Incoterms answer a limited set of questions
Incoterms 2020 describe how delivery duties, particular costs and transport risks are allocated between seller and buyer. They do not by themselves set product quality, transfer of title, credit period or dispute law. A valid inquiry should state the precise version and named place, for example FCA [named terminal], Incoterms 2020, rather than only three letters.
FOB and CFR are sea and inland waterway rules
Under FOB the seller delivers the goods on board the nominated vessel at the named loading port and risk passes at that stage. Under CFR the seller contracts and pays the freight to the named destination port, while risk normally transfers once the goods are on board at loading. CFR does not inherently require the seller to buy cargo insurance. Neither term should be casually used for every container transaction.
Container shipments may fit FCA or CPT better
ICC guidance specifically warns that FOB is often unsuitable where a container is handed to the carrier at a terminal before vessel loading. FCA can fit a named terminal or inland handover. Where the seller pays main carriage on a multimodal or container shipment, CPT may be more appropriate than CFR. Choose the rule based on physical delivery, not how familiar its acronym looks.
Compare two exporter offers fairly
Give all suppliers the same product quality, net tonne quantity, target loading month, packaging and named place of delivery. Separate product price from freight, insurance, import duties, inspection costs and bank charges. Ensure the purchase contract specifies who manages export and import clearances for the chosen term.
Frequently asked questions
Technical and commercial answers below are general sourcing guidance. Actual contracts and current destination rules prevail.
Does CFR include cargo insurance?
No, CFR does not by itself oblige the seller to arrange cargo insurance.
Can I request FOB for a container?
It may be inappropriate for terminal handover; review FCA or another suitable rule with your logistics adviser.
Are import taxes covered by Incoterms?
The chosen rule affects obligations, but duties and taxes must be analysed for the precise transaction and destination.
Sources
