Within the section “Freight Terms” on an LTL freight Bill of Lading, are two phrases that are often misunderstood: Freight Prepaid and Freight Collect. Understanding the meaning of the two, and their difference is an important factor in negotiating a shipment with a carrier and determining the correct billing process.
Keep reading to understand the difference between Prepaid & add, and Collect Upon Arrival when it comes to LTL shipping.
Freight Prepaid vs. Freight Collect
Understanding the difference between “Freight Prepaid” and “Freight Collect” is key to understanding who gets billed at the time of shipment. Unfortunately, many LTL shippers and shipment receivers don’t. Here’s the short and skinny of the two terms, and some other confusing matters to look out for.
The consignor (or shipper) is responsible for paying the LTL freight shipping charges, as well as any ancillary charges. This is also sometimes called “Prepaid & Add.”
The consignee (or shipment receiver) is responsible for paying the LTL freight shipping charges, as well as any ancillary charges. This is also sometimes called, “Collect Upon Arrival.”
Other Confusing Matters
In most LTL freight shipping transactions, shipments are not paid for before they are picked up. They can be, but that usually only happens when a person, company, or entity is shipping between their own locations, such as from their own distribution center to their own warehouse. In this case, any ancillary charges would be paid for afterward by the company.
Most LTL freight shipments do not require the carrier to collect payment at the time of delivery. This is also known as COD (Cash on Delivery) and is common to parcel post. If COD is required, the charges will not usually be related to the LTL freight payment terms at all, but rather for some other purpose.
How to Determine Who Gets Billed
As some of our readers will know, we recently wrote about understanding the freight bill and bill of lading. If you haven’t read it, definitely check it out.
On the bill of lading will be a clear directive on who gets billed for the freight services. This makes it easy for the carrier to charge for ancillary fees incurred while the shipment is processing, such as unexpected unloading or loading fees.
The freight terms are listed on the bill of lading because there isn’t an industry-wide carrier standard for billing. For this reason, billing terms are commonly laid out right on the receipt. Sometimes there are checkboxes on the bill that will say, “Prepaid” or “Collect.” Sometimes there is simply a handwritten note that says “Bill to:” with a name and address beneath it. If you’re not sure who will be billed for the LTL shipping services, it’s best to contact the carrier directly.
Simplify the Process with Amware
If dealing directly with carriers, shipping companies, and shipping contracts seems stressful, consider simplifying the process with the pros at Amware. As a third-party logistics provider, Amware has been simplifying the LTL freight shipping process for decades. Contact our team today for a free LTL freight quote, or sign up below for a free 30-day trial of Amrate, our cloud-based or integrated transportation management system (TMS).