Freight terms
Also called shipping terms
Reviewed by Dasha ShakovVP Marketing, Proton
Updated
What is freight terms?
Freight terms are the part of a sale that says who pays for shipping and how the cost is billed. The common ones are prepaid (the seller pays and absorbs it), prepaid and add (the seller pays the carrier and adds the cost to the invoice), and collect (the buyer pays the carrier directly).
How it works
Many suppliers ship free once an order reaches a minimum value, called a prepaid freight minimum, and buyers time their orders to reach it. Distributors offer their own customers similar thresholds. Freight terms are written alongside FOB, and when stated they override FOB’s default allocation of freight cost.
Freight terms example
A supplier ships prepaid on orders over $2,500. With $2,100 in the cart, the buyer adds a few fast-moving items rather than pay a $180 freight charge.
Related terms
- Free on board (FOB)Free on board (FOB) is a shipping term that names the point where responsibility for the goods passes from seller to buyer.
- Less-than-truckload (LTL)Less-than-truckload (LTL) is a freight service for shipments too large for parcel carriers but too small to fill a truck, typically one to several pallets.
- Landed costLanded cost is the total cost of getting a product onto the shelf: its purchase price plus inbound freight, duties and tariffs, insurance and handling.
- Minimum order quantity (MOQ)A minimum order quantity (MOQ) is the smallest amount a supplier will sell in one order, set as a number of units or cases or as a dollar value.
