CFR is an appropriate Incoterms® rule for transport of bulk and general cargo by water. The transfer of costs and risk takes place at different times.
Seller arranges and pays for:
- All transport up to agreed port of destination.
- Export formalities and export documents.
Buyer arranges and pays for:
- Unloading at port of destination, if nothing else was agreed in the contract of carriage.
- Transport from the agreed port of destination to final destination.
- Import formalities and local import documents.
Suitable for:
- Trade within and outside the EU.
- Transport of bulk and general cargo by ship.
- Payment via Letter of Credit or documentary collection.
Not or less suitable for:
- Container transport, as the containers cannot be opened to check whether the seller has delivered correctly.
- Transport by air, road, or rail.
Transfer of risk from seller to buyer:
- Once seller delivers the goods on board the vessel at departure port, as with FOB. Buyer carries risk during sea transport.
Points of attention:
- Only intended for transport by water.
- The transfer of costs (port of arrival) and risk (port of departure) take place at different times.
- Agree upon the exact location at the port of destination.