GlossaryEN1 min readUpdated: Jun 22, 2026
Freight Terms
Well-defined Freight Terms determine who pays for transportation and who bears liability for loss or damage in transit – the two questions at the heart of any freight contract.
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Incoterms 2020 Simulator: Who bears costs & risk?
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Definition & Explanation
Well-defined Freight Terms determine who pays for transportation and who bears liability for loss or damage in transit – the two questions at the heart of any freight contract. Agreed between shipper, carrier, and consignee, they establish each party's obligations, claim deadlines, and recourse options from pickup to final delivery. A frequent source of confusion is the relationship with Incoterms: Incoterms allocate cost and risk between buyer and seller under the sales contract, whereas transport-law conventions such as CMR (road) or CIM (rail) govern the carrier's liability on a separate legal basis. Both layers can apply simultaneously – and occasionally conflict. When damage occurs and responsibilities have not been clearly documented, disputes over Freight Terms are almost inevitable.
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