CFR

cfr vs cif
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CFR vs CIF: Key Differences and Which is Right for Your Business?

This article analyzes the differences between two important terms used in shipping, CFR, which stands for Cost and Freight, and CIF, which stands for Cost, Insurance and Freight in the perspective of international trade and more specifically about the services offered by Hongocean. Both terms spell out a need for the seller to pay the shipping costs, but one of these terms is with insurance while the other is not. Under CFR, once the goods are loaded on the ship the buyer assumes liability for those goods but there is no insurance from the seller’s side. This is different from CIF, which allows the seller to provide basic marine insurance which informs the buyer that he has some security while the goods are in transit. The article discusses the responsibilities of respective parties in the global shipping logistics and how the terms state influence risk and cost distribution in the global shipping logistics.

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Basic guide to the international trade term CFR

In the international business and marketing, Incoterms such as Cost and Freight (CFR) describe the main roles and duties of both the buyer and the seller. CFR makes the seller responsible to put the goods at a certain port and the buyer pays for the costs of transport up to the port. Once the goods are loaded on the vessel, risks pass to the buyer and the costs from shipment to the final destination are met including import custom duties and handling fees. Similar to CFR there are CIF in which insurance is included in CFR plus CIP in which the sellers get to arrange insurance to the destination. These Incoterms are very crucial in foreign trade contracts so that any confusion can be eliminated when contracting by avoiding the use of ambiguous words or phrases.

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