When you’re buying or selling goods, knowing your Incoterms® means that both parties to your contract will be speaking the same language—at least when it comes to transportation costs. Incoterms act as a handy shorthand to define who pays for what when moving goods to the buyer’s final destination.
Below, we’ll walk you through the CFR Incoterm.
What Does CFR Mean?
CFR stands for Cost and Freight. Along with FAS, FOB, and CIF, it’s one of four Incoterms that applies only to goods that move via sea and inland waterway.
Under the CFR Incoterm, the seller pays for all the costs up to and including the ocean freight to a destination port of the buyer’s choosing. In other words, if the contract says “CFR Port of Los Angeles,” that means that the seller will pay for all costs to get the goods onboard a vessel and to the Port of Los Angeles.
Once the vessel arrives at the port, the buyer is responsible for any expenses to move the goods to their final destination.