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What Are Freight Charges?

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  • Written By: Helen Akers
  • Edited By: Jessica Seminara
  • Last Modified Date: 24 September 2016
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Freight charges are the costs entailed in transporting goods from one geographical location to another. They can include packaging and insurance costs in addition to various transportation charges. Some types of freight charges are incurred by the seller and some are incurred by the buyer.

A combination of transport methods is often used in order to move purchased goods from one location to another. For example, when a customer purchases books from an online retailer, he may choose to have them shipped overnight. The seller will often enlist the services of a shipping company that will first use a truck or van to transport the package to an airport facility. A plane will then be responsible for transporting the package to the nearest delivery facility, where it will once again be delivered to the customer's address by van or truck.

In this type of situation, the seller must pay the shipping company to ensure that its goods reach the consumer by the agreed upon delivery date. Most of the time, the customer will reimburse the seller for the freight charges at the time of purchase. This is what is sometimes referred to as free on board destination, where the seller actually continues to own the goods while they are being transported. If for some reason they do not reach the customer, he is not responsible for payment and the seller must file a claim with the shipping company.

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Sometimes sellers will offer to waive freight charges as a special promotion. This may be done to entice first-time purchases or a certain volume of purchases. The amount of profit that the seller makes from the sale of its goods more than makes up for the shipping costs.

Certain types of freight charges incur higher costs than others. Ground transportation in the form of rail or trucks is usually considered to be the least expensive, although it can also take the longest. Some retailers offer to waive freight charges if customers choose to have the goods delivered to one of their store locations. They utilize their existing channels of distribution in order to move goods from one location to another, which does not result in any increased costs for the company or the customer. Company owned trucks that are already transporting other goods to the store location may be used to accomplish this.

When goods are transported, packaging and insurance is a concern. The shipping company may allow customers and businesses to purchase supplemental insurance and delivery verification services for an additional fee. Some companies include these in the standard shipping rate. Packaging and labeling is usually included in the standard freight charge.

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