Freight Clause

The Freight Clause is a core provision in international trade contracts that specifies which party bears the transportation costs, the payment method, and the payment timing. It is typically used in conjunction with trade terms (such as FOB, CIF) but is independent of them, specifically governing freight details. Application scenarios include: allocation of freight responsibility under sea, air, and land transportation modes. Precautions: it is necessary to clarify whether freight is prepaid or collect, whether surcharges (such as bunker adjustment factor, port congestion surcharge) are included, the payment currency, and exchange rate risks. Difference from trade terms: although trade terms (such as CIF) include freight, they only stipulate that the seller bears the cost, whereas the Freight Clause further details the payment milestones (e.g., prepaid after shipment, collect before discharge) and cost composition. If not stipulated in the contract, disputes may arise. Therefore, foreign trade practitioners should, taking into account the mode of transport, market practices, and customer credit, clearly specify the Freight Clause in the contract to avoid losses caused by freight fluctuations or payment delays.