A Guide To Sea Freight Rates
Calculating sea freight rates is a complicated and ever-evolving practise, making it hard to properly understand how much it will cost you to ship internationally. They fluctuate regularly, depending on a number of factors. An experienced freight forwarding company will have the tools to provide you with accurate quotes. Equally, a freight broker will also be able to support you in this way. However, it does help to have some understanding of what impacts these rates and how they work to get your cargo to its final destination.
What factors impact shipping rates?
Namely, the factors that can cause freight rates to change include:
- The type of cargo being shipped.
- The mode of transport used (sea freight or expedited freight).
- The weight or volume of cargo.
- The distance to the final delivery destination.
Why is sea freight such a popular choice?
In general, sea freight is a cost-effective solution – especially for larger shipments. There are a number of additional reasons why you may choose sea freight including:
- Larger capacity for bigger shipments.
- More cost-effective shipping solution than air freight or other solutions.
- Fewer restrictions on what goods are considered dangerous and, therefore, restricted.
- Friendlier to the environment with significantly lower CO2 emissions from sea freight than air freight.
For businesses that choose to use sea freight for their cargo movements, it is important to fully understand the costs and fees. This allows you to appropriately price products, allowing yourself a profit margin while compensating for any variables.
LCL and FCL
There are two key terms you’ll need to understand when using sea freight as a mode of transportation. These are LCL (less than container load) and FCL (full container load). LCL means that a number of shipments have been packed into a single container. This is generally due to the quantity and size of cargo, with that from a single supplier not being enough to fill an entire container. While this may be the most viable solution for smaller shipments, it comes with a number of disadvantages including an increase in the risk of damage or loss, longer delivery times due to numerous drop off points and a higher cost per cubic meter.
FCL, on the other hand, is when a single shipment completely fills a container. This is considered the safest option, with just the single drop off reducing the change for damage or loss. It also works out cheaper per cubic meter so can be a more financially viable option too. Additionally, most LCL shipments are priced by volume and not weight.
What are the most common costs and rates?
When organising and completing a sea freight shipment, you’ll be presented with a number of documents that breakdown individual costs. As we have mentioned above, these prices regularly fluctuate so don’t assume they will remain fixed for every shipment you make:
- Customs security charges issued by the country of delivery.
- Container Freight Station charges (these are applicable to LCL shipments only).
- Handling charges from the terminal (port authority).
- Customs brokerage charges.
- Pickup fees.
- Delivery fees.
- Insurance costs.
- Fuel charges.
- Additional fees for handling hazardous materials.
- Storage fees (if applicable).
- Routine charges (applicable to specific countries and regions).
In 2020, there has been a significant rise in sea freight costs due to the global spread of COVID-19. In many ports, shipment prices have recorded a 25% increase. This is largely due to supply and demand – we are in need of essential items such as PPE just as vessel capacity reduces due to the virus. This is why it is so important to work with a qualified and experienced freight forwarding company to organise your international shipments. It is their job to stay on top of changes in the market while tracking down the most cost-effective price for your individual shipment.
Sea freight charges explained
When a freight quotation is given, it is generally split into 3 categories – pre-carriage, carriage and on-carriage. There will also be differences in costs applied for Door-to-Door and Port-to-Port shipments as well as other transport modes.
This cost will apply to any movement that happens inland before the cargo is loaded into a shipping container.
The charges applied during the movement of cargo while on the vessel. These can include:
- Bill of Lading fees.
- Export service fees.
- Low sulphur/emission fees.
- Fuel Adjustment Factor fees.
- EIS (Equipment Imbalance Surcharge).
- ERS (Equipment Repositioning Surcharge).
- Shipping container charged.
- Terminal handling charges.
These charges are applied to cover the costs of movement that takes place once the container has been discharged at a port.
How to get the best sea freight prices
Work with an experienced freight forwarding company. These businesses are in place to be the middleman, using their contact base to find you the best deal for your shipment. This means they will work out the most cost-effective route, determine whether FCL or LCL is most suitable and organise all legal paperwork on your behalf. Additionally, if you do have to deal with lost, stolen or damaged goods, a freight forwarding company is there to make sure you understand everything clearly and know your rights.
Radius Warehouse and Logistic Services are an experienced freight forwarding company with over 20 years of experience. Request a quote or get in contact to let us take care of your sea freight needs today.