Importers may not like them, but freight charges are a key part of global trade and logistics. They account for many of the costs involved with transporting goods worldwide. You’re likely to encounter dozens of them, even if you’re an irregular importer of goods from the Far East, so it pays to understand what you’re paying for.
In this article, you’ll learn about the most common types of freight charges, the factors that impact them and how Pro Carrier can minimise your costs as much as possible.
What are freight charges?
Freight charges are the costs of transporting goods from one location to another, whether by sea, land or air. They include the actual cost of transportation, handling fees, surcharges and additional services like customs clearance.
Authorities and suppliers will calculate charges using several factors, including:
- Weight and volume: Larger or heavier shipments incur higher costs.
- Distance: Longer distances increase transportation costs.
- Mode of transport: Airfreight, for instance, is more expensive but faster than ocean freight.
- Handling requirements: Specialised equipment, refrigerated containers, or fragile goods add to the total cost.
What are common types of freight charges?
Here are the most common types of freight charges split into several categories.
1. Pre-transit charges
Goods can incur charges before they’ve even started their journey. These include:
- Pickup charges: Fees for collecting goods from the supplier and transporting them to a warehouse or terminal.
- Customs documentation fees: Costs for preparing export documentation such as invoices, certificates of origin, and export permits.
- Packaging costs: Costs for securing goods with appropriate packaging to ensure safety during transit.
These costs may come early, but they are important. Pre-transit charges ensure a smooth shipment process by preparing goods for transport and making sure they comply with regulations.
2. Air freight charges
Air freight is the fastest mode of transport, suitable for urgent or high-value goods. Common air freight charges include:
- Weight and volume-based rates: Airlines calculate costs based on actual or volumetric weight. Heavier goods require more fuel, so they cost more.
- Fuel Surcharges: Fees to account for fluctuating fuel prices, often adjusted monthly.
- Security Fees: Costs associated with cargo screening and meeting international aviation security regulations.
3. Ocean freight charges
Ocean freight is a cost-effective option for large or bulk shipments. There are still several charges, however, including:
- Freight rates: Base fees are calculated based on container size (e.g., 20-foot or 40-foot containers) or cargo volume for less-than-container load (LCL) shipments.
- Terminal handling charges (THC): Fees for loading and unloading goods at ports.
- Bunker adjustment factors (BAF): Adjustments made to account for changes in fuel prices.
- Demurrage Fees: Demurrage is a fine for exceeding the free storage time at ports.
4. Freight forwarder charges
Freight forwarders manage the movement of goods across the globe. They coordinate transport and handle documentation. Their charges may include:
- Customs clearance fees: Costs for ensuring goods comply with import/export regulations.
- Consolidation fees: Charges for combining smaller shipments into a single consignment to reduce costs.
- Administrative fees: Fees for handling paperwork, tracking shipments, and liaising with carriers.
5. Destination charges
Once goods arrive at their destination, additional costs may apply:
- Import duties and taxes: Government-mandated fees based on the type and value of goods.
- Last-mile delivery fees: Costs for transporting goods from the port or terminal to the final destination.
- Storage fees: Charges for holding goods at the destination terminal beyond the allowed free time.
What factors influence freight charges?
Several factors determine freight charges. Understanding these factors can help you devise the most cost-effective logistics solution.
1. Mode of transportation
The mode of transport significantly impacts costs:
- Air Freight: High-speed but expensive.
- Ocean Freight: Cost-effective for bulk shipments but slower.
- Road and Rail: Ideal for regional transport, with rail often being cheaper for large volumes.
2. Distance and route
Longer distances naturally incur higher costs. However, shipping on popular trade routes may reduce costs due to high carrier availability and competitive pricing.
3. Cargo size and weight
Freight costs are calculated based on the greater of actual weight or volumetric weight, meaning lightweight but bulky items can still attract high fees.
4. Fuel prices
Fuel surcharges are common, especially in air and road transport, as fuel prices fluctuate based on market conditions.
5. Customs and regulatory requirements
International shipments must comply with customs regulations, including duties, taxes, and additional inspection or certification fees.
6. Seasonal demand
Peak shipping seasons, such as holidays or harvest times, often lead to higher freight rates due to increased demand.
How to maximise the value of freight charges
Freight charges can be a significant expense, but businesses can optimise costs and enhance value by partnering with the right logistics provider. Here’s how Pro Carrier can help:
1. Transparent pricing
At Pro Carrier, we provide clear and itemised quotes, breaking down costs to ensure businesses know exactly what they’re paying for.
2. Efficient route optimisation
We balance efficiency with speed, using the most efficient shipping routes to get your products to their destination as quickly as possible. Our goal is to reduce transit times and minimise costs.
3. Flexible shipping solutions
We offer scalable options, from small parcels to large container loads, allowing businesses to choose solutions tailored to their needs.
4. Proactive paperwork
Our team completes customs documentation and other paperwork two weeks in advance to avoid delays and ensure your goods spend as little time in port as possible.
Save time and money with Pro Carrier
Freight charges are a critical component of global trade, encompassing various costs that impact a business’s bottom line. Businesses can make informed decisions that enhance their supply chain operations by understanding the types of freight charges, factors influencing costs, and strategies to optimise expenses.
At Pro Carrier, we specialise in delivering cost-effective, transparent, and reliable logistics solutions. Our expertise in managing freight charges and ensuring smooth delivery makes us the ideal partner for businesses navigating the complexities of international shipping.
Speak to an expert today to learn how we can help you optimise your shipping costs and maximise value.