The term freight used here refers to transportation charges. The INCOTERMS (International Commercial Terms) determine whether the shipper or the consignee is responsible for paying the freight.
Freight Prepaid
Freight prepaid means the freight has been paid or prepaid by the shipper. The trade terms CFR (C&F), CIF, DAF, CPT, CIP, DDU, DDP, DES, and DEQ require a prepayment of the cost of main carriage.
In a prepaid delivery, the letter of credit (L/C) normally requires that the words "Freight Prepaid" be marked on the bill of lading (B/L), clearly indicating payment or prepayment of freight at port (or point) of origin. The mark may appear by stamp or be indicated by other means. The words "freight to be prepaid" or "freight prepayable" or similar wording that may appear on the B/L do not prove that the freight has been paid.
In a prepaid delivery by a courier, the transport document (i.e., the courier's receipt) issued by a courier or expedited delivery service must show that the courier charges have been paid or prepaid by the shipper.
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