A Guide To Sea Freight Rates
Sea freight continues to be a popular option for many businesses. And whether it’s your first time moving freight in this way or you’re a seasoned pro, understanding the different rates can be confusing. They fluctuate and adapt according to the market and a number of varying factors. And while it’s increasingly difficult to nail down exactly how much you can expect to pay this form of transport, understanding the things that impact this can help your business plan more in advance.
Why is sea freight a popular option?
Even in 2020, there are still many businesses who favour sea freight over all other options. It remains one of the oldest options and still contributes to more than 90% of everything shipped internationally. The benefits of this form of freight movements are vast and beneficial to several businesses, depending on size and requirements.
Sea freight is generally the most competitive when it comes to pricing. It can come out as much as 6x less expensive than air freight. With this, you’re looking at longer shipping times but if your business model can support this, it is a viable option.
Sea freight can accommodate and adjust to suit your needs. There is the ability to consolidate a number of smaller shipments together to save on costs. Larger shipments can be configured into corresponding containers or transported in other means. And with the shipping vessels designed to transport high levels of cargo, it’s unlikely you’ll be pushed out in favour of other businesses.
As one of the oldest forms of freight movement, shipping by sea is much safer than other alternatives. Those working in this area have the experience and expertise to ensure measures are put in place to move hazardous and dangerous materials easily. And maritime safety is kept at the height of importance and continues to be adapted in line with technology to ensure this.
Kind to the environment
Moving freight by sea has a much smaller carbon footprint, using one of the most carbon-efficient transportation solutions on the market.
In total, the final price of a sea freight shipment will cover:
- Inland haulage.
- Terminal handling.
- Shipping documents.
- Customs clearance.
- Sea freight base rates.
- Fuel surcharge.
- Currency adjustments.
Below, we’ll look at several factors that can impact these costs.
FCL and LCL
We’ve written a detailed blog post on the difference between FCL and LCL here. However, we’ll give you a quick rundown here too as this will impact the cost of your shipments.
Full Container Load refers to shipments that take up the entire space within a standard container. If you have enough items to fill this space, it can work out a more financially viable option. Equally, fragile products are better protected in FCL shipments as they are only touched once during loading and once during unloading.
Less than Container Loads are the opposite. In this instance, smaller shipments will be consolidated with others to fill a container. For many, this is a more viable option as it allows you to reduce shipping costs overall. However, this process is slightly longer and you’ll have to organise shipment from the loading warehouse to your end customers.
While quantity will largely determine whether you choose FCL or LCL shipments, you also need to take into account cargo weight. A shipping carrier or Freight Forwarder will use the weight of your cargo and the cubic volume of the cargo and compare this to the shipper’s rate per kg to arrive at your shipping fee.
Fuel charges and surcharges can have a significant impact on profit margins – especially if you move a chunk of your business internationally. They fluctuate frequently in line with fuel costs and should be monitored regularly. They account for the fuel used to deliver your shipment to the end customer. Each of the main shipping carriers – DHL, UPS and FedEx – have their fees determined by a weekly report which is calculated using the price of kerosene. Generally, DHL will have a 0.5% fuel surcharge fee while FedEx Ground Services charge is between 2.75% and 3%.
To get a hold on these costs and ensure they don’t price you out of international shipping, it pays to negotiate rates. Getting a flat-rate if you plan to consistently ship large volumes can benefit you financially.
Once your container arrives at the destination port, the terminal handling fee is applied. This covers the crane removing it from the ship and placing it on a container stack. It also encompasses moving the container onto another truck to complete its journey to its final destination. It can be up to $800 for a single container, depending on various factors. When organising shipments of larger loads, taking into account this financial commitment will ensure it doesn’t come as a shock.
Sea freight fees are a fluctuating and confusing business. They change in accordance with various factors, including supply-and-demand, capacity to handle freight, seasonal changes and environmental laws. The best way to ensure you’re always getting the best deal is to work with a professional and experienced Freight Forwarder, like the team here at Radius Warehouse and Logistics. We have over 20 years of experience, helping small to large businesses move freight to the US, the Far East and further afield. If you’re looking to expand your business, take advantage of the benefits that sea freight has to offer and would like to speak to a member of our team, feel free to get in contact today.