What is international ocean freight?

Freight transported by ship is increasingly in demand. Its price, the possibility of reaching the world’s main logistics ports and its versatility are the main positive aspects to take into account. However, many people, even companies, are still unaware of what sea freight is in the logistics chain. In this post, we provide all the details.

 

Characteristics of international sea freight

International ocean freight can be defined as the most important cost in the entire ocean freight chain. Exact quantities as well as conditions of the shipment are usually specified in the shipping quotation of the freight itself, prepared in any case by the brokering companies or the freight forwarder who will facilitate the shipments, also between shippers and shipping lines.

Thus, international freight is the cost associated with transporting containers from one port to another, either 20 or 40-foot containers (the cost of freight varies, according to the capacity).

It is important for all organisations to be aware that there are different surcharges and concepts that are associated with the international ocean freight quotation, in addition to the aspects that influence the cost of the same, which we review below.

 

 

What influences the price of ocean freight?

Freight rates are determined, among other things, by the demand and supply in the countries of origin and destination of the goods. For example, if containers of grain return empty from a continent, the cost of freight will be higher as there is no export demand at destination. However, in recent years, if this is the case, freight rates have been lowered to boost export activity.

It should be noted that not all shipping companies offer this service and, in addition, the total amount of the freight will depend on the option chosen: whether it is door to port, door to door, port to door…

There are also clauses that can increase the cost of freight if certain conditions are met. In view of this fact, the ideal is to take out insurance to cover certain circumstances, something that is already common in most organisations.

At this point, it should be noted that there are two essential modalities that will determine the way in which the container is loaded, which will depend on the goods to be transported: FCL and LCL freight.

FCL Ocean freight

FCL refers to the use of full containers for a single load. Companies tend to contract this type because of its high versatility and cost-effectiveness, especially when handling volumes of more than 15 cubic metres. Many shipping lines charge a flat rate per container, which greatly simplifies operations.

FCL also provides extra security for the cargo, since it is usually sealed and belongs to the same owner. Moreover, it often results in faster deliveries, as the containers will go directly from the port of origin to the port of destination without having to make stops at intermediate ports.

LCL Ocean freight

The alternative to FCL is LCL freight, which is suitable for shipments with small cargo volumes. Goods of moderate volume are stored together from several shippers for the sole purpose of filling several containers.

However, the delivery of the goods is not usually as fast, since it makes stops at several ports. However, if you are not in a hurry for delivery and you want a more economical shipment, this is the best option, as it is more economical due to the sharing of costs. In these cases, the freight is calculated per tonne of cargo, so each company will only pay the cost of moving its goods.

 

 

Pre-shipment costs

There are, as can be seen, expenses derived from the sea freight quotation but, in addition, others must be incurred in the process prior to the loading of the goods on the ship, which are the following:

• Land transport until the goods arrive at the port of origin. This expense consists of applying a surcharge for shipments made from the exporting company’s warehouse to the agreed port of shipment.
• Cargo Fees. It is known as the T-3 Tariff. It applies an amount that has to be paid for the use of a space in a port.
• THC. Charges are applied for handling cargo at the port terminal. It is known outside Spain as Terminal Handling Charge.
• Customs clearance. Customs administration costs.
• Issuance of Bill of Lading.
• Bank losses. Charges or percentages may be applied to the price derived from the execution of financial transactions.
• BAF. This is a surcharge applied to modify, or correct, changes in unforeseen situations. For example, due to a rise in the price of fuel.
• CAF. This is a surcharge applied to cover currency exchange rate variations. It is usually applied to the cost of freight, with a certain pre-fixed percentage. Normally, the comparison is made against the US currency.
• IMO. Shipping companies work with dangerous goods, so a surcharge will also be added to the basic freight rate in the case of goods requiring special care or attention.
• CS. This surcharge occurs when the waiting time at the ports is increased due to congestion. This is regardless of whether the shipment is for loading or unloading of the goods.
• CSF. It is a security add-on charged at all ports.
• Extra costs. It depends on what has been agreed between the companies executing the shipment, but charges may be applied for cleaning containers, seals, issuing different documents, additional packaging…

 

Remember that SuiscaGroup offers everything that a ship may need in its stopover, so now that you know what sea freight is, we can adapt to everything you need or, directly, to your requirements. Moreover, as you have seen, international sea freight and its rates depend on different causes.