Difference Between Collect Freight and Prepaid Freight in International Maritime Shipping and Calculation Method of Freight Costs

What's the Difference Between Freight Collect and Prepaid in International Maritime Shipping? How is the Freight Calculated?

In international trade, international maritime shipping is one of the key ways to transport goods. Whether it’s bulk cargo or small-batch products, choosing the right transportation mode and payment method is crucial for businesses. Among them, freight collect and prepaid are two common freight payment methods, each with their own characteristics and applicable scenarios.

First, let us understand what prepaid means. Prepaid refers to the shipper paying all or part of the ocean freight to the carrier or freight forwarding company before the shipment departs. The advantage of this approach is that it reduces the financial pressure on the consignee, as they only need to pay duties, customs clearance fees, and other related costs after the goods arrive at the destination. For the shipper, paying the freight in advance ensures a smoother logistics process and avoids delays caused by financial issues. For example, a news report in 2025 mentioned that an electronics manufacturer chose prepaid to handle all orders exported to the European market to ensure the stability of its global supply chain. This decision significantly reduced uncertainties in the transportation process.

On the other hand, freight collect refers to the consignee paying the ocean freight to the carrier after receiving the goods. This model is typically suitable for price-sensitive customer groups such as small and medium-sized retailers or companies trying import business for the first time. By adopting the freight collect method, these customers can complete the payment only after confirming the quality of the goods, thereby reducing financial risks. Since there is no need to prepay large amounts of funds, this approach also helps improve the cash flow of enterprises. According to recent market research data, approximately 40% of cross-border e-commerce platforms tend to use freight collect services to attract more potential buyers.

So, how do these two payment models specifically affect the calculation of ocean freight? Generally speaking, regardless of whether it is prepaid or freight collect, the final factors determining the freight rate mainly include the following aspects

1. Weight and Volume of Goods This is the most basic consideration. Typically, heavy goods like steel products and light bulky goods like clothing and shoes will be charged according to different billing standards.

2. Transportation Distance The farther the distance from the port of origin to the destination port, the higher the corresponding cost naturally becomes.

3. Ship Type Selection Different types of vessels have varying cargo capacities and service ranges, which will also be reflected in the quotations.

4. Market Supply and Demand Relationship When demand is strong, shipping companies may increase rates; conversely, they may lower them.

5. Additional Fees Including but not limited to fuel surcharges, port congestion surcharges, etc.

It should be noted that in actual operations, whether using prepaid or freight collect forms, relevant laws and regulations must be followed, and both parties need to sign a clear service agreement to avoid disputes in the future. Additionally, with the development of digital technology, an increasing number of logistics companies are starting to provide online quotation systems, making it easier for customers to compare the service quality and price levels of various companies.

In conclusion, both freight collect and prepaid in international maritime shipping have their advantages and disadvantages. Enterprises should consider their own circumstances and the needs of their partners when making decisions. Only in this way can they maximize the advantages of maritime transportation and promote the smooth development of cross-border trade activities.