What is the difference between CFR and CIF?

They are identical except for insurance. Under CIF the seller must buy marine insurance for the voyage; under CFR insurance is the buyer's responsibility. In both, the seller pays the ocean freight and risk passes at loading.

Who bears the risk during the sea voyage under CFR?

The buyer. Risk transfers when the goods are loaded on board the vessel at origin, even though the seller continues to pay the freight to the destination port.

Can CFR be used for air or container shipments?

No. CFR is restricted to sea and inland waterway transport. For air freight or containers handed over at a terminal, the correct equivalents are CPT (Carriage Paid To) or CIP (Carriage and Insurance Paid To).

Does the seller insure the goods under CFR?

No. CFR includes no insurance obligation. Because risk has already passed to the buyer at loading, the buyer should arrange their own cargo insurance for the voyage.

Glossary

CFR (Cost and Freight)

Cost and Freight · CFR Incoterm · C&F

CFR (Cost and Freight) is an Incoterms 2020 rule for sea and inland waterway transport. The seller pays the cost of carriage to the named destination port, but risk transfers to the buyer as soon as the goods are loaded on board the vessel at the port of origin. The seller pays freight; the buyer carries the risk during the main voyage.

Last updated: June 2026

Key facts

CFR applies only to sea and inland waterway transport — not air, road or container terminals.
The seller pays freight to the destination port but does not insure the cargo.
Risk passes to the buyer once the goods are placed on board the vessel, even though the seller is paying the freight beyond that point.
The cost transfer point and the risk transfer point are different, which is the defining feature of CFR.

How CFR splits cost and risk

CFR is one of the trickier Incoterms because cost and risk part company. The seller arranges and pays for ocean freight all the way to the buyer's destination port. However, the seller's risk ends the instant the goods are loaded on board the vessel at the origin port. From that moment, if the cargo is damaged or lost at sea, the loss falls on the buyer — even though the seller is still paying for the voyage.

This split exists because CFR is a "C" rule (a shipment, not a delivery, contract). The seller delivers by handing the goods to the carrier and paying carriage, but does not guarantee arrival. Buyers who do not understand this often assume that because the seller paid the freight, the seller also bears the risk in transit — which is wrong.

CFR vs CIF and FOB

CFR is identical to CIF (Cost, Insurance and Freight) except for one thing: under CIF the seller must also buy marine insurance for the voyage, whereas under CFR insurance is the buyer's problem. Because risk has already passed to the buyer at loading, a sensible buyer on CFR terms arranges their own cargo insurance to cover the voyage.

CFR also differs from FOB (Free On Board). Under FOB the buyer arranges and pays the main freight; under CFR the seller does. In both, risk passes when the goods are on board, but who pays for the ocean leg is reversed. Like FOB and CIF, CFR is strictly a maritime term and should not be used for containers handed over at a terminal or for air freight.

Example

A Chinese supplier sells goods CFR Hamburg. The supplier books and pays the ocean freight from Shanghai to Hamburg. As soon as the containers are loaded onto the ship in Shanghai, the risk passes to the German buyer. If a storm damages the cargo mid-Atlantic, the buyer bears the loss — so the buyer should arrange their own marine insurance even though the seller paid the freight to Hamburg.

Why it matters for marketplace sellers

When importing stock CFR, remember the seller pays the freight but you, the buyer, carry the risk from the moment of loading — arrange your own cargo insurance.
CFR only suits sea freight; if your supplier ships by air or hands containers to a terminal, use CPT or CIP instead to avoid a mismatched term.
A CFR quote covers freight to the destination port only — you still pay terminal handling, import clearance, duty and import VAT to get goods to your warehouse.
Compare CFR against CIF: CIF includes minimum insurance, which can be simpler than arranging your own, though the cover level is often low.