When you move goods from one place to another, there are various costs involved. They are known as freight charges. However, freight costs aren’t always straightforward. They’re based on your cargo weight and volume, shipping distance, or the type of product itself.
In this article, we’ll explain what freight charges are, the different types, and how you can manage them best.
What Are Freight Charges?
Freight charges are the fee you pay to move your goods from one place to another, whether by ship, plane, or truck. Think of the freight fee like a ticket price for your shipment. This cost covers the actual transport, fuel, handling, and a few other services. Understanding what are freight shipping charges helps plan your budget accordingly and pick the best for your business.
The shipment fee usually depends on:
The shipping mode you choose. For instance, air is fast but expensive, sea is slower but cheaper.
Total distance and your shipping route.
The weight and volume of your cargo. Sometimes you have to pay by “chargeable weight”, which means that you pay for the heavier of actual and volumetric weight.
The particular handling, paperwork, customs, freight forwarder fees, or extra services needed.
Main Types of Freight Charges
Freight charges aren’t just a single number on the bill. They are made up of different smaller costs. Knowing these types so you can avoid surprises and unnecessary hidden charges.
Origin Charges
These are costs at the starting point, like a departure port, which include picking up goods, loading them into containers, and preparing the documents. Handling fees at the origin terminal are also part of this.
Main Transit Charges
These are the core shipping charges. It includes the air freight, sea freight, or land freight rates, depending on the mode you are using. Along with fuel surcharges, security surcharges, and sometimes even seasonal fees when demand is high.
Destination Charges
Once your goods arrive at the destination, there are costs for customs clearance, unloading, terminal handling, and freight delivery charges for sending the cargo to its final location.
Extra Handling Services
If your shipments require extra handling, such as refrigerated containers, oversized cargo, packaging, storage, or even delivery outside normal operating hours, you’ll get to see some extra charges on your bill.
As a business owner, you need to know these charges. Confirm these fees with your freight forwarder before and after shipping.
Air Freight Charges
Air freight is generally known for speed, but that speed comes at a cost. In air freight, you are charged based on either actual weight or volumetric weight of your cargo, whichever is greater. Volumetric weight of cargo is calculated by multiplying the package’s volume by a standard factor, such as cubic meters multiplied by 167, then comparing it to the actual mass.
Besides cargo volume and weight, international cargo rates are also influenced by the shipping route, cargo type, fuel surcharges, and terminal handling charges, as mentioned above.
So, when you see an air cargo charge per kg quote, always keep in mind that this is just a fraction of the overall cost. Always ask the freight forwarder to provide you with a detailed breakdown of the freight price.
Ocean Freight Charges
Ocean freight shipping costs are more than the fees for moving your goods from one port to another. Other extra charges involve:
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Bunker Adjustment Factor (BAF): These are to compensate for fuel price changes.
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Currency Adjustment Factor (CAF): These are to cover exchange rate risk.
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Terminal Handling Charges (THC): Ocean freight destination charges include loading/unloading goods at ports, depending on the ports you are using.
To have a rough idea of shipping cost, consult a freight forwarder like Foresmart, who can give an estimate of cost based on container size, weight, volume, and distance between the origin and destination ports.
Ocean freight is slower compared to air freight, and the charges here are lower than air freight. But the port and handling fees add up to the final cost, especially for smaller shipments.
Truck Freight Charges
Trucking freight rates are basically charged per mile. The charges are calculated differently depending upon the truck load: full truck or less than truck load. Distance and the type of vehicle you are choosing matter as well.
Several different factors influence those per-mile rates:
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Fuel costs (which fluctuate a lot).
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Drivers’ wages, insurance costs, and maintenance fees.
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Road quality, route, and tolls.
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The size and weight of the load.
Think of it like this. If a truck covers 500 miles and the rates are $2 per mile, the basic freight charges will be $1,000 without adding any extra fee. By using per-mile charges, businesses can have an idea about road transport costs quickly, and they can choose the best route or carrier for themselves.
Hidden Shipping Fees
When you receive a freight quote, the numbers mentioned on it are often just the beginning, especially in international shipping. International freight quotes often come with additional freight fees because of various uncontrollable factors during transit, compared to domestic shipping.
Some of the common hidden shipping fees are mentioned below.
Accessorial Charges:
Charges for the extra services other than the normal pickup or delivery. For instance, inside delivery or special handling of goods.
Overweight or Oversized Surcharge:
When your shipment is heavier or larger than the standard weight or size limits, carriers will charge you more.
Peak Season Surcharges:
During busy seasons or at crowded ports, congestion fees or peak season surcharges are applied.
Demurrage and Detention Fees:
If the containers containing your goods stay too long at ports or at warehouses, the demurrage and detention, which are charged daily, will keep adding on.
Customs Processing Fees:
Besides customs duties, import/export taxes, and value-added tax (VAT), you should consider international freight charges like customs filing and processing fees. It is necessary to prepare all documents early. Moreover, random customs checks also add up your storage fees, probably causing you demurrage and detention.
Exchange Rate:
As an importer, you should watch out for exchange rate and currency fluctuations, as they can impact your profit margins. The transfer fee also needs to be considered.
These hidden shipping fees may surprise many businesses in the end, especially the new ones. Our suggestion is to work with a reliable freight forwarder. Foresmart can provide you with an explicit cost breakdown and arrange everything for your international shipping. By staying alert, you can prevent being overcharged as far as possible.
How Can You Reduce the Cost of Freight
There are many smart ways to lower your freight charges without compromising on your reliability.
First, compare your quotes from different freight forwarders or shipping companies. Even a small difference in rates can add up.
Before shipping, make sure that your shipment is weighed and measured correctly, as inaccurate dimensions or weight can lead to unexpected charges.
Use appropriate packaging for your goods. Compact, well-fitting boxes can help you reduce volumetric and dimensional charges.
You can also consolidate your shipments whenever possible.
Finally, always plan. Booking early, avoiding peak season charges, and staying flexible with shipping dates can help you access lower rates.
Conclusion
Freight charges are a big part of international shipping. Understanding these charges helps in planning better and avoiding surprises, whether you’re moving goods through air, ocean or truck. Smart freight planning means smoother deliveries, lower expenses, and happier customers.
Frequently Asked Questions
How do you calculate freight charges?
Freight charges are usually calculated based on factors such as weight, size, distance, and mode of transport. Tools such as an online sea freight cost calculator or air cargo rate tables can make cost estimation easier. And then you can turn to a freight forwarder like Foresmart for an accurate quote.
Who pays freight costs?
Freight costs depend on the trade agreement, like Incoterms. Ideally, the seller pays the freight charges and the buyer pays the transport costs from the warehouse to their store or vendors. The determination of who will be charged the freight costs is usually indicated ahead in the shipping agreement.
How much do freight forwarders charge?
This is flexible, depending on the freight forwarders and services they can provide. Most freight forwarders make money by adding a profit margin on top of the base freight rates they get from carriers. They might also charge for documentation, handling, and customs clearance.
Freight charges are usually calculated based on factors such as weight, size, distance, and mode of transport. Tools such as an online sea freight cost calculator or air cargo rate tables can make cost estimation easier. And then you can turn to a freight forwarder like Foresmart for an accurate quote.
Freight costs depend on the trade agreement, like Incoterms. Ideally, the seller pays the freight charges and the buyer pays the transport costs from the warehouse to their store or vendors. The determination of who will be charged the freight costs is usually indicated ahead in the shipping agreement.
This is flexible, depending on the freight forwarders and services they can provide. Most freight forwarders make money by adding a profit margin on top of the base freight rates they get from carriers. They might also charge for documentation, handling, and customs clearance.
