paying for the international transport, the buyer is liable for the condition of the goods during the journey.

Cost and Freight Transportation Options

The ICC has divided the 11 Incoterms into those that can be used for any mode of transportation and those that should only be used for transport by “sea and inland waterway.” That’s because companies were choosing Incoterms where risk and responsibilities transferred at a point that made no sense in a non-ocean journey.

Under Incoterms 2020, CFR should only be used for sea and inland waterway transport.

Using Cost and Freight

With all of the C-group terms, including CFR, the seller is responsible for contracting international transportation. The named place where the transfer of responsibility occurs is always on the buyer’s side.

Although buyers and less experienced exporters may prefer an F-group term, C-group terms are preferable to more experienced exporters, because they allow you to deal directly with the carrier; documentation, bills of lading and all the information needed for letters of credit originate from a single place. Additionally, using C-group terms allow you more negotiation power, especially if you book a lot of freight.

That being said, like all four of the Incoterms 2020 rules designed for sea and inland waterway transport, CFR is best used in situations where sellers have direct access to the vessel for loading, i.e. bulk cargo or non-containerized goods. For most exports however, Carriage Paid to (CPT) might be a better Incoterms choice. The named destination under CPT can be any freight destination.

Using CFR may be advantageous to the buyer when goods originate in a high-risk country. Loading costs must be included in the quote.

Frequently Asked Questions about CFR and Incoterms 2020

What does CFR mean in Incoterms 2020?

CFR stands for Cost and Freight. Under the Incoterms 2020 rules, it means the seller pays for the cost of transporting goods to the port of destination, but the risk transfers to the buyer once the goods are loaded on the vessel at the port of export. CFR is used exclusively for ocean and inland waterway transport.
What is the difference between CFR and CIF?

The main difference is insurance. Under CFR (Cost and Freight), the seller is not responsible for insuring the goods during transit. Under CIF (Cost, Insurance and Freight), the seller must provide minimum insurance coverage for the goods while in transit. Both are limited to sea and inland waterway transport.
When should I use CFR instead of other Incoterms?
Use CFR when:
- You are shipping non-containerized goods or bulk cargo via ocean transport.
- You have direct access to the vessel for loading.
- You want to control the freight costs but not take on the risk during transit.
For containerized goods or multimodal transport, CPT (Carriage Paid To) is typically a better option.
Who arranges freight under CFR?

The seller is responsible for arranging and paying for international freight to the buyer’s port of destination. However, the buyer bears the risk for the goods once they are loaded onto the vessel at the origin port.
What are the buyer’s responsibilities under CFR?
Under CFR, the buyer is responsible for:
- Marine insurance (if desired)
- Unloading at the destination port
- Import customs clearance
- Duties and taxes
- Inland transportation beyond the destination port
Is CFR a good Incoterm for U.S. exporters?

It depends on the situation. Experienced U.S. exporters may prefer CFR because it gives them control over freight booking and documentation, which is especially helpful when using letters of credit. However, if you're exporting containerized goods, CPT or FCA may be more appropriate due to better alignment with modern logistics practices.
Can CFR be used for air freight or trucking?

No. CFR is designed only for sea and inland waterway transport. For other modes of transport—such as air, rail, or truck—use CPT (Carriage Paid To) instead.
Where does risk transfer from seller to buyer under CFR?

Risk transfers from the seller to the buyer once the goods are loaded onto the vessel at the port of origin—not at the destination port. This is a common point of confusion.

Learn More about Incoterms 2020 Rules

If you are regularly involved in international trade, you need to understand the risks and responsibilities for each of the Incoterms 2020 rules, not just pick the term you always use. Start by getting a copy of ICC's Incoterms® 2020 Rules book.

Read our articles about each of the Incoterms 2020 rules here:

If history is any indication, the Incoterms 2020 rules will be around for at least a decade. Now seems like the perfect time to make sure you understand each of the terms, so you can make sure you’re speaking the same language as your international trading partner.

Like what you read? Subscribe today to the International Trade Blog to get the latest news and tips for exporters and importers delivered to your inbox.

This article was first published in March 2017 and has been updated and revised based on the changes made with the release of the Incoterms 2020 rules.

About the Author: David Noah

As president of Shipping Solutions, I've helped thousands of exporters more efficiently create accurate export documents and stay compliant with import-export regulations. Our Shipping Solutions software eliminates redundant data entry, which allows you to create your export paperwork up to five-times faster than using templates and reduces the chances of making the types of errors that could slow down your shipments and make it more difficult to get paid. I frequently write and speak on export documentation, regulations and compliance issues.

PassagesThe International Trade Blog

Incoterms 2020 CFR: Spotlight on Cost and Freight

Cost and Freight Responsibilities and Risk

Cost and Freight Transportation Options

Using Cost and Freight

Frequently Asked Questions about CFR and Incoterms 2020

What does CFR mean in Incoterms 2020?

What is the difference between CFR and CIF?

When should I use CFR instead of other Incoterms?

Who arranges freight under CFR?

What are the buyer’s responsibilities under CFR?

Is CFR a good Incoterm for U.S. exporters?

Can CFR be used for air freight or trucking?

Where does risk transfer from seller to buyer under CFR?

Learn More about Incoterms 2020 Rules

Are you confused by the various Incoterms 2020 Rules?

Subscribe to the Newsletter!