Are “Freight Collect” and “Freight Prepaid” terms described in Incoterms 2010?

Incoterms is a short form of International Commercial Terms.

They are published by ICC’s Commercial Law and Practice Commission.

Current version of Incoterms is called Incoterms 2010 which has been in force since 01.January.2011.

Incoterms rules are published by ICC in order to define buyers and sellers obligations, costs and risks associated with the transportation and delivery of goods in a very clear way with a global scale.

Incoterms rules can only be applied to transactions in which tangible goods are bought or sold. 
You cannot use Incoterms to sales of intangible goods. Incoterms rules can be used both international and domestic sales.

Which trade terms specified in Incoterms 2010?

Incoterms 2010 defines 11 commercial trade terms. These trade terms are classified as bellows:

7 Incoterms 2010 rules can be used for any mode of transport:
  • EXW EX WORKS (... named place) 
  • FCA FREE CARRIER (... named place) 
  • CPT CARRIAGE PAID TO (... named place of destination) 
  • CIP CARRIAGE AND INSURANCE PAID TO (... named place of destination) 
  • DAT DELIVERED AT TERMINAL (new rules) 
  • DAP DELIVERED AT PLACE (new rules) 
  • DDP DELIVERED DUTY PAID (... named place of destination) 

4 Incoterms 2010 rules can be used for sea transport.
  • FAS FREE ALONGSIDE SHIP (... named port of shipment) 
  • FOB FREE ON BOARD (... named port of shipment) 
  • CFR COST AND FREIGHT (... named port of destination) 
  • CIF COST, INSURANCE AND FREIGHT (... named port of destination) 
Incoterms rules can be used by giving express references to the sales contract or proforma invoices. Here are some examples of express references to various Incoterms rules: “FOB New York Port, Incoterms 2010”, “CIF Rotterdam Port, Incoterms 2010”, “DDP Distribution Warehouse 28197 Bremen, Germany , Incoterms 2010”.

Are “Freight Collect” and “Freight Prepaid” terms described in Incoterms 2010?

“Freight Collect” and “Freight Prepaid” terms are not defined in Incoterms 2010 rules. They are used by international shipment world to indicate by whom the freight charges will be paid. 

What is “Freight Collect” and “Freight Prepaid”?

When stated on a bill of lading or any other transport document, freight collect indicates that the freight will be payable by the importer.

When stated on a bill of lading or any other transport document, freight prepaid indicates that the freight will be payable by the exporter.

Note : Please keep in mind that “Freight Collect” and “Freight Prepaid” are used by giving references on the transport documents and they only tell us by whom the freight charges will be paid. Incoterms rules are used by giving express references to the sale contracts and they define buyers and sellers obligations, costs and risks associated with the transportation and delivery of goods.
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