Definition & Commercial Framework
In maritime, road, and air commerce, freight refers to the contractual fee paid for moving merchandise from origin to destination under a formal contract of carriage (bill of lading, CMR consignment note, or air waybill).
The Role of Incoterms in Freight Payment
Incoterms 2020 rules determine whether the seller or the buyer is legally liable for freight payment. Under EXW (Ex Works) or FOB (Free on Board), freight is paid by the buyer (Freight Collect); under CIF, CPT, CIP, or DAP, freight is prepaid by the seller (Freight Prepaid).
Frequently Asked Questions
What does BAF and CAF mean in freight quotations?
BAF (Bunker Adjustment Factor) is a floating surcharge accounting for fuel price fluctuations. CAF (Currency Adjustment Factor) offsets exchange rate volatility between invoice and operating currencies.
What is demurrage and detention?
Demurrage is a penalty fee charged when equipment (containers or trailers) remains within a port or terminal beyond the agreed free time. Detention applies when equipment is held outside the terminal beyond allowed limits.
This guide is for informational purposes only. International customs tariffs and transport regulations are subject to revision; verify requirements with our operations desk prior to shipment.
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