Written and maintained by CASRAI Editorial Board
Published · Last updated
On this page
Short answer
Freight collect is commonly understood to mean that the freight charges on a shipment are billed to the receiver (the consignee) rather than the sender. For a lab or clinic buying supplies, it means the carrier may present a freight bill at your dock, and U.S. law on motor carrier freight (49 U.S.C. 13706) makes a consignee that is only the shipper’s agent liable for rates billed at delivery, so it pays to read the bill before signing. The term is a billing arrangement, not a statement about who owns the goods in transit or who bears loss or damage. This is general logistics information, not legal advice.
Definition and scope
“Freight collect” is trade usage rather than a defined legal term: it is commonly understood to mean the receiver is billed for the transportation charges, in contrast to “freight prepaid,” where the shipper pays. It describes who pays the carrier. It does not by itself say who is responsible if cartons are crushed, cold-chain product warms or items go missing; that depends on the sale terms, which is a separate question covered in the Incoterms guide and the FOB vs CIF comparison.
This guide stays on the receiving-side view for laboratory and clinic purchasing. It does not cover prices, carrier selection or any specific supplier’s terms.
How freight collect is used in practice
On the bill of lading
For interstate and foreign shipments, a for-hire, non-exempt motor carrier must issue a receipt or bill of lading for property tendered for transportation (49 CFR 373.101). The regulation lists the contents: the names of the consignor and consignee, the origin and destination, the number of packages, a description of the freight and, where applicable to rating, weight, volume or measurement. The regulation does not list a payment-terms field, so where “collect” or “prepaid” appears is a matter of the carrier’s and shipper’s own documents. That is why you should read the bill rather than assume.
On the purchase order
The freight term in your purchase order and the term on the bill of lading should say the same thing. If a supplier ships freight collect against a PO that assumed delivered pricing, the first sign is a freight bill at the dock that nobody budgeted for. Classing and rating of the shipment itself is explained in freight class for medical supplies.
Who is liable for the charges
49 U.S.C. 13706 covers motor carrier shipments to a consignee other than the shipper. Where the shipper instructs the carrier to deliver to a consignee that is an agent only, without beneficial title to the goods, that consignee is liable for rates billed at the time of delivery for which it is otherwise liable. It is not liable for additional rates found due after delivery if it gave the delivering carrier written notice before delivery of the agency and the absence of beneficial title. In that case the shipper or consignor (or the beneficial owner, if the goods were reconsigned or diverted) is liable for those additional rates regardless of the bill of lading or contract. Under 49 U.S.C. 13707, a carrier gives up possession at destination only when payment is made, although regulations may allow release before payment.
Related terms
- Freight prepaid: the shipper pays the carrier; the mirror image of collect in common usage.
- Consignor and consignee: the sender and the receiver named on the bill of lading under 49 CFR 373.101.
- Incoterms 2020: ICC rules, in force 1 January 2020, covering the tasks, costs and risks involved in delivery of goods from sellers to buyers. See the Incoterms guide.
Where it matters for labs and clinics
A checklist built from the primary sources above, for the person who signs for a delivery:
| Check | Why (source) |
|---|---|
| Read the freight terms printed on the bill of lading before signing. | A consignee acting as agent is liable for rates billed at delivery (49 U.S.C. 13706). |
| Confirm consignee name, origin, destination and package count match your PO and the cartons. | These are the fields a bill of lading must carry (49 CFR 373.101). |
| Confirm the PO freight term and the bill’s term agree; ask the supplier for the corrected document if not. | Mismatched versions of a bill caused an unpaid-freight dispute in a documented ocean case (ITIC, below). |
| If you believe you are only the receiving agent for another party, take the question to your legal or compliance contact before delivery. | The notice provision in 13706 turns on written notice of agency given to the carrier before delivery. |
| Note any damage or shortage on the delivery receipt and open a claim; do not rely on the freight terms to settle it. | Payment terms and loss responsibility are separate questions; see filing a freight damage or shortage claim. |
| Record the receipt against the PO. | See goods receipt note and the wider medical supply logistics overview. |
A documented example of mismatched terms
The marine insurer ITIC published a claims review of an ocean shipment in which a bill of lading was reissued six times: the first three said “freight prepaid” and the last three “freight collect.” The carrier’s system still showed prepaid, the cargo was released, and roughly USD 40,000 in freight went unpaid. The consignee argued it had bought on CIF terms but could produce only emails. The review concluded the consignee remained liable for the freight under the bill of lading. It is an ocean case, not a domestic truck shipment, but the lesson transfers as a records point: keep your purchase documents consistent with the bill.
Common misunderstandings
- “Collect means the buyer bears the risk.” The term addresses who pays the carrier. Risk transfer is set by the sale terms; see the Incoterms guide.
- “If the carrier delivered without payment, the charge is gone.” In the ITIC case the cargo was released before payment and the consignee was still held liable under the bill.
- “The PO governs, so the bill does not matter.” The bill of lading and the carrier’s freight bill are what the carrier acts on at delivery, so a PO promise should be backed by a matching bill; the statute’s allocation of additional rates between shipper and agent-consignee applies regardless of the bill or contract.
FAQ
Who pays for freight collect?
In common usage the receiver is billed. Under 49 U.S.C. 13706, a consignee that is an agent only is liable for rates billed at the time of delivery for which it is otherwise liable; the statute does not define the words “freight collect.”
Does freight collect change who bears loss or damage?
Not by itself. Payment of freight and responsibility for loss are separate; sale terms such as Incoterms address costs and risks between seller and buyer. See the Incoterms guide.
What does a bill of lading have to show?
Under 49 CFR 373.101 for for-hire, non-exempt motor carriers: consignor and consignee names, origin and destination, number of packages, a description of the freight and, where applicable to rating, weight, volume or measurement.
Can a carrier hold a shipment until the freight is paid?
The general rule in 49 U.S.C. 13707 is that the carrier gives up possession at destination only when payment is made, though regulations may permit release before payment.
Sources
- 49 U.S.C. 13706, Liability for payment of rates, Cornell LII, https://www.law.cornell.edu/uscode/text/49/13706 (checked 2026-11-01).
- 49 U.S.C. 13707, Payment of rates, Cornell LII, https://www.law.cornell.edu/uscode/text/49/13707 (checked 2026-11-01).
- 49 CFR 373.101, Bills of lading, Cornell LII, https://www.law.cornell.edu/cfr/text/49/373.101 (checked 2026-11-01).
- ITIC, “A question of freight: who pays?”, https://www.itic-insure.com/our-publications/claims-review/a-question-of-freight-who-pays-3555/ (checked 2026-11-01).
- International Chamber of Commerce, Incoterms 2020 rules, https://iccwbo.org/business-solutions/incoterms-rules/ (checked 2026-11-01).
