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Ocean Freight Fees: What You Should Know When Shipping By Sea
Created on 11.24
Often, estimating the ocean freight fee for your shipment can be tricky. Not only do you have a base charge, you’ll also face costs at loading and docking ports. Alongside that are further applicable fees, depending on your shipment size and type.
Sounds convoluted, right? Let us do the demystifying for you – read along to the end.
What Is An Ocean Freight Fee?
An ocean freight fee is what your freight forwarder (shipping carrier) charges to transport your cargo from one port to another, by sea. Typically, this covers the cost of moving your shipments as a Full Container Load (FCL) or Less Than Container Load (LCL) on a seaward vessel.
An FCL is when the container carries only your shipments in its full capacity, while an LCL is when your cargo shares space with someone else’s shipment load. Here’s a general breakdown of how these are calculated and what constitutes ocean freight fee :
· Basic Freight Rate – This is the core charge for your shipment load, based on how much space it takes up in a container(s).
· Bunker Adjustment Factor (BAF) – Essentially a fuel surcharge, reflecting the current price of fuel required for the transporting vessel.
· Terminal Handling Charges (THC) – These are fees incurred when loading/unloading your containers at port.
· Documentation Fees – A fee for preparing necessary shipping documents, especially for those crossing international waters and borders.
· Customs and Security Fees – Charges incurred during customs processing and routine port security checks.
However, it’s important to note that these might not be the only fees you incur. Every ocean shipment is different, and there may be additional, hidden fee charges – all of which we will explain in the next section.
What Are All The Shipping Charges Involved In Ocean Freights?
Like we’d mentioned earlier, each shipment is unique and may see different fee structures. To make things easier for you, we’re going to go ahead and detail all the fee types common when calculating ocean freight fee :
Ocean Freight Base Charge
The Basic Ocean Freight (BOF) charge, as you know, is divided into FCL and LCL. Here’s how they are calculated.
Full Container Load (FCL)
FCL shipments are often a flat rate depending on the size of the container you choose. Here are the costs for the most common container types :
· 20ft Dry Container (20GP) – $1,500 – $3,000 / container
· 40ft Dry Container (40GP) – $2,800 – $4,500 / container
· 40ft High Cube (40HC) – $3,000 – $4,800 / container
· 45ft Container – $3,800 – $5,500 per container
Besides these, there are further, more specialized options – these almost always come with custom pricing and surcharges :
· Reefer Container (Refrigerated) – Temperature-controlled units, usually used for heat-sensitive perishables like food or pharmaceuticals.
· Open Top Container – Units with no fixed roof, usually used to transport unevenly sized goods like timber, large machinery, etc.
· Flat Rack Container – An open rack (no sides or roof) use when transporting goods like vehicles or construction material.
· Tank Container – A large steel tank mounted onto a frame for stability during transport of liquids like chemicals, food-grade liquids, and hazardous materials.
· Ventilated Container – Units that allow ventilation through small openings, commonly used when transporting raw food products and biomass.
Less Than Container Load (LCL)
For an LCL shipment, costs are calculated by weight or volume in cubic meter (CBM) – whichever greater. Often, there’ll also be a minimum load charge, should your cargo not meet threshold weight or volume. Here’s what the general costing looks like for LCLs :
Say your cargo dimensions are : 1.2m × 1.0m × 1.5m = 1.8 CBM. Total weight : 450kg (0.45 ton)
Most carriers have a 1CBM = 1 ton rule, and whatever larger will be charged. In this case, 1.8 CBM is larger than 0.45 ton. Hence, your LCL shipment will be charged as a 1.8 CBM cargo.
Once you have that, determine the current rate of LCL shipment and multiply by the CBM value. In my example, LCL rates are $35. This leaves us with :
1.8 CBM x US$35
= US$63
Most carriers also have a threshold cost, often marked at the 1CBM point. This means that you will have to pay at least the base LCL cost for whatever shipment you make by sea.
Origin Charges (at Port of Loading)
Now, your shipment is ready for its sea voyage. Let’s see what the ocean freight fee looks like when you begin to load the vessel :
· Terminal Handling Charge (THC) – Cost of container handling and manpower at the loading port. This is charged by the port itself.
· Documentation Fee – Fee to prepare the Bill of Lading (cargo inventory list) and shipping documents.
· Origin Handling / Origin Service Fee (OSF) – Local services during loading of your shipment. This is a charge from your freight provider.
· Export Customs Clearance Fee – Filing and clearance for export, if your shipment is internationally bound.
· US Import Security Filing (ISF) – Shipments to the US require a mandatory declaration of container contents to ensure there is no threat to the state.
· Pick-up / Drayage – Trucking services move your shipment from the warehouse to the origin port.
Destination Charges (at Port of Discharge)
Your shipment has arrived at your intended destination. But what are the ocean shipping fees you’ll incur here? Let’s see what they are :
· Destination Terminal Handling Charge (DTHC) – Further shipment handling and processing charges. This time, it’s the arrival port that charges your shipment.
· Delivery Order Fee – A fee to issue a delivery order stating that your cargo is ready to be released to the next step/party in your supply chain.
· Import Customs Clearance – Charges for customs documents detailing the nature of import and volume.
· Port Storage Charges – Ports allow 3-7 free days to store your cargo. Anything beyond that becomes chargeable.
· Demurrage Fees – If your container overstays its welcome by weeks or months, you’ll get hit with an extended storage fee.
· Detention Fees – This is when you hold on to your shipment provider’s container for too long.
· Port Congestion Surcharge (PCS) – If the arrival port is seeing too many shipments, there will be a charge from the port to bring in additional manpower and admin to complete shipments.
Surcharges & Add-ons
Alongside those basic costs of shipment size, port loading and unloading, you may see a few more freight fee types in your shipment invoice.
· Bunker Adjustment Factor (BAF) – Fuel prices fluctuate, and travel by sea can add up in costs. This fuel adjustment fee helps your freight service provider to recoup costs as fuel prices move up and down in the active market.
· Currency Adjustment Factor (CAF) – Like fuel, currency exchange rates also flip-flop throughout the day. This charge allows your provider to even out the costs they may face due to rate changes from one country to the next.
· Peak Season Surcharge (PSS) – During high-demand periods, there is a scarcity of ships available. Hence, freighters tend to add a premium for their available seaborne vessels – just like hotels do at peak seasons/holidays.
· General Rate Increase (GRI) – Carrier alliances and your shipment provider will announce such adjustments when market spikes are expected.
· Equipment Imbalance Surcharge (EIS) – If there is a shortage of available containers in a region you’re shipping to, carriers impose this fee for the extra effort it takes to find you an available container.
· International Ship & Port Security Fee (ISPS) – This is a security fee charged under the International Maritime Organization (IMO) mandate in 2004 to proactively prevent acts of terror or biowarfare at shipping ports.
· Low Sulphur Surcharge (LSS) – Under the IMO 2020 fuel compliance, carriers must use fuel with sulfur content not more than 0.5%, which can be more expensive than standard fuel.
Optional Ocean Freight Fees
These are the few shipping fee entries you will find on your invoice, if your cargo meets these special conditions listed below :
· Lift Gate / Special Handling Fee – If your shipment is too heavy or oversized, you’ll see this on your shipment invoice.
· Inspection Fees – This is a fee if you decide to go with a third-party inspection or personalized Customs check.
· Storage / Warehousing Fees – Cargo held at the dock storage unit before or after shipping will see these fees added on.
How To Easily Calculate Your Ocean Freight Fee?
You could add them up one by one, but even then, that’ll simply be an estimate. A lot of these charges can vary from carrier to carrier. The smartest thing to do is to use a freight index shipping calculator.
These calculators have the latest freight rates of global carriers, making it easier for you to get a closer estimate to aid budgeting. But the best way to get the exact cost is to speak to your freight service provider.
Get Your Ocean Freight Fee Calculations Right
Calculating your sea shipment costs doesn’t have to be confusing. And with all these costs listed down, you can easily add them up to see how much each container is going to cost you. But at Dafey, you won’t have to do all that extra work – just contact our shipping experts and they’ll give you a detailed, itemized quote.
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