Freight prepaid or collect
Home — Freight prepaid or collect
Who pays the carrier, where they pay it, and why the two words on the bill of lading matter.
Two words that decide who is out of pocket
Every bill of lading says either freight prepaid or freight collect. It is a small field on the document and it settles a large question: whether the seller pays the carrier at origin, or the buyer pays at destination.
Get it wrong and the cargo lands with an unexpected invoice attached to it, in a country where neither party wants to argue about it. The term must agree with what the sales contract already said — which is why this belongs beside the Incoterm, not after it.
Who pays,
Whoever pays the carrier is normally the one who books it. Payment and control travel together.
Freight prepaid
Paid by the shipper / exporter
Paid
At origin.
Paid by
The seller.
Who controls transport
The seller — they choose the carrier and the routing.
On the documents
Marked “Freight Prepaid”.
Best for
Seller-managed shipments, and anywhere the seller wants control of the routing.
Freight collect
Paid by the consignee / importer
Paid
At destination.
Paid by
The buyer.
Who controls transport
The buyer — their carrier, their contract, their rates.
On the documents
Marked “Freight Collect”.
Best for
Buyer-managed shipments, and buyers with freight rates better than their supplier’s.
Four things the term quietly decides
None of these are about the freight rate itself. They are about who is exposed when something moves.
Accurate documentation
The freight term appears on the bill of lading and the invoice. If those two disagree, the bank and the customs broker both stop.
Cost responsibility
A clear understanding of who pays, agreed before the booking rather than argued after arrival.
Smooth operations
Avoids the delays, disputes and extra charges that come from cargo landing with an unexpected invoice on it.
Stronger trade relationships
Clarity is what makes a second order easy. Most freight disputes are not about the amount, but about who expected to pay it.
At a glance
Three questions, and the same answer runs down each column.
Who pays
Prepaid → the exporter · Collect → the importer
Where it is paid
Prepaid → at origin · Collect → at destination
Who controls the shipping
Prepaid → the seller · Collect → the buyer
What the B/L says
The words “Freight Prepaid” or “Freight Collect”, in the freight field
It has to match the Incoterm
The rule that catches people out
The freight term on the B/L must agree with the Incoterm in the contract
The Incoterm decides who arranges and bears the main carriage; the freight term is how that shows up on the transport document. Under the C-terms — CFR, CIF, CPT, CIP — the seller contracts the main carriage, so the bill normally reads prepaid. Under the F-terms — FCA, FAS, FOB — the buyer contracts it, so it normally reads collect. If your bill of lading and your sales contract disagree, one of the two is wrong, and it is cheaper to find out before the vessel sails.
Freight prepaid or collect — the one-page version
The whole guide on a single sheet, sized for WhatsApp and for A4. Ours to give away.