GlossaryEN1 min readUpdated: Jun 16, 2026
Bill of Lading Freight Terms
Unlike Incoterms, which allocate risk and delivery obligations between buyer and seller, Bill of Lading freight terms define solely who pays the ocean freight charge and when.
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Source: https://www.freightos.com/freight-resources/bill-of-lading/
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Incoterms 2020 Simulator: Who bears costs & risk?
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Definition & Explanation
Unlike Incoterms, which allocate risk and delivery obligations between buyer and seller, Bill of Lading freight terms define solely who pays the ocean freight charge and when. The two standard arrangements are "Freight Prepaid"—the shipper settles the freight before loading—and "Freight Collect"—the consignee pays on arrival; third-party billing is also used. Carriers and freight forwarders must state these terms precisely on the bill of lading: they affect cash flow directly and, in a number of customs regimes, influence customs valuation, since prepaid freight may be included in the dutiable value while collect freight can be treated differently. Errors or ambiguous entries risk delaying cargo release and triggering payment disputes between trading partners.
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