Your supplier in China offers a freight prepaid quote, while another forwarder suggests freight collect. Which arrangement makes more sense?
The difference goes beyond who pays the shipping bill. Destination charges, Incoterms, and payment deadlines can all affect your total cost.
Here’s how freight prepaid vs. collect works and what to check before booking an international shipment.
Table of Contents:
Freight Prepaid vs. Collect: What's the Difference?
Freight prepaid means the shipper or another designated party pays the agreed freight charges at origin. Freight collect means the consignee or another designated party pays the freight charges at destination.
These terms describe how the carrier or forwarder collects payment. They don’t determine cargo ownership, transfer of risk, or responsibility for every shipping expense.
| Freight Prepaid | Freight Collect | |
|---|---|---|
| Who pays? | Shipper or designated payer at origin | Consignee or designated payer at destination |
| Where is payment made? | Usually at origin | Usually at destination |
| Typical arrangement | Seller pays the main freight | Buyer pays the main freight |
| Does it include import duties? | No, unless separately agreed | No, unless separately agreed |
| Does it include final delivery? | Only when the service agreement includes it | Only when the service agreement includes it |
Both terms appear in international ocean and air freight. Actual billing arrangements depend on the carrier, forwarder, and agreed terms.
How Do Freight Prepaid and Collect Work?
Consider an importer shipping goods from Shenzhen for delivery to Los Angeles.
Freight Prepaid
The supplier arranges ocean freight and pays the agreed charges at origin. The bill of lading shows “Freight Prepaid.”
However, the importer may still need to cover destination handling, customs clearance, import duties, and local delivery.
Freight Collect
Under this arrangement, the importer agrees to pay the main freight charges at destination. The bill of lading shows “Freight Collect.”
Depending on the sales agreement, the buyer may also select a freight forwarder and manage the shipment directly.
Neither option automatically costs less. Compare the full quotation, including origin, freight, destination, and delivery charges.
How Do Freight Prepaid and Collect Relate to Incoterms?
Incoterms define how buyers and sellers divide delivery obligations, transportation costs, and cargo risk. Freight prepaid and collect only describe freight payment arrangements.
Common examples include:
- FOB (Free on Board): The buyer normally arranges and pays for the main ocean freight. Freight collect is common.
- CIF (Cost, Insurance and Freight): The seller arranges and pays for ocean freight and the required insurance to the named destination port. Freight prepaid is common.
- EXW (Ex Works): The buyer handles most transportation arrangements and costs from the agreed pickup point.
- DAP (Delivered at Place): The seller arranges and pays for transportation to the named destination. The buyer generally handles import clearance and duties.
These are typical arrangements, not mandatory freight payment labels.
Payment responsibility and cargo risk are separate issues. Under FOB and CIF, for example, risk generally transfers to the buyer once the goods are on board the vessel at the port of shipment.
Always check the Incoterms rule and named place in your sales contract before confirming shipping instructions.
Does Freight Prepaid Include Destination Charges?
Not necessarily. Prepaid freight doesn’t mean the shipper has covered every expense from origin to final delivery.
Depending on the quotation, the consignee may still pay:
- Destination terminal handling and port charges
- Customs clearance fees and import duties
- Delivery order and documentation charges
- Storage, demurrage, or detention fees
- Inland transportation and final delivery
For example, a supplier may prepay ocean freight from Shenzhen to Los Angeles, while the importer pays for customs clearance and trucking to their warehouse.
Ask your forwarder for an itemized quotation. Confirm which charges the rate includes and who pays the remaining costs.
Which Payment Term Should You Choose?
Your choice depends on your purchasing agreement, shipping volume, and preferred level of control.
Freight prepaid may suit you when:
- Your supplier offers a competitive shipping rate.
- You want the seller to coordinate the main transportation.
- You understand your responsibilities for destination charges.
Freight collect may suit you when:
- You prefer to select your own freight forwarder.
- You regularly import goods and negotiate freight rates.
- You want direct control over shipping arrangements and carrier selection.
Keep in mind that choosing your own forwarder doesn’t necessarily require destination-collect billing. You can arrange freight directly and pay the forwarder before shipment.
ASLG generally requires payment before arranging shipment. But we may offer flexible payment terms to established customers based on their cooperation history and agreed conditions.
Compare the total shipping cost and service scope rather than choosing solely based on the prepaid or collect label.
What Should You Confirm Before Booking Freight?
Before booking your shipment, confirm these five details:
- Incoterms: Check the agreed rule and named place in your sales contract.
- Freight payer: Confirm who pays the freight charges and where.
- Included charges: Check whether the quote covers origin fees, main freight, destination charges, and final delivery.
- Shipping documents: Make sure the bill of lading or air waybill matches the agreed payment terms.
- Payment terms: Confirm when payment is due. ASLG generally requires payment before arranging shipment, but established customers may qualify for agreed credit terms.
Keep all charges and payment agreements in writing to avoid disputes and delays.
Shipping from China? Get a Clear Freight Quote
When comparing prepaid and collect freight, look beyond the freight rate to understand your total shipping costs.
Airsupply offers international ocean and air freight services from China, including Amazon FBA and door-to-door delivery.
