4. Consignee Collects The Freight Charges
This is when the end customer, the one who will be receiving the freight pays the freight charges. They will also be responsible for all Customs declarations and all appropriate tax taxes. They are the ones responsible for all the related forms and other documentation.
5. Free-on-Board (FOB) Origin Freight Charges
Kind of like a transfer of responsibility. It is when the seller lets go of their rights, regarding the freight and the buyer takes the full responsibility. At that point the buyer is responsible for all the charges and pays all costs associated with the shipment.
6. FOB Origin, Prepaid Freight Charges
This is when the responsible party has paid all the associated freight charges in advance. Usually it is the shipper or the third party vendor who will need to cover these charges.
7. FOB Origin, Prepaid And Charged Back Freight Charges
Like number 6, the shipper has paid all the associated freight charges in advance. Usually it is the shipper or the third party vendor who will need to cover these freight charges. But then they will charge the consignee for the freight charges.
8. FOB Destination Freight Charges
Usually the freight will be sent prepaid. The shipper pays all associated freight charges, but the consignee maintains controls of the freight.
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9. FOB Destination, Collect Freight Charges
This is when the consignees maintain full control of the freight and they are responsible for the freight charges and all related cost.
10. FOB Destination, Collect and Allowed Freight Charges
This is much like number 9, the consignee maintains full control of the freight and they are responsible for the freight charges and all related cost, but after which the consignee deducts the freight charges off of the seller’s invoice.
Remember when dealing with freight, invoices, and freight charges there are several things to look at and to verify. Accuracy of the information is a MUST. It won’t matter who made the mistake if it could, perhaps should, have been caught at your end.
Here are few things you need to check:
- Date when (it was invoiced, the shipment is due, freight charges are due)
- Billing to Address/POC (who is going to pay the freight charges)
- Billing from address (your information to receive the freight charges payment)
- Invoice number (system used to track your various freight charges)
- Item description (what actual items does the freight charges cover)
- Quantity (how many items are to be included in the freight charges)
- Unit cost (the breakdown of each item listed in the freight charges)
- Taxes (the federal, state, and local, taxes included in the freight charges)
- Amount due (the total freight charges they are being billed for)
- Notes (any additional information regarding the cargo and freight charges)
Of course there are other points and information included on all invoices. But at a minimum this information should be included. Quoting freight load quote and freight charges can be a bit tricky and even a little scary if you are new to the industry. You can research your competitors online.
Another consideration that I can’t stress enough, is the importance of accuracy. It might not seem like a big deal, but getting the address wrong could create a huge logistical nightmare. Just imagine if your dispatcher put the delivery address as Springfield Illinois instead of Springfield Missouri! Now, that is what I call a nightmare!
Keep in mind you need to protect the freight especially if you are the one responsible for it, and to always inspect the cargo for damage before accepting responsibility and signing for it. It doesn’t matter if the damage was hidden or just overlooked. It also doesn’t matter where or when it occurred. What matters is who was physically and officially responsible for it at the time the damage was discovered.
What is your biggest concern regarding freight charges? Have you even had a discrepancy? How did you handle it? Share your experiences dealing with freight charges.