The freight forwarding process can be pretty complicated, especially with the number of documents that are required in shipping. There are many different terms involved, and some of them can be confusing. This blog goes over the terms “freight collect” (also commonly known as “shipping collect”) and “freight prepaid,” which are often used in conjunction with the two terms “FOB Origin” and “FOB Destination.”
What Does Shipping Collect Mean?
Shipping collect, also known as “freight collect,” is an indicator of who is responsible for the cost of shipping and the additional charges that need to be paid for a particular shipment. In the case of freight collect being identified, the consignee or receiver will be in charge of the freight. The term “Collect Upon Arrival” is also used in reference to freight collect.
The function of freight collect is similar to the “Cash on Delivery” (COD) arrangement in online shopping. Except, only the freight costs are paid for by the consignee or receiver when the cargo arrives. Things like the cost of goods would already be arranged for.
FOB Origin Freight Collect: with this term, the consignee or receiver of the shipment receives ownership of the freight as soon as it has been picked up by the carrier at its origin. The buyer is also responsible for both the safety and costs of the shipment until its arrival at the destination.
FOB Destination Freight Collect: with this term, the consignor or shipper retains ownership of the cargo during the transportation process, and would be held responsible for any damages or delays that may occur to the shipment. However, the buyer is still responsible for the end cost.
What is Freight Prepaid?
Freight prepaid is the opposite of freight collect. A freight prepaid indicates that the consignor or shipper is responsible for the shipping charges and any other extra charges that may pop up. Freight prepaid is occasionally referred to as “Prepaid & Add.”
FOB Origin Freight Prepaid: with this term, the ownership of the shipment is transferred to the consignee or receiver once the shipment gets picked up by the carrier. However, the responsibility for the safety and costs of the cargo remains with the seller.
FOB Destination Freight Prepaid: with this term, the cargo ownership stays with the consignor or shipper during the shipping process. Furthermore, the seller is also responsible for the safety and costs of the shipment until it has been successfully delivered to the destination.
Freight Collect or Freight Prepaid – Which One Is Better?
Since the two terms identify which party pays for a freight shipment, the answer to this question really depends on who you ask.
For a seller, choosing freight collect would appear to be the better option, as the possibility of paying for extra freight charges falls onto the consignee or receiver. On the contrary, a buyer would most definitely prefer utilizing freight prepaid, since that alleviates the responsibility of footing the bill for any risks that the shipment may go through during transportation.
Let SFI Help You!
The logistics and shipping industry can be incredibly complicated to navigate, and the amount of confusing terminology does not help. And it’s totally normal to be confused by everything. That’s why there are industry experts like SFI here to help you! SFI seeks the most cost-effective ways to transport all types of commodities using every available shipping option. We have years of experience and can handle anything. Contact SFI today and we’ll take care of your shipping needs. We have professionals ready to help resolve any shipping problems you may have. Email us at info@sfi.com or call us at (909) 594-3400.
