Understanding the Cost and Freight (CFR) Pricing Method for Coffee Exports
When goods are bought or sold under the Cost and Freight (CFR) pricing method, the seller is responsible for the delivery of the goods to a ship and loading the goods onto the ship. The seller is also responsible for any customs export documentation and export licenses that may be required. Like "Free on Board" (FOB) and "Free on Trade" (FOT), "Cost and Freight" (CFR) transfers the risk of the goods once they are on the ocean vessel. The main difference between CFR and these other methods is that the seller, not the buyer, is responsible for contracting and paying for the overseas transit.
Explaining the Cost and Freight (CFR) in simple terms
When people sell coffee using CFR, they are responsible for getting the coffee to the ship and making sure it is loaded properly. They also have to take care of any papers and licenses needed to export the coffee. Like FOB and FOT, CFR transfers the risk of the coffee once it is on the ship. The difference is that the seller, not the buyer, is responsible for paying and arranging the trip overseas.
Main points to remember
- CFR is a pricing method for coffee exports
- The seller is responsible for the delivery of goods to the ship and loading goods onto the ship
- The seller is also responsible for any customs export documentation and export licences
- Transfers risk of goods once on an ocean vessel
- The main difference from other methods is the seller is responsible for contracting and paying for the overseas transit.