Incoterms 2020 CFR Leave a comment

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Incoterms 2020 CFR

Within Incoterms, which define the rules of international trade, the so-called group C is distinguished. Group C includes rules where the basic transport costs are paid by the seller. In addition, the seller arranges transport and carries out customs clearance, and the risk is transferred to the buyer when the goods are on board the vessel. In this video, we’ll take a closer look at Incoterms 2020 CFR which means Cost and Freight.

As usual, we also discuss from cost, obligation, delivery, insurance and conclusion to understand this term, OK let start learn this CFR.

Incoterms 2020 CFR – Allocation of costs

What’s the seller take costs:
1. The seller take tax costs in the country where the goods were manufactured;
2. The seller take port charges at the port of departure;
3. The seller take costs of transporting goods to the port;
4. The seller take costs of obtaining an export license;
5. The seller take costs customs duties and taxes in the country of departure;
6. The seller take costs of goods quality control, weighing, measuring and counting the goods, which is necessary before loading the goods onto the vessel;
7. The seller take the costs of providing the transport document issued to the port of destination and its electronic copy;
8. The seller take transit costs that were on the seller’s account under the contract of carriage;
9. The seller take costs of security clearance for export, as well as safe and appropriately labeled packaging of the goods.

So what’s The buyer take cost.
1. The buyer take tax costs in the destination country;
2. The buyer take insurance costs during transport;
3. The buyer take transport costs from the home port to the main office;
4. The buyer take the costs of obtaining the import license necessary for the
5. The buyer take transaction and the costs related to import clearance;
6. The buyer take customs charges in transit countries and in the destination country;
7.The buyer take charges resulting from a pre-shipment inspection of goods, unless this is required in the country from which the goods are shipped;
8. The buyer take the cost of notifying the seller of the required shipping date and port of destination;
9. The buyer take all charges related to transit, unless stated otherwise in the contract of carriage;
10. The buyer take unloading costs including lighterage and wharfage charges unless stated otherwise in the contract of carriage.

Incoterms 2020 CFR – Obligations

What are the seller’s obligations?
1. The seller need loading at the starting point of transport.
2. The seller need making a contract for carriage.
3. The seller need delivering the goods on board the vessel along with a commercial invoice in the place indicated by the buyer, as well as bearing the costs related to it.
4. The seller need controlling the quality of goods, weighing, measuring and counting the goods – necessary before loading the goods onto the ship.
5. The seller need safe packaging of goods necessary for transport to avoid unnecessary risk.
6. The seller need operating according to all transport-related security requirements for transport to the destination.
7. The seller need providing a transport document issued to the destination port of the goods and its copy in electronic form.
8. The seller need providing information to the buyer at his expense and risk needed to obtain insurance.

So What are the buyer’s obligations?
1. The buyer need taking up the delivery at the time and place specified in the contract.
2. The buyer need transporting the goods from the named port of destination to the main office and unloading at the port.
3. The buyer need informing the seller about the port of destination and date of delivery.
4. The buyer obtains the import license necessary for the transaction and bears the costs of carrying out customs clearance.
5. The buyer carrying out pre-shipment controls of the goods (if it is required in the country from which the goods are shipped).
So those are the obligation, let check the delivery of goods, insurance and transport.

Incoterms 2020 CFR Delivery Of Goods, Insurance and Transport

According to Incoterms 2020 CFR, the moment of delivery and transfer of risk is when the goods are on board the vessel. Also, the buyer can purchase already delivered goods.

How about the Insurance of goods on the terms of CFR?
There is no obligation to make a contract of insurance. The buyer may, however, make it at his own cost and risk. In addition, the seller bears the risk, as well as loss or damage to the goods, only until the goods are on board the vessel. Besides, the buyer bears the additional risk of losing or damaging the goods if buyer has not notified the seller of the date of shipment and the destination port.

Then transport for Incoterms 2020 CFR
According to legal provisions, CFR applies only to sea and inland waterway transport. It is not used in other forms of transport.

The seller must provide the buyer with the transport document to the agreed port of destination at his own expense. This document must cover the contract goods, be dated within the period agreed for shipment, enable the buyer to claim goods from the carrier at the port of destination and enable the buyer to sell goods in transit by the transfer of the document to the next buyer or by notification to the carrier. The buyer must be provided with the full set of documents.

So let doing the final parties.

Incoterms 2020 CFR – Conclusion

The CFR rule, like the CIP, CPT and CIF rules, imposes basic costs on the seller. The obligations in this rule are also relatively similar to the obligations of the seller in the FOB rule. There is, however, a fundamental difference between them. In the case of the Incoterms CFR rule, the seller is responsible for transport. It means that the exporter finds the carrier, negotiates the appropriate contract and pays for the transport. In addition, it is recommended to use CPT rule if more than one mode of transport is used.

OK, CFR main content is finished too. Right now we are only have final one rule CIF, the next time we will discuss this final C group Incoterm rules.

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CFR

A1 GENERAL OBLIGATIONS
The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.
Any document to be provided by the seller may be in paper or electronic form as agreed or, where there is no agreement, as is customary.

B1 GENERAL OBLIGATIONS
The buyer must pay the price of the goods as provided in the contract of sale.
Any document to be provided by the buyer may be in paper or electronic form as agreed or, where there is no agreement, as is customary.

A2 DELIVERY
The seller must deliver the goods either by placing them on board the vessel or by procuring the goods so delivered. In either case, the seller must deliver the goods on the agreed date or within the agreed period and in the manner customary at the port.

B2 TAKING DELIVERY
The buyer must take delivery of the goods when they have been delivered under A2 and receive them from the carrier at the named port of destination.

A3 TRANSFER OF RISKS
The seller bears all risks of loss of or damage to the goods until they have been delivered in accordance with A2,with the exception of loss or damage in the circumstance described in B3.

B3 TRANSFER OF RISKS
The buyer bears all risks of loss of or damage to the good from the time they have been delivered under A2.
If the buyer fails to give notice in accordance with B10, then it bears all risks of loss of or damage to the goods from the agreed date or the end of the agreed period for shipment, provided that the goods have been clearly identified as the contract goods.

A4 CARRIAGE
The seller must contract or procure a contract for the carriage of the goods from the agreed point of delivery, if any, at the place of delivery to the named port of destination or, if agreed, any point at that port. The contract of carriage must be made on usual terms at the seller´s cost and provide for carriage by the usual route in a vessel of the type normally used for the transport of the type of goods sold.
The seller must comply with any transport-related security requirements for transport to the destination.

B4 CARRIAGE
The buyer has no obligation to the seller to make a contract of carriage.

A5 INSURANCE
The seller has no obligation to the buyer to make a contract of insurance. However, the seller must provide the buyer, at the buyer´s request, risk and cost, with information in thr possession of the seller that the buyer needs for obtaining insurance.

B5 INSURANCE
The buyer has no obligation to the seller to make a contract of insurance.

A6 DELIVERY/TRANSPORT DOCUMENT
The seller must, at its own cost, provide the buyer with the usual transport document for the agreed port of destination.This transport document must cover the contract goods, be dated within the period agreed for shipment, enable the buyer to claim the goods from the carrier at the port of destination and, unless otherwise agreed, enable the buyer to sell the goods in transit by the transfer of the document to a subsequent buyer or by notification to the carrier.
When such a transport document is issued in negotiable form and in several originals, a full set of originals must be presented to the buyer.

B6 DELIVERY/TRANSPORT DOCUMENT
The buyer must accept the transport document provided under A6 if it is in conformity with the contract.

A7 EXPORT/IMPORT CLEARANCE
a)Export clearance
Where applicable, the seller must carry out and pay for all export clearance formalities required by the country of export, such as:
•export licence
•security clearance for export
•pre-shipment inspection; and
•any other official authorisation
b) Assistance with import clearance
Where applicable, the seller must assist the buyer at the buyer´s request, risk and cost, in obtaining any documents and/or information related to all transit/import clearance formalities, including security requirements and pre-shipment inspection, needed by any country of transit or the country of import.

B7 EXPORT/IMPORT CLEARANCE
a) Assistance with export clearance
Where applicable, the buyer must assist the seller at the seller´s request, risk and cost in obtaining any documents and/or information related to all export clearance formalities, including security requirements and pre-shipment inspection, needed by the country of export.
b)Import clearance
Where applicable, the buyer must carry out and pay for all formalities required by any country of transit and the country of import, such as:
• import licence and any licence required for transit;
• security clearance for import and any transit;
• pre-shipment inspection; and
• any other official authorisation.

A8 CHECKING/PACKING/MARKING
The seller must pay the costs of those checking operations (such as checking quality, measuring, weighing, counting) that are necessary for the purpose of delivering the goods in accordance with A2.

The seller must, at its own cost, package the goods, unless it is usual for the particular trade to transport the type of goods sold unpackaged. The seller must package and mark the good in the manner appropriate for their transport, unless the parties have agreed on specific packaging or marking requirements.

B8 CHECKING/PACKING/MARKING
The buyer has no obligation to the seller.

A9 ALLOCATION OF COSTS
The seller must pay:
a)all costs relating to the goods until they have been delivered in accordance with A2, other than those payable by the buyer under B9;
b) the freight and all other costs resulting from A4, including the costs of loading the goods on board and transport-re-lated security costs;
c)any charges for unloading at the agreed port of discharge that were for the seller’s account under the contract of carriage;
d) the costs of transit that were for the seller´s account unde the contract of carriage;
e)the costs of providing the usual proof to the buyer under A6 that the goods have been delivered;
f)where applicable, duties, taxes and any other costs related to export clearance under A7(a); and
g) the buyer for all costs and charges related to providing assistance in obtaining documents and information in accordance with B7(a).

B9 ALLOCATION OF COSTS
The buyer must pay:
a) all costs relating to the goods from the time they have been delivered under A2, other than those payable by the seller under A9;
b) the costs of transit, unless such costs were for the seller´s account under the contract of carriage;
c) unloading costs including lighterage and wharfage charges, unless such costs and charges were for the seller´s account under the contract of carriage;
d) the seller for all costs and charges related to providing assistance in obtaining documents and information in accordance with A5 and A7(b);
e)where applicable, duties, taxes and any other costs related to transit or import clearance under B7(b); and
f)any additional costs incurred if it fails to give notice in accordance with B10, from the agreed date or the end of the agreed period for shipment, provided that the goods have been clearly identified as the contract goods.

A10 NOTICES
The seller must notify the buyer that the goods have been delivered in accordance with A2.
The seller must give the buyer any notice required to enable the buyer to receive the goods.

B10 NOTICES
The buyer must, whenever it is agreed that the buyer is entitled to determine the time for shipping the goods and/or the point of receiving the goods within the named port of destination, give the seller sufficient notice.

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