A method of collection in which a transportation carrier contracts with a shipper to collect a specified amount of money (usually the purchase price) in cash, or cash equivalent, from the consignee as a condition of delivery of the cargo to the consignee. If the consignee does not pay, the carrier has no liability for collection provided the cargo has not been released to the consignee. A shipper should not dispatch cargo with a COD basis without the consignee first agreeing to the COD. In the event the consignee does not pay the COD, the shipper then faces the additional cost of returning the cargo (including the outbound freight charges if they were sent freight collect), plus storage fees. With the exception of air carriers, and some indirect carriers or NVOCCs, international carriers typically do not offer COD services. Carriers who do offer COD service typically restrict it to only certain destination countries, limit the amount to the delivered value of the goods (i.e., inclusive of freight, duty and incidental costs), and exclude a variety of commodities. Carriers typically charge COD fees of between one to two percent of the amount collected, plus modest markups on the currency exchange rate.
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