CFR FO or CFR + FO — When to Use It?

QUESTION

Dear Mr. Old Man,

Good day.

Could you kindly explain whether there’s any difference between CFR FO and CFR + FO as used in letters of credit?

Also, which type of shipment are these Incoterms suitable for—containerized cargo, break bulk, bulk cargo, etc.?

Does this mean CFR FO (or CFR + FO) is only applicable when a Charter Party Bill of Lading (CPBL) is used?

Appreciate your guidance.

Thank you.

Best Regards,

Ms. Woo

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ANSWER

Hi Ms. Woo,

Great question! Let’s break it down:

CFR FO = Cost and Freight – Free Out

This term is often seen in bulk or break-bulk cargo shipments (think coal, cement, grain—not your standard container stuff). These types of shipments are usually carried under Charter Party contracts, and that’s where the FO (Free Out) comes into play.

• “Free Out” means: the buyer pays for the unloading at the port of discharge.
• Meanwhile, the seller pays for the cost and freight to get the goods to the destination port.

So, in short:

• Seller: gets it to the port.
• Buyer: gets it off the ship.

CFR FO vs. CFR + FO

Functionally, there’s no difference in meaning between CFR FO and CFR + FO.

But in terms of proper usage:

• CFR FO is the correct and commonly accepted format.
• CFR + FO might be used informally or for explanation, but it’s not how it appears in official shipping documents or contracts.

Applicable To What?

• Yes, CFR FO is specific to bulk or break-bulk cargo, usually not used for containerized shipments (which typically follow liner terms).
• You’ll often see CFR FO accompanied by a Charter Party Bill of Lading (CPBL)—that’s the standard practice in the shipping world when these terms are used.

Example of Correct Usage

Let’s say your shipment is headed to Hai Phong:

CFR FO Hai Phong Port

No need for fancy punctuation. Keep it short, sharp, and seaworthy.

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Hope this clears things up nicely!

Best regards,

Mr. Old Man