Freight Allowance (Amazon Vendor Central)
Freight Allowance is the percentage Amazon deducts from a vendor's payments to cover the cost of moving inbound shipments, charged only to vendors who ship to Amazon on Collect freight terms.
Freight Allowance is the percentage Amazon deducts from a vendor’s payments to cover the cost of moving inbound shipments, charged only to vendors who ship to Amazon on Collect freight terms.
What it is
Whether you pay a freight allowance at all depends on your freight terms. Under Collect terms, Amazon arranges the carriers that pick up your inbound shipments and pays them, then recovers that cost through the freight allowance. Under Prepaid terms you book and pay for your own freight to Amazon, and no freight allowance applies.
The rate is calculated from average shipping cost and typically runs between 2% and 5%. Agreements often start near 5%, and the rate can rise in later years. Freight allowance is one of the negotiated lines in your Co-op (Cooperative Marketing Agreement), set at the Annual Vendor Negotiation (AVN) alongside the marketing and damage allowances, and it holds until the next AVN.
Where it lives in Vendor Central
The agreed rate sits under Payments, then CoOp, with the other co-op lines in your vendor terms. The deduction itself comes off your remittances, and if a specific freight charge looks wrong you contest it through Dispute Management, the same way you would any other co-op deduction.
Freight deductions also feed Contra-COGS, the allowance figure Retail Analytics reports. That figure is a modeled estimate, so when you need the exact amount Amazon took for freight, work from the deduction detail on your remittances instead.
Why it matters to a vendor
On Collect terms you give up a percentage of your payments so that you don’t have to book and manage inbound carriers yourself. Before you accept that, model the freight allowance rate against what your own freight to Amazon would cost for the same shipments.
The comparison matters because the rate is fixed at AVN, so a rate you accept without running it applies to every PO that ships until the following negotiation. If your rate started near 5% and has crept up since, re-run the numbers before each AVN, because your own carrier costs may have moved in the meantime. When Prepaid comes out cheaper, take that comparison into the negotiation as your case for switching terms.
Related terms
- Co-op (Cooperative Marketing Agreement): the negotiated agreement freight allowance is one line of, with the AVN cadence and the dispute path.
- Contra-COGS: the reporting figure Amazon nets the freight deduction into.
- Glossary index: the rest of the Vendor Central terms and InsightLeap metrics.
