Negotiating shipping contracts can feel a bit like a game of chess. You make one wrong move and the whole game is lost. One of those “wrong moves” is agreeing to shipping terms you don’t actually understand. Unfortunately, this is a rather common occurrence and one of the biggest mistakes we see on a daily basis.
Freight Prepaid and Freight Collect are two such terms that are often confused and misunderstood. Keep reading to get a better understanding of freight collect and freight prepaid, then contact the team at Amware to simplify your shipping process.
Freight Collect and Freight Prepaid: What’s the Difference?
Freight prepaid and freight collect are two terms used to define who pays for a specific freight shipment, but they are often paired with another term, which defines who owns a shipment until delivery.
Freight Prepaid indicates that the shipper or consignor is responsible for the shipping charges, as well as any ancillary charges that might come up along the way. This is also sometimes referred to as “Prepaid & Add.”
- FOB Origin, Freight Prepaid: In this scenario, the buyer takes ownership of the shipment when it is picked up by the carrier. However, the seller maintains the responsibility for the cost and safety of the shipment.
- FOB Destination, Freight Prepaid: In this scenario, the seller maintains ownership of the shipment throughout the shipping process and is responsible for the cost and safety of the shipment until delivery.
Freight Collect indicates that the consignee or shipment receiver is responsible for the shipping charges, as well as any ancillary charges. This is sometimes referred to as “Collect Upon Arrival.”
- FOB Origin, Freight Collect: In this scenario, the buyer or receiver of the shipment takes ownership as soon as it is picked up by the carrier at the origin pick-up location. The buyer is also responsible for the cost and safety of the shipment until arrival.
- FOB Destination, Freight Collect: In this scenario, the seller maintains ownership of the shipment throughout the shipment process, and would be responsible if something were to happen to the shipment. However, the buyer is responsible for the cost of the shipment.
Common Shipping Acronyms & Their Meanings
In addition to Freight Prepaid and Freight Collect, there are a couple of other key terms you’ll want to be familiar with when negotiating shipping contracts including the following.
- FOB, Free on Board: This is the point in the supply chain in which the buyer accepts ownership of a shipment and the seller relinquishes their ownership.
- COD, Cash on Delivery: This is a situation in which the carrier would collect payment when the shipment is delivered.
- BOL, Bill of Lading: This is the terms and conditions for the shipment that outlines the freight and payment terms.
Let Amware Take Care of Your Logistics
Shipping industry jargon isn’t for everyone. The full-service freight and logistics professionals at Amware are here to help. Our team of experienced professionals can work with you to get the right terms for your business and make sure your deliveries arrive on time safely. Want to learn more? Contact us to get a free quote on your LTL shipping now, or sign up today to get a free 30-day trial of our premium LTL software platform, Amrate.