Understanding Prepaid & Add in LTL Freight Shipping
Within the "Freight Terms" section of an LTL freight Bill of Lading, two phrases that are frequently misinterpreted are Freight Prepaid and Freight Collect. Understanding these terms is crucial for negotiating shipments with carriers and determining the proper billing process. This article delves into the distinctions between "Prepaid & Add" and "Collect Upon Arrival" in LTL shipping.
Freight Prepaid vs. Freight Collect
Understanding the difference between “Freight Prepaid” and “Freight Collect” is vital in knowing who gets billed at shipment time. Many LTL shippers and receivers are unaware of these distinctions. Here's a brief explanation of these terms and some other confusing aspects to consider.
Freight Prepaid
The consignor (or shipper) is responsible for paying the LTL freight shipping charges, as well as any ancillary charges. This is commonly referred to as "Prepaid & Add."
Freight Collect
The consignee (or shipment receiver) is responsible for the LTL freight shipping charges and any ancillary charges. This term is also known as "Collect Upon Arrival."
Other Confusing Matters
In most LTL freight shipping transactions, shipments are not prepaid; however, prepayment occurs mainly when shipping between a company’s own locations. In these cases, any ancillary charges are settled post-delivery.
Typically, LTL freight shipments do not require immediate payment at delivery, unlike COD (Cash on Delivery), common in parcel post. If COD is necessary, it generally covers purposes other than LTL freight payment terms.
How to Determine Who Gets Billed
For a thorough understanding freight bills and bills of lading, read our deep dive article on the subject. Simply put, the freight bill and BOL documents clearly outline who is billed for freight services, aiding carriers in charging for ancillary fees incurred during shipment processing, like unexpected unloading or loading fees.
Billing terms are specified on the bill of lading, lacking a standardized carrier-wide approach. These terms are often clearly marked, sometimes with checkboxes for "Prepaid" or "Collect," or a simple handwritten note indicating the billing party.
Simplify the Process with Amware
Navigating the complexities of carrier negotiations, shipping contracts, and the billing process can be overwhelming. Consider simplifying these processes with Amware, a seasoned third-party logistics provider. For a streamlined approach to LTL freight shipping, contact Amware for a free quote or sign up for a 30-day trial of Amrate, our comprehensive transportation management system (TMS).