Short Answer
Overview
Collect, sometimes written as “collect freight,” is a shipping term indicating that the transportation charge is to be paid by the consignee (the party receiving the goods) at the time of delivery, rather than by the shipper. The term is commonly used in freight contracts, bill of lading documents, and logistics software to designate the payment responsibility for the movement of goods.
History / Background
The practice of collecting freight from the consignee dates back to the early days of rail and ocean freight in the 19th century, when carriers needed a reliable method to ensure payment for long‑distance shipments. The term was formalised in the United States with the development of the Uniform Bills of Lading and later incorporated into the International Chamber of Commerce’s Incoterms, which standardise trade terms for global commerce.
Importance and Impact
Collect shipments affect cash flow, risk allocation, and operational planning. Because the shipper does not bear the freight cost, they can preserve working capital, while the consignee assumes the financial liability and any associated customs or handling fees. Carriers also use the collect designation to prioritise billing and collection processes.
Why It Matters
For businesses engaged in e‑commerce, manufacturing, or wholesale distribution, knowing whether a shipment is collect or prepaid determines invoicing procedures, accounting treatment, and customer service expectations. Misunderstanding the term can lead to delayed payments, disputes, or unexpected costs at the point of delivery.
Common Misconceptions
Collect means the carrier will not deliver until payment is received.
Carriers typically deliver as scheduled; the consignee settles the freight charge upon receipt, not before delivery.
Collect freight is the same as “cash on delivery” (COD) for the goods themselves.
COD refers to payment for the merchandise, whereas collect refers solely to the transportation fee; both can exist together but are distinct concepts.
FAQ
How does a collect shipment affect customs clearance?
Customs duties are usually payable by the consignee, and the collect designation reinforces that the receiver is responsible for all charges, including duties, taxes, and freight.
Can a shipper change a prepaid shipment to collect after dispatch?
Changes are possible but must be agreed upon by the carrier and documented in an amendment to the bill of lading; the carrier may charge an amendment fee.
Is collect freight the same as FOB shipping point?
No. FOB (Free on Board) determines when title and risk transfer; collect refers specifically to who pays the freight charge, which can be combined with any Incoterm.
Leave a Reply