Freight Prepaid

Freight Prepaid is a common freight payment term in international trade, meaning the seller (shipper) pays the full freight to the carrier before or at the time of loading the goods onto the vessel. This term is typically used with trade terms such as CIF, CFR, CIP, and CPT, where the seller arranges transportation, indicating that the freight has been borne and prepaid by the seller to the shipping company or freight forwarder. It is often used when the seller has strong bargaining power or when the buyer requires a CIF quotation. Key points to note include: prepaid freight is generally non-refundable even if the goods are lost; the seller must ensure 'Freight Prepaid' is correctly marked on the bill of lading, otherwise it may affect the buyer's ability to take delivery; it is the opposite of 'Freight Collect,' where the buyer pays the freight at the destination port. The difference lies in the allocation of risk and cost: under prepaid, the seller bears the freight cost and includes it in the quotation; under collect, the buyer bears it. Additionally, in letter of credit transactions, banks strictly scrutinize the freight notation on the bill of lading, and mislabeling may result in document discrepancies.