What are the differences between FOB and CFR?

Previously on this website, I have explained the differences between EXW & FCA, FOB & FCA and FOB & CIF.

Today I would like to talk about the differences between FOB Incoterms and CFR Incoterms.

Firstly, I need to make the definitions on each incoterms as follows.

Definition of FOB according to Incoterms 2010 rules

FOB means Free on Board. According to incoterms 2010 rules, an exporter delivers the goods to the importer once the goods shipped on board a named vessel at the port of loading.

Exporter neither arranges the transportation from port of loading to port of discharge, nor pays for the freight cost under FOB terms.


Additionally exporter has no obligation against the importer in regards to marine insurance.

Definition of CFR according to Incoterms 2010 rules 

CFR means Cost and Freight. According to incoterms 2010 rules, an exporter delivers the goods to the importer once the goods shipped on board a named vessel at the port of loading just like the FOB Incoterms.

Exporter not only has to arrange the transportation from port of loading to port of discharge, but also must pay for the freight cost under CFR terms.

Finally exporter has no obligation against the importer in regards to marine insurance.
Differences between FOB Incoterms and CFR Incoterms
Once you read the definitions of each incoterms, you will realize that the only difference between FOB and CFR is the arrangement of the transportation and the freight cost paying party.
Booking Container
  • Under FOB Incoterms 2010 importer books the container with his own forwarder or carrier.
  • Under CFR Incoterms 2010 exporter books the container with his own forwarder or carrier.
Freight Cost
  • Under FOB Incoterms 2010 importer has to pay for the freight cost, which is necessary to bring the goods from port of loading to the port of discharge.
  • Under CFR Incoterms 2010 exporter has to pay for the freight cost, which is necessary to bring the goods from port of loading to the port of discharge.
Blogger Widget