GlossaryEN1 min readUpdated: Jun 16, 2026
Assignment of Freight Charges
Assignment of freight charges is the contractual determination of which party in a trade transaction bears the cost of transport: the shipper (freight prepaid), the consignee (freight collect), or a nominated third party.
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Incoterms 2020 Simulator: Who bears costs & risk?
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Assignment of freight charges is the contractual determination of which party in a trade transaction bears the cost of transport: the shipper (freight prepaid), the consignee (freight collect), or a nominated third party. In international trade, Incoterms govern this allocation – terms such as CPT or CIF place transport costs with the seller, while EXW or FCA shift them largely to the buyer. The assignment is recorded on the transport document: a bill of lading, air waybill (AWB), or CMR consignment note marked either "Freight Prepaid" or "Freight Collect". Errors at this stage commonly lead to payment disputes, delayed cargo release, or misdirected invoices. This should not be confused with internal cost accounting, where freight expenses are distributed across cost centres or projects.
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