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Carrier’s freight charges are typically based on a contracted rate or a market rate. Contracted rates are included in the carrier’s tariff and market rates are also known as spot rates. In the past the FMCSA referred to the carrier distinctions as having either a common or contract authority. Since 2007 the FMCSA has been required by law not to make a distinction. Today many carriers have a mix of contracted customers and market-based customers. The rates charged are disclosed in a long- or short-term agreement.
Scope
Motor carriers must be aware of their options and responsibilities regarding freight charges.
Regulatory citations
- 49 CFR Part 373 — Receipts and bills
- 49 CFR Part 377 — Payment of transportation charges
- 49 CFR Part 378 — Procedures governing the processing, investigation, and disposition of overcharge, duplicate payment, or overcollection claims
Key definitions
- C.O.D. (collect on delivery): The payment for goods is made at the delivery point. The driver must collect payment before the cargo is unloaded.
- Contracted rate: The basis for calculating the specific applicable rates for transportation and any additional service or fuel fees. Carriers may choose to enter a long-term agreement (typically a year) to ensure a known rate.
- Prepaid: A term denoting that transportation charges have been or are to be paid at shipping point.
- Spot rate or spot price: Also known as a market rate. The rate and any additional service or fuel fees for a single movement.
- Tariff: An issuance containing an accurate description of the services offered to the public and the specific applicable rates (or the basis for calculating the specific applicable rates) and service terms. The tariff must be arranged in a way that allows for the determination of the exact rate(s) and service terms applicable to any given shipment.
Summary of requirements
Presentation of freight bills for payment.
- “To be prepaid” shipments. The time period for a carrier to present its freight bill for all transportation charges is 7 days, measured from the date the carrier received the shipment. This time period does not include Saturdays, Sundays, or legal holidays.
- “Collect” shipments. On collect shipments, the carrier must present its freight bill for all transportation charges within the time period prescribed unless exempted or when the carrier lacks sufficient information to compute tariff charges. When information sufficient to enable the carrier to compute the tariff charges is not then available to the carrier at its billing point, the carrier must present its freight bill for payment within 7 days following the day upon which sufficient information becomes available at the billing point. This time period does not include Saturdays, Sundays, or legal holidays.
Standard credit period for payment of freight charges. The credit period begins on the day following presentation of the freight bill.
Unless a different credit period has been established by an agreement, the credit period is 15 days. It includes Saturdays, Sundays, and legal holidays.
Carriers may establish different credit periods in their published tariff rules. These credit periods may not be longer than 30 calendar days.