Collect shipments transfer shipping costs to the recipient, with the seller responsible for packing and transporting the cargo to a shipping company or arranging for pickup. The buyer is responsible for all other costs, including insurance, taxes, and duties. Clear communication and documentation are essential to avoid disputes.
A collect shipment transfers shipping costs to the recipient, rather than making them the responsibility of the sender. Such shipments are often shipped under terms known as freight on board (FOB), where the seller agrees to pay the costs to move the shipments to a port and to a vessel, but the buyer is responsible for everything else. Shipping terms are typically outlined in sales agreements and contracts to make sure all parties are aware of expectations. In the event of a dispute, this documentation may help resolve the issue.
Under the terms of a collect shipment, the seller or agent is responsible for packing the cargo responsibly, in strong containers that can withstand shipping and transporting it to a shipping company or arranging for pickup. For large shipments measured in container loads, the company typically requires transportation to a port or loading yard. A small package from a business to a customer, on the other hand, might be picked up by a driver on a delivery route.
The seller assumes the costs associated with bringing the shipment collect from the shipping company and loading it on board, if applicable. At this point, all costs become the responsibility of the buyer. These include the fixed costs associated with shipping, as well as any additional payments for insurance, taxes, duties, and other fees that may arise. Sellers can provide buyers with estimates on these costs, or information on how to obtain them from the shipping company, so buyers know what to expect.
The terminology used in the submission is not internationally consistent. Companies may not refer to “shipping collect” but instead use terms like “freight pickup” or others. Buyers and agents who are unsure of their responsibilities may request clarification and a detailed discussion of the terms being used. This allows them to determine what costs they will be responsible for, so they can prepare or negotiate, if necessary. A buyer might, for example, request that a seller cover shipping costs as part of a negotiation.
Once the goods are delivered to the buyer and appear to be in order, the shipping company’s net billing terms begin to apply to shipping collect. The customer has a set period of time, such as 30 days, to pay the invoice. If there is a problem, the buyer must dispute the invoice and provide documentation to resolve the problem. This may include evidence that a collect shipment arrived damaged or late, supporting a claim that the invoice is unreasonable.
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