Freight Claim Filing & FOB TermsWritten by Neal Willis
Anyone can file a freight claim but, generally speaking, most people will determine responsibility of freight claim filing based on either the payment of the freight charges or the FOB terms of the purchase. FOB (Free on Board) terms indicate which party bears responsibility of paying freight charges and at what point ownership or title of the goods passes from the seller/shipper to the receiver/buyer. Essentially, the FOB terms signal the point at which liability and risk of a shipment is passed from the shipper/seller to the receiver/buyer. The four most common FOB terms are: 1) F.O.B. Origin, Freight Collect, 2) F.O.B. Origin, Freight Prepaid, 3) F.O.B. Destination, Freight Collect, and 4) F.O.B. Destination, Freight Prepaid.
F.O.B. Origin, Freight Collect:
“FOB Origin” means that the buyer takes ownership of the item(s) and assumes the risks of transportation the minute that the freight carrier picks up the item(s) and signs the bill of lading at origin. “Freight Collect” means that the buyer accepts responsibility of paying the freight charges. Under this term, the buyer will usually file for a claim in the event of damage or loss since they are the party paying the freight charges and took ownership of the product at origin the moment the carrier accepted the shipment.
F.O.B. Origin, Freight Prepaid:
“FOB Origin” means that the buyer accepts ownership of the item(s) and all the risks of transportation the minute the freight carrier picks up the goods and signs the bill of lading at origin. “Freight Prepaid” means that the seller consents to the responsibility of paying for all of the freight charges and usually assumes all risks of transportation. The seller, therefore, tends to file for a claim in the case of loss or damaged freight.
F.O.B. Destination, Freight Collect:
“FOB Destination” means that the seller retains title and control of the item(s) until they are delivered. The seller normally chooses the carrier, assumes the responsibility of the risk of transportation, and is usually the party responsible for filing a claim in case of damage or loss. “Freight collect” means that the buyer is responsible for the freight charges.
F.O.B. Destination, Freight Prepaid:
“FOB Destination” means that the seller maintains ownership of the item(s) until a claim free delivery is made. “Freight prepaid” means that the seller is responsible for all freight charges. The only party who can collect the freight charges for a freight claim is the payer of the freight bill, so they are typically the party that files a claim. Anyone can file a freight claim, however, so it’s up to the shipping parties to come to agreement on who will do it.
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