Freight prepaid means full payment of freight in advance against the presentation of the airway bill. The transportation trade practice under which the shipper pays transportation charges.
The INCOTERMS (International Commercial Terms) determine whether the shipper or the consignee is responsible for paying the freight. The trade terms CPT, CIP, DDU, DAT, DAP and DDP 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 airway bill clearly indicating payment or prepayment of freight at port (or point) of origin. The mark may appear by stamp or indicated by other means. The words 'Freight to be prepaid' or 'Freight pre-payable' or similar wording that may appear on the AWB do not prove that the freight has been paid.
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