What Is a Collect Shipment?

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  • Written By: Mary McMahon
  • Edited By: Shereen Skola
  • Last Modified Date: 27 May 2020
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A collect shipment passes freight charges on to the recipient, rather than making them the responsibility of the sender. Such shipments are often sent under what are known as freight on board (FOB) terms, where the seller agrees to pay costs to move shipments to a port and onto a vessel, but the buyer is responsible for everything else. The terms of shipment are typically outlined in sale agreements and contracts to make sure every party is aware of expectations. In the event of a dispute, this documentation can help resolve the problem.

Under the terms of a collect shipment, the seller or agent is responsible for packaging cargo responsibly, in sturdy containers that will stand up to shipping, and transporting it to a shipping firm or arranging for pickup. For large shipments measured in container loads, usually the firm requires transport to a port or freight yard. A small package from a business to a customer, on the other hand, could be picked up by a driver on a delivery route.

The seller assumes the costs associated with getting the collect shipment to the shipping firm, and loading it on board, if applicable. At this point, all expenses become the responsibility of the buyer. These include the flat costs associated with shipping as well as any extra payments for insurance, taxes, duties, and various other fees that may arise. Sellers may provide buyers with estimates on these costs, or information about how to get them from the shipping company, so they know what to expect.

Terminology used in shipping is not internationally consistent. Firms may not refer to "collect shipments," instead using terms such as "freight collection" or others. Buyers and agents who are not sure about their responsibilities can request clarification and a detailed discussion of the terms being used. This allows them to determine which costs they will be liable for, so they can prepare, or negotiate, if necessary. A buyer might, for instance, ask that a seller cover shipping costs as part of a negotiation.

Once goods are delivered to the buyer and appear to be in order, the shipping firm’s net billing terms start to apply to the collect shipment. The customer has a set period of time, like 30 days, to pay the bill. If there is a problem, the buyer needs to dispute the bill and provide documentation to resolve the issue. This may include proof that a collect shipment arrived damaged or late, supporting a claim that the bill is unreasonable.

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Post 1

Is collect shipment similar to exworks term? Can you please clarify the difference?

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