Incoterms 2020
FOB vs CFR
Compare Free On Board and Cost and Freight side by side: who pays freight, where risk transfers, and who clears customs.
| Field | FOB | CFR |
|---|---|---|
| Applies to | Sea and inland waterway only | Sea and inland waterway only |
| Risk transfers to buyer | When the goods are on board the vessel at the named port of shipment. | When the goods are on board the vessel at the origin port. Risk passes at origin even though the seller pays freight to destination. |
| Main carriage paid by | Buyer | Seller |
| Insurance | No party is obliged to insure. | No party is obliged to insure. The buyer bears the in-transit risk and should insure. |
| Export clearance | Seller | Seller |
| Import clearance and duties | Buyer | Buyer |
| Seller handles | Deliver the goods on board the vessel, cleared for export. | Load the goods and pay ocean freight to the destination port. |
| Buyer handles | Ocean freight, insurance, import clearance, unloading, and delivery. | Insurance in transit, import clearance, unloading, and delivery. |
| Best for | Traditional non-containerized sea trade with a clear on-board handoff. For containers, FCA is technically more appropriate. | Buyers who want the seller to book freight but want to control insurance. |
Fields that differ are highlighted in teal. General guidance only, not legal advice. Your sales contract governs. Based on Incoterms 2020.
FOB vs CFR questions
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