Ocean Freight Rates Are On The Rise

Ocean freight rates are once again on the rise.  This is particularly true of ocean container shipments.  In the last months average ocean freight rates (container transport particularly) have climbed up to 55%.  Have you renegotiated your rates lately?  If not now is the time!

Effectively negotiating ocean freight is not so simple and depends on knowing a fair amount of detail.  Will you have many “one-time” shipments, or more a repetitive business with each shipper?  How much product are you shipping at one time, or if repetitive, each shipment?  If repetitive, how often?  Answers to these questions determine if you want to use a freight forwarder or negotiate directly with the ocean carriers.         

Door to door transit time is also a huge consideration.  Will you ship to a major or “gateway” port and then truck to multiple distribution centers?  Or will it all go to one DC?  If you are planning on moving the containers intact to an inland DC, some difficulty may arise depending on the ocean carrier, and rail charges can be quite high.  A forwarder (or the customs broker) can often manage the container delivery trucking to and from the port much better than a carrier (if the carrier even would).  Otherwise you must arrange the trucking.

There are quite a few charges that may be a part of the total ocean / delivery transport costs on a typical import shipment.  Some may be negotiable with the carrier / forwarder (given sufficient volume and frequency) and if you understand how ocean freight rates are calculated. 

Some of the most common ocean freight cost components include:

BAF    - Bunker Adjustment Factor Surcharge

ACC    - Alameda Corridor Surcharge

PNC    - Panama Canal Charge

SUZ    - Suez Transit Surcharge

PSS    - Peak Season Surcharge

AMS    - Advance Manifest Surcharge

CHS    - Chassis Usage Surcharge

CAF    - Currency Adjustment Factor

DDC    - Destination Delivery Charge

THC    - Terminal Handling Charge

ARB    - Origin Arbitraries

AGS    - Aden Gulf Surcharge

WRS   - War Risk Surcharge

Depending on your terms of sale (Incoterms) you may pay origin charges including:

ORC    - Origin Receiving Charge

ODF    - Origin Documentation Fees

THC    - Terminal Handling Charges

DTHC  - Destination Terminal Handling Charges

If your shipment is moving inland from the port you may pay:

DDC    - Destination Delivery Charges

IPI      - Inland Point Intermodal or MLB - MiniLandBridge

IFC     - Inland Fuel Surcharge

In addition, your container freight rate may depend on the actual commodity being shipped. 

Of course there are the myriad of other costs not directly associated with the ocean freight or container rate, some of which include:

Importer security Filing (ISF or 10+2)

Customs Brokerage

Duty & Taxes

Stripping and / or Transloading of Containers

Interim warehousing

and, and, and …

If you need more detail or clarification, we will be happy to work with you to setup a bid or RFP (Request For Proposal), or to audit or review your current rates and processes for possible improvement.

Whatever you do, plan for success!  The cost and efficiency of your international logistics system is determined by how well you have planned and executed it.  Poor planning can result in much headache and unnecessary expense.  Great success will follow your good planning.

Contact us today or email us at inquiry@raymcguire.com for more information.

Ray McGuire Consulting Group  provides direction, tools and training to help you quickly and successfully execute international and domestic logistics, inventory management, agent/supplier relationships, safety, social, and governmental trade compliance or security programs.

Increasing speed-to-market while reducing costs!