Freight charges; are you actually aware of the various freight charges and ways to cover the cost of shipping freight? It doesn’t matter if the freight is going across town, across the nation, or even across the globe. There are numerous forms of freight charges. You need to be aware of what to watch for and the types of freight charges that can be used to cover the cost of shipping the merchandise.
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Though most of the terms are standardized, there are constantly updates. Organizations such as the International Chamber of Commerce (ICC), – the world’s largest representative business organization, publishes the International Commercial Terms (Incoterms), globally recognized commercial shipping terms used for commercial transactions or procurement processes.
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That doesn’t mean individual organizations, agencies, and even countries won’t have their own set of commonly used terms. Actually they all do, from places like the University of Main to the United States Army and everyone in between.
So sometimes it can get a bit confusing when dealing with regional dialect. In the USA what we call a truck they call a lorry in Great Britain. But that doesn’t mean most of the key terms change. Here are a few examples in trucking business that remain same all the time and shouldn’t change:
- Air Bill (Air Waybill); provides information regarding the weight, the charges, the freight itself, and other information required by the air carrier, basically a freight bill, for the air carrier.
- Bill of Lading (BOL); provides similar information as an Air Bill, but is the contract between the carrier and the shipping company explaining the contractual agreement.
- Carrier; whoever was contracted to transport the freight (either a company or an individual- owner operator)
- Dispatching; the scheduling and managing pickup and delivery (P&D) of the freight.
- Freight Bill Factoring; Freight factoring is the easiest way to get immediate money for your freight bills. Without freight factoring you will wait for weeks or even months to get paid. A factoring company also referred to as a “factor”, purchases freight bills at a discount, providing up-front funds to a client for unpaid invoices. These services are usually used by small trucking companies, however that does not mean that some of the biggest and best trucking companies does not use it too.
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Those are of course only a couple examples of commonly used terms in the trucking business world, when dealing with freight and the charges. As I said many terms are localized, but not as many as you would think. The US trucking industry has been around a long time, with the use of trucks being for well over 100 years! There are millions of class 8 trucks, medium duty trucks, reefers and flatbed trucks out on the open road hauling freight from point A to B! So of course there are numerous common terms, many of which have come and gone or evolved as the industry evolved. Many of the terms spread as the various companies expanded.
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That is why it is so important to be familiar with the various correct terminology and freight charges. Especially when shipping across the country, cross border shipping or around the globe. It is an absolute MUST; it will reduce hassles and confusion. More importantly is that it will reduce the potential loss associated with misunderstood freight charges.
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Remember a bill of lading is an official document. It can even be used in court; it lists the cargo and quantity being shipped. This document is usually provided by whoever is responsible for the shipment. As I stated above, it is an actual contract, listing all the pertinent information.
A freight bill on the other hand is not legal document for use in court or other legal proceedings. A freight bill is more like an invoice; it’s a document where you have the information about the shipment, items being shipped and such. These are more a checks and balances audits and accuracy.
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In regards to a bill of lading, there are some exceptions. Basically these are the terms and conditions that release the carrier from liability in the event of damage or loss due to:
- Things considered as “acts of God”
- Caused by war or terrorism
- Legal actions of law enforcement
- If the shipper defaults or has an issue.
- There is not a proper route to get the items delivered
- Manufacturer related defective merchandise
- Unforeseen strikes or riots
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Keep in mind, there are various requirements on just how long different documents, invoices and POD’s must be kept. This is dependent on the agency that oversees those particular items. But a couple of the agencies you may want to check with are the Department of Transportation (DOT), the Internal Revenue Service (IRS), and the Department of Labor (DOL). You also want to check with the regulatory agencies of your particular state. It is better to keep the documents and not need them than to discard them and then be asked to produce them.
There are different things to watch for when dealing with freight charges, but here are 10 common charges that you just might encounter:
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1. Cash On Delivery (COD) Freight Charges
All payments to the carrier are made at the time of delivery, and then they will need to forward the payments to the shipper for reimbursement. It is common for the carrier to add additional charges for this.
2. Prepay And Add Freight Charges
The shipper will cover the freight charges then bill the customer for it. This procedure is common when both the carrier and the shipper have good relationship and have contracted a better rate for service. Also the shipper usually has better resources to negotiate a deal than an individual customer will have.
Third Party Freight Charges
Normally this is through a logistics or related company who is handling the process. They are the ones who handle the freight charges, not the shipper or end customer. People will do this when they are new to the industry and recently started a trucking business, or when the shipment is tricky, example must go through Customs and several modes of transport.
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