x Businesses and shippers specializing in import-export and sea transport need to find out what freight collect is?
x You can't distinguish between freight prepaid and freight collect, what are the similarities and differences?
x Do you want to know what are the benefits of freight collect for stakeholders in ocean freight?
PROSHIP.VN we will synthesize knowledge about the term freight collect, what is it? What are the similarities and differences between prepaid freight and freight collect?,...Along with that, we point out important notes when transporting goods by sea so that shippers, businesses, and transport units can grasp them promptly. .
Freight collect: Concept, benefits for all parties
What is freight collect?
What is freight collect? Freight collect is a type of freight where the buyer will pay freight and shipping charges at the destination port. Often appears in contracts as EXW, FOB, and when the goods are specified. The freight collector is usually the forwarder's agent at the receiving port (destination port). To make it easier to imagine, you can compare this fee with paying your phone bill after using the service (postpaid).
Benefits of Freight collect for all parties
- With Shipping Line:
Only accept debt (pay later) in cases where the buyer places freight for groups E and F. In this situation, the shipping company will receive payment when the goods arrive at the import port. To receive the goods, the buyer needs to pay freight and local fees.
- For sellers:
If they sell to groups E and F, they do not have to assume responsibility for booking freight. So they don't need to care whether the fee is prepaid or postpaid.
- For buyers:
Through booking freight and requesting payment later, the shipping company has greater responsibility during the service process. This helps avoid cash jams and allows buyers, in case they do not have financial resources available, to have the ability to rotate capital to pay employees' salaries.
Freight Prepaid and Freight Collect are the same, how are they different?
In the import-export industry, Freight prepaid and Freight collect are two terms that are mentioned quite a lot. But this is also a type of fee that can easily cause confusion if you don't really understand it. To help distinguish between prepaid and postpaid charges, you can refer to the following information:
Similarities between Freight prepaid and Freight collect
Freight prepaid and Freight collect are similar in that:
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- All Local Charges are paid at the loading or unloading port;
- These are all fees that will be paid to the party where you directly book the train;
- These are all fees collected when importing and exporting goods via sea.
Difference between Freight prepaid and Freight collect
Freight prepaid is the freight that the shipper must pay at the port of shipment before the goods are accepted onto the ship. This means that if you want the goods to be transported, the shipper must pay the freight in advance and the shipping company does not accept payment later (debt).
This type of charge is often applied in CIF contracts, and FWD often calls the shipping unit "freehand goods". There are also differences between Freight prepaid and Freight collect that can be compared based on:
| Criteria | Freight Prepaid | Freight Collect |
|---|---|---|
| Party pays the freight | The sender is responsible for paying shipping fees. At the same time, they must pay other fees and charges related to international shipping activities. | The recipient is responsible for paying shipping fees. At the same time, other costs including incidental fees are also paid by them. |
| Fee collection party | The shipping company collects from the sender | Forwarder's agent collects from the recipient |
| Freight port | Loading port | Port of discharge |
| Bill of lading shown | On the Master Bill and House Bill | Only available on House Bill |
| Purchase conditions apply | Usually used in group C and D terms | Usually used in group terms E and F |
Purpose of Freight Collect and Freight Prepaid
The purposes of two types of freight prepaid and freight collect are:
- Freight prepaid and Freight collect are to avoid risks for shipping lines, eliminating the situation of unrecoverable freight debt;
- In case the exporter is the charterer, the shipping company collects the freight in advance because the importer only needs to present valid documents to be able to pick up the goods;
- In case the importer is the charterer, the payment can be collected later. When the goods arrive at the destination port, the importer will have to make payment to be able to pick up the goods.
What should you keep in mind when transporting goods by sea?
Do you know what Freight collect is and what is similar and different from freight prepaid, etc. So, when transporting goods by sea, to ensure the goods arrive safely and quickly, what should you pay attention to?
- Learn carefully about fees and surcharges related to sea freight activities to avoid confusion when sending goods;
- Pay attention to packaging goods properly to ensure safety and limit risks of damage, theft, etc.
- Carefully check the goods being transported to make sure the goods being sent do not belong to the list of prohibited transportation according to State regulations;
- Carefully agree with the buyer or seller when signing the Sales Contract under which Incoterms conditions. Based on the contract conditions, determine the fees payable according to regulations.
Proship Logistics has conveyed to your business the knowledge you need to know about the term freight collect . And it is understanding the difference between Freight Collect and Freight Prepaid that will help you understand the costs and responsibilities of international shipping. For any questions related to maritime transportation, freight, surcharges, etc., please contact 0909 344 247 for answers.
