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When it comes to moving LTL freight, it’s important to know the differences between the 3 primary types of freight charges that you will encounter; collect, prepaid, and third-party.
The differences between these types of freight charges ultimately affect who to bill and when. Knowing and understanding the differences between these on your Bill of Lading (BOL) is not only useful, but it is also necessary when dealing with LTL freight. Understanding these terms can also help you better negotiate future contracts with carriers in order to ensure you’re getting your preferred terms before moving forward.
What is Collect Freight?
With collect freight, freight payment is made by the consignee. This person can either be the shipper or the receiver. All LTL charges and additional fees are the responsibility of the consignee. This type of freight charge is also sometimes called “Collect Upon Arrival” because it is handled at the time that the shipment arrives.
What is Prepaid Freight?
In the case of prepaid freight, the cosigner, otherwise known as the shipper, is responsible for all LTL freight charges and any additional charges added. This term is also sometimes known as “Prepaid & Add.”
What is Third Party Freight?
In the case of third-party freight, this means freight payment is neither the responsibility of the shipper or receiver, but falls to the responsibility of a third party, generally a logistics company. The involved logistics company is the one responsible in this case for all LTL and additional charges.
No matter which way the freight is billed, it will indicate on the Bill of Lading which freight terms are being used to give you a clear indication of who is responsible for billing purposes. Knowing and understanding the differences between collect freight, prepaid freight, and third-party freight can help you map your business decisions and make sure you’re partnering with carriers who use your preferred terms.
FAQs
The main transportation types are air freight, ocean freight, and truck freight, with each type offering unique benefits. To leverage the benefits they provide, it is important to carefully identify which one is suitable for your business.
What are the different types of freight charges? ›
Freight charges have multiple components, including the cost of transport, fuel charges, local taxes, special charges, handling charges and emergency costs.
What is the 3 method in shipping? ›
There are three primary methods of shipping: ground, air, and maritime. Ground shipping is the most common, and typically the cheapest, method of shipping. It uses trucks and trains to transport goods over land.
What are the three types of freight documentation? ›
As far as interstate transportation of goods in the US, there are three documents that are of the greatest importance: the bill of lading, freight bill, and the Free On Board (FOB) terms of sale.
What are the 3 groups of cargo? ›
Group A: Cargoes that may liquefy Solid bulk cargoes categorized into three distinct groups in the Code: Group B: Cargoes that possess chemical hazards Group C: Non- harzardous cargoes (cargoes that do not meet Group A or B)
What are the three types of shipping? ›
All three modes of shipping-land, air, and sea-play a significant role in our economy.
What is 3 way logistics? ›
The names derives from the way they can send their shipment by either Land, Air or Ocean. The company was founded by Florencio Mario Simao Martins in May 2001. 3Way also works on Freight services, freight forwarding, and as a cargo agent.
What are the methods of freight? ›
Freight shipping is the process of transporting commodities, goods and cargo by land, sea or air. Common types of freight shipping over the road include truckload, less than truckload (LTL) and intermodal. Freight itself can be defined as the goods transported by truck, train, ship or plane.
What is the 3 container method? ›
A very popular method is the 3-container method. You take 3 containers, they could be plastic bins, trash bags, laundry baskets, or just make 3 clean areas on the floor for piles. The 3 containers are for: keep, remove, and store. Sometimes there is a fourth for donation or selling.
What is the most common type of freight? ›
Less Than Truckload (LTL)
Less than truckload or less than load (LTL) is one of the most widely used methods of shipping. It takes an economical approach in transporting smaller types of freight that can range in weight from 100 to 20,000 pounds.
COMMONLY-USED SHIPPING TERMS AND THEIR IMPLICATIONS
| Terms of Sale | Payment of Initial Freight |
|---|
| FOB Destination, Freight collect and allowed (deducts from invoice) | Receiver |
| FOB Origin, Freight prepaid | Shipper |
| FOB Origin, Freight collect | Receiver |
| FOB Origin, Freight prepaid and charged back (adds to invoice) | Shipper |
3 more rowsA freight bill includes transactional details and costs for a freight shipment, including services rendered and accessorial charges. A freight bill generally describes cargo in a freight shipment, specifies any NMFC code where applicable, and supports additional details not included in a bill of lading.
What are the different modes of freight? ›
There are several types of freight transportation, including road, rail, air, ocean/ship, and multimodal transport, each with its own advantages and disadvantages. Understanding these modes of transportation can help businesses make informed decisions about the best way to move their goods.
What are the three types of transportation? ›
What Are The Different Modes Of Transportation?
- Land Transport.
- Air Transport.
- Water Transport.
