What to Know About Freight Costs

When selecting a freight forwarder, you need to select a company that offers a transparent pricing structure. You need to compare quotations from different forwarders to ensure that you select a company that offers competitive pricing. But you should have a good idea of overall costs that are involved in freight. 

Shipping cost will generally be the cost of moving cargo from one place to another. But there can be different contracts between you and the freight forwarder and this can change the costs. Mainly, you will be dealing with ocean and landside costs but these will be further broken down into components. When it comes to ocean freight costs, this is related to costs for cargo during its time in the water. The cost will be charged per container. The calculation of the cost will be from when you load cargo from a specific port until it is discharged at another port. While different shipping lines may travel the same route, their charges will be different and this will depend on the operational costs, container costs etc. Bunker adjustment factor which is the cost of fuel for ships can be calculated in several ways. Usually, you will be charged per size of container. But this charge will vary according to oil prices.

Sea freight charges are set by the carrier and then there are also charges for handling and clearing the cargo at the ports where it is either loaded or discharged. There are different volumes you can choose from as well. There is FCL or full container load where there is a flat fee for a container. The cost is also influenced by destination, origin and when the shipment is to start. There are certain times of the year that can be more expensive. For LCL or less than container load, there will be a pro rata rate per cubic meter or per 1000Kg. You will be billed terminal handling charges at the loading and discharging ports. These charges will be provided to you by the shipping line. Then there is wharf cartage where there is an additional charge added when goods are unloaded. The base freight rate of the freight forwarder will include these fees. Cartage is the charge for moving cargo by road. For example, this can be the charge for transporting foods from the port to the warehouse or the other way around. And wharfage refers to charges applied by the port to cargo interest for using their space and facilities.

The shipping line will also charge for ISPS or International Ship and Port Facility Security Code. There is also a charge called the low sulphur surcharge. Shipping lines are required to reduce their carbon emissions and be more environmentally friendly. So many shipping lines tend to use fuel with a low sulphur content. This can be more expensive than the cost of normal bunker fuel. Shipping lines will have to convert costs and revenues into different currencies and this is generally converted into US Dollars as this is considered to be the main trading currency. However, there can be certain exchange losses when converting so there is a cost charged by the shipping line called the currency adjustment factor.


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