Exploring Ocean Freight Rates

Essential Information for Shippers

For many shippers, ascertaining the precise figures for ocean freight rates can pose a challenging task, particularly when they lack a dedicated shipping partner. These rates encompass the fundamental charges associated with moving containers from one seaport (Port A) to another (Port B).

Distinguishing Ocean Freight Rates from Freight Quotations

An ocean freight rate signifies the expenses incurred for transporting cargo directly by sea. Conversely, freight quotations represent an estimated overview of expenses throughout the entire transportation journey, encompassing services like pickups, trucking, warehousing, and more. While not all shipments involve multiple modes of transportation, when shippers request a freight quote, it covers the comprehensive spectrum of costs.

Freight quotations can be further categorized into three sub-groups: pre-carriage, carriage, and on-carriage. Each of these segments comes with its own set of standard fees, and the choice of transportation mode can be Door-to-Door, Port-to-Port, or other related services. Consequently, shippers or consignees may find themselves responsible for a multitude of services. Ocean freight charges typically pertain to the “carriage” phase but can also encompass the pre- and on-carriage stages.

The pre-carriage phase [ origin charge ] pertains to any inland transportation that occurs before the loading of shipping containers at a port, whether at the port itself or in close proximity.

On-carriage [ destination charges ], on the other hand, covers charges incurred for transportation after the container has been discharged at a port. This can be executed by carriers using road or rail transport, or handled by a merchant. A significant service charge that applies to both scenarios is customs clearance, a task typically managed by a customs broker.

Accessorial charges in transportation refer to extra fees imposed by carriers for services beyond standard pick-up and delivery. These charges are triggered when additional labor, specialized equipment, extended time, or increased fuel are needed. They address unique or non-standard shipping requirements.

Below, we will examine the Carriage charges in greater detail, which are integral to the calculation of ocean freight rates.

Breakdown of Carriage Charges Contributing to Ocean Freight Rates

A multitude of carriers worldwide offer ocean freight services, and the charges for the carriage process may vary depending on the contract of carriage and the mutually agreed-upon service type. Final rates may, at times, exhibit similarities between services but can be influenced by various factors, including pricing competitiveness, long-standing partnerships, and the adoption of innovative technology.

The Bunker Adjustment Factor [ BAF ] serves as compensation for steamship companies to offset the constantly changing fuel expenses. It may also be referred to as the “Fuel Adjustment Factor” [ FAF ].

The low sulphur surcharge is imposed in recognition of the utilization of low-emission fuels.

The Bill of Lading Fee, as the name suggests, is levied for the processing of the Bill of Lading on behalf of the client.

Export Service charges are fees that an exporting agent may impose for their services.

Shipping lines impose the Equipment Imbalance Surcharge (EIS) to cover costs associated with the removal of empty containers from the destination country. When imported containers have no purpose in the receiving country, they must be relocated to reclaim valuable space.

Equipment Repositioning Surcharge fee comes into play when a shipper requests that carriers make empty containers available for relocation from one location to another.

The Piracy Surcharge is applied to compensate shipping companies for the increasing costs associated with piracy and hijacking avoidance and control.

Terminal Handling Charges – Destination pertains to fees applied for handling shipments at the destination port.

Terminal Handling Charges – Origin refer to charges applied for handling shipments at the point of origin.

Charges related to shipping containers can vary based on factors such as container size, the extent of container utilization, and whether the shipment is for local or international travel. Container sizes typically range from 20 feet to 40 feet but can extend to 56 feet, depending on the specific shipping requirements.

Shipping containers range in size and charged by usage, loading/unloading and removal from port after delivery.
How to maximize the benefits of Ocean Freight

When a freight quotation is dispatched, the responsibility lies with the shipper to decide whether they wish to accept and commence a contract with the shipping company. Generally, there is little room for subsequent disputes, as carriers tend to be explicit in their offerings.

Hence, it is of utmost importance for shippers to carefully review and comprehend all the terms and conditions outlined by the carrier. This diligence ensures that all charges associated with ocean freight rates are mutually agreed upon, and unexpected additional costs are avoided.

When shippers possess a comprehensive understanding of the entirety of carriage charges and the methodology behind the determination of ocean freight rates, ambiguity is eliminated. Therefore, it is advisable for shippers to scrutinize each item in the freight quotation meticulously, particularly in the context of international transport.

It’s worth remembering that shippers are in the driver’s seat when selecting a carrier, granting them the entitlement to seek detailed explanations of all charges, should the need arise.

If you are a shipper seeking ocean freight services, consider exploring how EP Logistics can fulfill your shipping needs. Our comprehensive freight quotes and rates are available for shipments of all sizes, destined for major locations worldwide.