Incoterms Explained: Cost and Freight (CFR) – The Essential Guide for eCommerce Logistics

December 6, 2023
13 min read

In global trade, understanding the nuances of shipping terms can be the difference between a seamless transaction and a logistical nightmare. For eCommerce businesses, mastering terms such as  'Cost and Freight' (CFR) is not just beneficial – it's essential.

CFR, a key player in the suite of International Commercial Terms (Incoterms), carries a range of responsibilities and risks that companies must navigate with precision. By fully understanding its stipulations, eCommerce entities can optimise their logistics, reduce uncertainties, and gain a competitive edge in the marketplace. 

Read on to learn the ins and outs of CFR Incoterms. With Bezos as your guide, transform this knowledge into a tangible asset for your eCommerce logistics strategy.

What Is CFR Incoterms?

CFR Incoterms represent a rule of international trade, particularly for sea and inland waterway transport. This term signifies a commitment by the seller to handle a multitude of tasks, expenses, and risks associated with the delivery of goods to the buyer's specified destination.

The Seller's Commitment

When a seller agrees to sell products under CFR terms, they are taking on several layers of responsibility:

AspectSeller's Responsibilities
Contract of CarriageAccountable for the contract that outlines the carriage of goods to the designated port of destination. This includes selecting a trustworthy carrier, coordinating the shipment, and confirming that the transit adheres to the established delivery schedule.
Costs Up to DestinationResponsible for all costs related to transporting the goods, including export fees and charges incurred during the loading process until they reach the destination port. 
Loading of GoodsThey must ensure that the items are stowed and secured onto the vessel appropriately for the journey, adhering to all safety and industry standards to prevent damage during transit.
Export FormalitiesClearing the stock for export, which means handling all the bureaucratic procedures required by the customs authorities, including the provision of necessary documentation and payment of relevant tariffs.
DocumentationProvide the buyer with a shipping document that allows them to claim the merchandise upon arrival at the destination port. Typically, this is a bill of lading that serves as evidence of the contract of carriage and receipt of goods.

The Buyer's Role

While the seller has significant responsibilities under CFR terms, the buyer is not without obligations:

AspectBuyer's Responsibilities
PaymentPay the price of the load as stipulated in the contract of sale. This is typically done through a letter of credit or other agreed-upon payment methods.
Import FormalitiesHandle all import customs clearances and pay the necessary duties, taxes, and other charges upon the goods' arrival.
Unloading CostsBear the costs associated with unloading the cargo from the vessel and any subsequent handling charges.
Onward CarriageIf the consignment needs to be transported from the port of destination to another location, arrange and pay for this additional carriage.

Risk Transfer

A critical aspect of CFR Incoterms is the transfer of risk from the seller to the buyer. This transfer occurs the moment the shipment is loaded onto the vessel at the port of shipment. From that point onwards, should any loss or damage occur to the goods, the vendee bears the consequences, not the vendor.

Strategic Considerations

Businesses using CFR must strategically consider the choice of carrier and the implications of shipping routes and schedules. The seller's control over these elements can significantly impact the timing and cost-effectiveness of the delivery, which in turn can affect the buyer's inventory and sales cycles.

CFR Under Incoterms 2020

The update to Incoterms 2020 has been marked by a series of refinements rather than a complete overhaul, particularly in the context of CFR. These adjustments have been aimed at enhancing the clarity and practicality of the terms. 

Here, we delve into the nuances of these clarifications and their implications for businesses worldwide:

Update CategoryIncoterms 2010Incoterms 2020
Allocation of CostsGeneral guidance on cost allocation between seller and buyer.A clearer demarcation of expenses, specifying which party is responsible for each cost associated with the shipping process. 
This precision assists in preventing disputes over unexpected charges and facilitates smoother financial planning for both parties.
Insurance CoverageNo specific recommendations on insurance.Explicit recommendations regarding insurance coverage. 
It suggests that purchasers consider obtaining cargo insurance to cover the risk of loss or damage once the goods have been loaded onto the vessel, as the risk transfers from the seller to the buyer at that point.
Security-Related RequirementsLimited guidance on security-related obligations.Provides guidance on the obligations of the vendor and vendee concerning security requirements for transport and customs clearances. 
This is particularly pertinent given the heightened focus on security in global shipping logistics.
Bills of LadingRequirement for a bill of lading, but less emphasis on on-board notation.Under CFR terms, the seller must provide a bill of lading with an on-board notation to the buyer. 
The 2020 update ensures that the significance of this requirement is understood, as it represents the moment when the risk transfers to the purchaser.
Terminal Handling Charges (THC)Some ambiguity regarding the responsibility for THC.These charges can be a source of confusion and contention, and the revised terms aim to clarify who is responsible for these costs, reducing the potential for friction between the seller and the buyer.

CFR: The Seller's Perspective

Adopting CFR Incoterms from the vendor's perspective offers a strategic advantage in international trade. This stems from the control and negotiation leverage they retain over the shipping process. 

Here, we explore the benefits and considerations for those operating under CFR terms:

Control Over Shipping LogisticsThe seller’s ability to select the shipper, route, and delivery timing promotes logistical efficiency, aligning shipping with production schedules and inventory for an optimised supply chain.
Freight Rate NegotiationThe ability to consolidate shipments allows for better freight rate negotiations, leading to cost savings.
Relationship With CarriersEstablishing strong relationships with carriers can lead to prioritised treatment and flexible shipping terms.
Predictability in CostsManaging the main carriage provides sellers with upfront knowledge of costs, aiding in accurate pricing strategies.
Risk ManagementControl over the carriage process allows vendors to minimise risks of damage or loss until the point of transfer.
Streamlined Export FormalitiesHandling export formalities directly ensures compliance and can prevent shipping delays.

CFR: The Buyer's Perspective

While CFR Incoterms offer certain advantages to sellers, from the buyer's perspective, the dynamics are different. They need to consider several factors when engaging in contracts under CFR terms, as their control over the shipping process is limited. 

Here's an in-depth look at the implications:

Considerations for BuyersDescription
Limited Control Over TransitNo direct control over the selection of the carrier, shipping route, or schedule, potentially impacting timelines and specific shipping preferences. They must rely on the seller to make decisions that align with their inventory needs and sales forecasts.
Potential for Higher Freight CostsSellers may add a markup to the freight costs. For buyers, this can mean higher overall costs for the goods, as they have no direct influence over the negotiation of freight rates.
Dependency on Seller's Shipping ChoicesThe seller's choices for carrier and shipping terms may not always align with their preferences. If they prioritise cost over speed or reliability, the buyer may face delays or service issues that can impact their supply chain and customer satisfaction.
Risk of Hidden CostsFees at the destination port may not be transparent at the outset. These hidden costs can accumulate and lead to budget overruns if not properly anticipated and accounted for in financial planning.
Insurance ConsiderationsThe transfer of risk upon loading necessitates obtaining insurance. This is an additional cost and responsibility that requires careful consideration to protect against potential transit risks.
Import Formalities and ComplianceThe process of import customs clearances and associated duties demands a good understanding of the local regulations and can involve considerable time and resources to ensure compliance.
Onward Carriage CoordinationCoordinating the onward carriage from the destination port requires additional logistics planning and can introduce more complexity into the buyer's supply chain management.

Streamline Your Global Trade With Bezos

Navigating the complexities of CFR Incoterms isn’t an easy task for any eCommerce business aiming to expand globally. Bezos understands that whether you're a burgeoning UK drinks brand on Shopify or an Australian consumer brand eyeing the British and European markets, the intricacies of CFR terms can significantly impact your operations and bottom line.

We've tailored our services to alleviate the pain points associated with CFR Incoterms. Our full-service fulfilment solution takes the guesswork out of the equation, offering you the control and cost-effectiveness that CFR terms often compromise for both buyers and sellers. 

With Bezos, you gain the advantage of:

  • Expert Negotiation for Freight Rates: By leveraging our volume consolidations, we secure competitive freight rates, minimising costs for sellers while ensuring buyers aren't burdened with hidden fees.

  • Seamless Import Formalities: Our adept team navigates customs clearances and import duties, simplifying what is often a complex process for buyers and ensuring compliance for sellers.

  • End-To-End Order Fulfilment Transparency: With our real-time tracking and powerful reporting, both parties have full visibility over inventory and shipments, maintaining clarity and confidence throughout the transaction.

  • Flexible, No-Strings-Attached Service: Reflecting our commitment to radical transparency, we offer flexibility with no long-term contracts or minimum volumes, ensuring our services align with the dynamic needs of different businesses.

  • Fulfilment With a Focus on Expansion: By partnering with Bezos, you're not just choosing a fulfilment service; you're opting for a powerful drive towards sustainable growth. Our dedicated account managers become part of your team, responding to your needs swiftly, allowing you to focus on what you do best – growing your brand.

Don't let the intricacies of CFR Incoterms set you adrift in the vast sea of global trade. Anchor your eCommerce business with Bezos's expertise and robust fulfilment network. Speak to an expert to streamline your shipping process and start saving today. 


Understanding CFR Incoterms is crucial for any business involved in international trade. These terms delineate the responsibilities, risks, and costs between buyers and sellers, influencing the dynamics of global shipping and logistics. While CFR offers sellers control over the shipping process and the potential for cost savings, buyers must be vigilant about the implications, particularly regarding freight costs and the transfer of risk. 

Moreover, the evolution from Incoterms 2010 to 2020 has brought about clarifications that enhance the practical application of these terms, ensuring that businesses can navigate the complexities of global trade with greater confidence and efficiency. Also, for those seeking to streamline their shipping and fulfilment processes, Bezos stands as a robust partner, equipped to handle the intricacies of CFR Incoterms with expertise. 

Get your free quote today and start transforming your logistics into a competitive advantage.

2 min read

Premium wines delivered reliably and less environmental impact

2 min read

Scaling orders volumes whilst saving time and money on fulfilment