Freight to Collect

Freight to Collect is a common payment method for freight charges in international trade, meaning that the transportation costs are paid by the consignee at the destination, rather than prepaid by the shipper at the port of origin. This term is typically used in conjunction with F-group or C-group trade terms (such as FOB, FCA, CFR, CIF, etc.), but note: under CIF or CFR, the seller is supposed to pay freight to the destination; if the contract stipulates 'Freight to Collect,' it means the freight is borne by the buyer, potentially altering the default rules of the trade term. It is often used when the buyer has a long-term agreement with the carrier to obtain better rates, or when the buyer wants to control shipping arrangements. Precautions include: 1) The bill of lading must clearly mark 'Freight Collect,' otherwise the carrier may default to prepaid; 2) Collect freight is usually higher than prepaid, and the buyer may face additional handling fees; 3) If the buyer refuses to pay, the carrier may exercise a lien, potentially involving the seller. It is the opposite of 'Freight Prepaid,' where the shipper pays. The difference lies in who bears the cost and the point of risk transfer; with collect, the seller must ensure the bill of lading is correctly marked to avoid the carrier seeking payment from the seller.