BusinessLong reads

What is the difference between freight and cargo? What is a cargo and freight service? Who should pay freight?

To the uninitiated, the words freight and cargo are often used interchangeably, however, there is an important distinction between the two; particularly for businesses who are looking to expand their operations and source products from overseas. 

In this article, we’re going to highlight the key difference between freight and cargo, outline what a freight and cargo service is, and then look at who is responsible for paying ‘freight’. If this is a subject that you’re not quite familiar with, read on and we’ll tell you everything you need to know. 

What is the difference between freight and cargo?

So, what is the difference between freight and cargo? We’ll begin by defining both and then looking at the key differences between them:

What is cargo shipping?

The term ‘cargo’ refers to goods that are being transported via larger vehicles such as a ship or plane. Mail being sent from one country to another can also fall under the cargo bracket. 

The important thing to learn about cargo is the fact that the word itself only relates to the physical goods that are being transported – and not the payment or money being exchanged for the actual transportation/logistics relating to the goods. 

In essence, any item or product that is being transported is called cargo. The large cargo (or product containers) are then used to carry a variety of products from one destination to another. Additionally, goods can also be transported on pallets or with handling nets for example. 

So, while the word ‘cargo’ typically conjures an image of large items being moved, your post cost card being sent from your vacation destination back home to your family will technically be ‘cargo’, as it will be bundled with other mail on its way to a similar destination. 

What is freight shipping? 

Freight refers to goods that are being transported via smaller, land vehicles, such as a train or a 10-wheeler truck. That being said, goods can also be transported via the air and be referred to as ‘air freight’. 

In addition to that, freight can also be defined as being cargo—a product—that is being transported via land, sea or air. However, the important thing to note in this instance is that it only refers to the movement of commercial goods. As such, your personal mail being sent from one location to another is cargo, whereas any goods that you sell via your online business would be referred to as being freight. 

The key difference between cargo and freight is the fees that are associated with sending freight. Again, cargo doesn’t refer to the money charged for the logistics, only the physical movement of the product itself. 

As you can see, it’s easy to understand why the two phrases can often be confused. The fact is, both terms have a lot of similarities with only a few minor distinctions. 

The easiest way to remember the difference is by picturing a “cargo hold” (i.e., the storage area in the belly of a large ship), and “freight train” (i.e., a train being used to transport freight). 

truck with cargo container on road in shipping yard

What is a cargo and freight service?

Cargo and freight services refer to the logistical solutions offered by cargo and freight companies, such as Darwin Transport for example. 

Depending on what your requirements are, a cargo and freight service provider will arrange the physical transportation or movement of your items from A to B – whether it be via van, truck, train, or indeed, plane. 

To give you a broader idea as to what kind of items freight and cargo service providers move, here are some examples:

  • Mining materials (machinery and mined minerals, etc.). 
  • Over-sized loads (particularly difficult loads that require permits, creativity, and specialist transportation).  
  • Caravan transportation (moving larger assets from A to B). 
  • Auction collection (collecting expensive or especially fragile goods). 
  • Portable homes (that’s right! They can move homes too!)
  • Farm machinery transport (a wide variety of machinery and tractors used in agriculture).

As you can see, cargo and freight service providers can move a wide variety of different items – each varying in size and complexity significantly. In essence, these types of companies specialise in logistics solutions and can move practically anything. 

Who should pay freight?

As the term ‘freight’ refers to the movement of goods and the fees involved with getting said goods from A to B, who is responsible for paying those charges? 

First, let’s outline what these charges are. If you’ve never heard the term ‘Freight on board’ (FOB) before, it refers to the international commercial law that was published by the International Chamber of Commerce (ICC). This law indicates the point at which the risks and costs involved with shipping goods are switched from the seller to the buyer (the responsibility). 

Generally speaking, in modern domestic shipping, the term FOB is used to describe the point at which the seller is no longer responsible for the goods being shipped, and the buyer assumes responsibility for paying the relevant transportation costs. 

The most common way of handling this is, that the seller pays the initial freight charges involved to a major port or any other shipping destination, at which point, the buyer is responsible for paying for the transportation costs from the warehouse to its final destination. 

For example: an e-Commerce business owner orders a large shipment of products from China, to be shipped to their warehouse in the US. From there, they will sell the items online via their website, to the customer, and move the products from the warehouse to its final destination: the customer’s doorstep. Now, in this example, the e-Commerce business owner is the “buyer”. They are buying a shipment of products from a manufacturing company in China. The manufacturer (the initial “seller”), will be responsible for paying the freight costs, while the buyer pays for the transport costs. Naturally, these costs will be accounted into both mark-ups. Then, when you (the final customer) orders the product online, you pay for the delivery from the warehouse to your doorstep – or perhaps you get free delivery, though you likely pay a higher premium on the product itself to account for the involved costs.

Related posts

What is acupuncture? How many types of acupuncture? Does acupuncture actually work?

Acupuncture, a traditional Chinese medical practice dating back thousands of years, continues to…
Read more

How Much Does Freight Cost in Australia? How Do You Calculate Freight Costs?

Do you ever find yourself staring blankly at a freight quote, wondering how on earth they came up…
Read more
BusinessConstructionHome & Living

How much does it cost to get house plans drawn up in Australia? How much should you budget for an architect?

Jumping into a building project is a big deal, whether you’re dreaming up a new pad, giving…
Read more
Become a Trendsetter
Sign up for Davenport’s Daily Digest and get the best of Davenport, tailored for you.