Cost and Freight (CFR) is a pivotal Incoterm for Australian businesses involved in importing goods. As international trade grows and regulatory settings evolve, understanding how CFR works—and how it’s changing in 2025—can make the difference between a smooth shipment and a costly headache.
What is Cost and Freight (CFR)?
CFR is an Incoterm commonly used in sea and inland waterway transport, where the seller covers the cost of transporting goods to a specified port, but the buyer assumes risk once the goods are loaded onto the vessel. This arrangement splits costs and responsibilities in a way that can benefit both parties, but also requires careful management, especially in the current economic climate.
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Seller's obligations: Deliver goods, pay for carriage to the port, provide export clearance.
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Buyer's obligations: Assume risk after loading, cover insurance and import duties, arrange onward transport in Australia.
For example, if an Australian retailer imports electronics from China under CFR Sydney, the Chinese supplier pays shipping to Sydney, but the Aussie retailer is responsible for insurance and all costs (and risks) from the moment the goods are loaded at the port in China.
2025 Policy Updates Impacting CFR Shipments
This year, several updates and trends are influencing CFR agreements for Australian importers:
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Biosecurity reforms: The 2025 Australian Biosecurity Import Levy has increased, raising costs for imported containers. Importers using CFR must budget for these additional fees, as they become payable upon arrival at Australian ports.
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Customs compliance: The Australian Border Force has tightened documentation checks, requiring more precise declarations of value and freight costs under CFR. Incorrect documentation may lead to delays or penalties.
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Shipping disruptions: Global freight rates have stabilised after the volatility of 2023–2024, but port congestion in Asia and the Middle East is still causing unpredictable transit times. Under CFR, importers bear the risk for delays after loading, so contingency planning is essential.
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Marine insurance trends: With the buyer responsible for insurance under CFR, the rising cost of marine insurance—especially for high-value or perishable goods—means careful comparison shopping is a must in 2025.
CFR in Practice: Pros, Cons, and Risk Management
Is CFR the right choice for your next import? Here’s a breakdown of the main advantages and pitfalls for Australian businesses in 2025:
Advantages:
- Often lower upfront shipping costs, as sellers may negotiate bulk rates with carriers.
- Simplifies logistics up to the port of discharge—ideal for buyers with strong local expertise.
Disadvantages:
- Risk passes to buyer at the overseas port, even though goods are still in transit.
- Hidden costs: Import levies, port handling charges, and insurance can add up quickly.
- Less control over the choice of carrier and shipping schedule.
In 2025, best practice for CFR importers includes:
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Requesting full breakdowns of freight and local charges before finalising contracts.
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Engaging reputable customs brokers and freight forwarders to manage compliance and logistics.
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Budgeting for higher insurance and biosecurity fees in line with new Australian regulations.
Real-World Example: An Australian Importer's CFR Journey
Consider an Australian outdoor furniture company importing from Vietnam under CFR Brisbane. In 2025, the seller arranges sea freight to Brisbane and provides export paperwork. The Australian importer, however, must:
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Organise marine insurance for the full value of the shipment.
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Pay the 2025 biosecurity levy and customs duties upon arrival.
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Arrange local transport from the port to their warehouse.
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Manage risk of loss or damage in transit (after loading in Vietnam).
This setup can be cost-effective, but only with strong local partners and clear contract terms. A single missed detail—such as underestimating port charges or failing to arrange timely insurance—can erode profit margins.
Conclusion: CFR in 2025—A Smart Move?
CFR remains a popular Incoterm for Australian importers, especially those confident in managing local logistics and compliance. With 2025’s policy changes and ongoing shipping challenges, it’s more important than ever to review your CFR contracts and processes. By staying informed and working with experienced partners, Australian businesses can continue to trade globally—and profitably—under CFR terms.