How Ocean Freight Is Calculated?

Shipping freight to different locations or countries happens on a regular basis. This is one of the most availed services from businesses. There are 3 modes of transport that are usually offered to these customers. Depending on the type of products, urgency, or budget, a customer may opt to choose a specific mode over the other. Ocean freight is one of these transport methods that has lesser restrictions on the type of product that customers are shipping out to other countries or locations. With regards to the costs incurred by these customers, they are lower than having products shipped via airplane. 

This article will discuss the important things customers should know about ocean freight and how it is usually calculated by shipping companies.

Important Things to Know About Ocean Freight Shipping

For those people who need to ship cargos overseas, they actually have two methods of shipping to choose from. Transporting goods via air freight is one of the fastest but also the most costly among these methods. Air freight shipping has its benefits but may not be allowed to transport specific kinds of items. With ocean freight shipping, customers are assured that their cargos will be able to reach their respective destinations without worrying that the items will not be allowed to be boarded on to the shipping vessels. Below are some of the important things customers must remember when they are thinking of transporting cargos via ocean freight:

  • When choosing between air freight and ocean freight, the total weight of the cargo has to be considered even if the classification of the items that would be shipped is allowed to be loaded into an airplane. In most cases, if the customer’s cargo reaches 100kg, the airline may not allow for the cargo to be transported as it is deemed to be too heavy and ocean freight shipping would be the only solution.
  • The customer must always be ready with all the information regarding the items included in the cargo. There are certain kinds of goods that may have additional customs taxes and duties that must be paid beforehand. Customers may get help from customs brokers to help deal with the documentation and determine the amount needed to be paid in relation to the taxes and duties. Some shipping companies offer customs brokerage services to make it easier for the customers. This is crucial since unpaid customs taxes and duties will cause delays to the shipment. Customs officials will not hesitate to put the shipment on hold unless all the requirements have been completely fulfilled by the customer.
  • When importing or exporting goods, customers have the option to go with full container load (FCL) or less than container load (LCL) to transport their cargo. These options can give customers the ability to choose which would fit their requirements and budget. FCL would usually cost more since the customers that opt for this option will be required to pay for the fees in using the whole shipping container to store their cargos. FCL is cost-effective when the quantity and sizes of the items included in the cargo will be able to take up the whole space inside the container. It would also be safer as the items would undergo fewer chances of loading and unloading. With LCL, the cargos of multiple customers are consolidated into one shipping container. This is cheaper for customers who need to move fewer items.
  • Depending on the destination of the cargo, it may take some time before the cargos reach their respective destinations. Customers need to remember that the shipments need to be scheduled before they are loaded into a shipping vessel. The possibility of delays is normal in ocean freight services. Weather conditions and other unforeseen events may cause the schedule of all shipments to change.
  • To ensure that the items that customers are transporting via ocean freight shipping are kept safe and secured during the whole process, they should not forget to carefully pack the items. This is crucial since any movement or pressure may cause damages to items inside the shipping container. Customers must use heavy-duty packaging materials to keep the items protected from any type of risk that they may get exposed to. Customers must pack fragile items in bubble wraps to keep them secured at all times. For furniture and other larger items, customers may use moving blankets to help keep them intact as they travel through the rough waves from the ocean.
  • When customers are fixing the schedules for their shipments, they need to consider the cut-off dates from the shipping companies. These dates are different from the sail dates of the shipping vessels. Customers must not get this wrong, or their shipments may not reach their destinations in relation to their required deadlines. Keeping close coordination with a shipping company is very important to ensure that the schedules will be aligned.
calculating-ocean-freight-costs

Calculating Ocean Freight Costs

For customers that are wondering how shipping companies compute the expenses of their cargos, they have to remember shipping companies will have different variables that will make each of their price quotations different from other companies. To get a better view of the common factors that shipping companies include in the calculation of the ocean freight shipping costs, you refer to the following list:

Hauling charges

  • Since it would be easier if the shipping company would be the one handling transporting the cargos to the port of exit, customers will be required to pay for any fees and expenses incurred for bringing the cargo to the dock.
  • If the customers opt to have the cargos delivered to their warehouses or customers, then they will also be required to pay for the fees that will be incurred from transporting the cargos from the port of entry to the destinations of the cargos.
  • These charges will also include the costs for the shipping containers that will be used in storing and transporting the cargos. LCL shipping usually includes container freight station charges (CFS). CFS deals with the consolidation or deconsolidation of the cargos. This includes the charges when the cargos are transferred from the original truck onto the truck that would bring the cargos to the container yard. Cargos that are going to countries or areas that will be using the same port of discharge will be grouped together.

Terminal handling charge

  • This is a required expense that is collected by the terminal port authorities for the labor of handling equipment and their maintenance. Terminal handling charges are required at the port of origin and at the port of discharge. The terminal handling charges differ for each country, and customers will need to understand this. This will also depend on the type of items that are included in the cargo since some products may need extra care when loading and unloading from the shipping vessels.
  • Since the shipping company will be the one to act as the authorized representative to transact with the port authorities, the terminal handling charges must be paid first before the cargoes are loaded onto the shipping vessels.

Documentation charges

There are fees that need to be paid by customers to process the required documentation for the cargo to be processed, loaded, and released at their destinations. An example is the fees needed for the bill of lading. This is the documentation that would contain all the necessary information of all the items included in the cargo. This legal document also serves as protection for all the parties involved in the transaction or shipment. There may also be other documentation required for the shipment that the shipping company may need to acquire and process, and the costs will be paid by the customer.

customs declaration

Customs taxes and duties

For customers that wish to make the process of transporting their cargos faster, they can rely on the shipping company to pay for the customs taxes and duties for them. The computation will be included in the price quotation. This will also give the accountability to the shipping company if the shipment is held by customs authorities for any unpaid taxes and duties.

Insurance

Considering that transporting products from different countries or continents will always have risks involved, the customers may opt to pay for insurance so that their cargos will be covered from losses or damages during transport. It may not be required to pay for insurance, but it is highly advised that customers insure their cargos because travelling via ocean freight may have unforeseen incidents.

Accessorial charges

These charges include the fuel surcharge of the shipping vessel, handling of cargoes that include hazardous materials, or any other miscellaneous charges that will be needed to fulfill the shipping transaction.

Review The Price Quotation Before Finalizing the Transaction

If you are dealing with reputable shipping companies, you are assured that there will be fewer mistakes in the quotation they are giving your cargos. However, it is still recommended that you check if the charges included are fair since you do not want to pay for something that will be unnecessary to your transaction. If you have a need for ocean freight shipping, you may contact Ontario Container Transport at (905) 695 1501. As one of the well-known shipping companies in Ontario, Canada, we assure you that your cargos will reach their destinations as fast and safe as possible.

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