What does CFR - Cost and Freight mean- by bnmbgtrtr52

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									?"Cost and Freight". What does that mean? These were the very questions I asked
when I first heard of it. Well today, I am going to give my explanation as best as I can
about this shipping term.

Ok, I have previously gone through in my blog about Ex Works and FOB, if you have
read about them, it will definitely help. CFR simply means you add your Ocean
Freight cost, which is the cost you pay for booking a container to the other costs you
are incurred when making a purchase. As I mentioned before, the container is a steel
box that is used to contain all the goods you desire to ship. It comes in a 20 footer size,
40 footer size and 40 footer high cube size. I will dwell into that some other time.

So this is how CFR works. A buyer from Africa wants to buy 10 container loads of
ginger bread man dolls from you and he asked you for a quote CFR (Tema Port). So
what do you do? Well, firstly you calculate the quantity you can load, into the
container, and then calculate the product's total price per container. This friend is ex
works.

So now let's proceed to add the forwarding charges, which include the forwarding fee
and also the haulage charges. Now with that done, you get yourself an FOB price.

Then we proceed by adding the ocean freight on top of the FOB price. This gives you
the CFR price.

Recap: CFR = Product price + Forwarding and Haulage Charges + Ocean Freight Fee

So what is the benefit of quoting your customer CFR? The thing is, it will help your
customer get the most accurate costing available to him at that period of time. If he is
a serious buyer who needs to make a purchase confirmation within the next few days
or week, then this is the most accurate cost he can rely on. Of course he will have to
be aware of the import duties in his country to get a final nett price which he will be
paying for your ginger bread man dolls.

Again, always remember to get your currency exchange rates correct and note the
trend, is the US dollar going up or down these past few days, what's the movement
going to be tomorrow and onwards, especially the time the products are meant to be
shipped.

Remember to place a short validity to your CFR quote because it will protect you
from the crazy fluctuations of transportation and ocean freight prices. Always double
check your shipping costs before you make your delivery. Get a verbal confirmation
AFTER you get a black and white or documented quote from your transporter,
forwarder, haulier and forwarding agent. This way, you free yourself from the risk of
quoting the wrong prices. Your ginger bread man dolls would really blow your
business away!
So there you go, the meaning of CFR made easy for you. If you are new to shipping,
make sure you consult your shipping agents to learn these terms better. If you do your
homework, it will just make your job and theirs easier. Ultimately, making your
customer's job of buying from you an easy as ABC 123!

For more, come to my site /blog/ I'll bless you with long term business survival.

								
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