Freight Collect is a term used in the shipping industry to describe a payment arrangement where the receiver of the goods is responsible for paying the shipping costs at the time of delivery. This arrangement is typically outlined in the shipping contract and indicated on the bill of lading, a legal document issued by a carrier to acknowledge receipt of cargo for shipment. This term is important in the management of logistics and financial transactions between shippers, carriers, and consignees (receivers of the goods).
How Freight Collect Works
Shipping Agreement
When a shipment is arranged as Freight Collect, the shipper and consignee agree that the transportation charges will be borne by the consignee. This agreement is usually formalised in the shipping documentation.
Bill of Lading
The bill of lading will clearly state that the freight is to be collected from the consignee upon delivery. It serves as a contract of carriage and a receipt issued by the carrier to the shipper.
Payment Process
Upon arrival of the goods, the carrier will present the consignee with an invoice for the freight charges. The consignee must settle these charges before receiving the shipment. Failure to pay can result in the carrier withholding the goods.