Factors That Determine Ocean Shipping Costs
If you are thinking of importing or exporting something, chances are you’re going to have to use ocean freight to transport the goods. As someone interested in shipping goods, understanding how ocean shipping costs are determined can help you get an idea of how much it will cost to ship your products. Here is a look at six factors that influence ocean freight costs.
One important factor that’s used to determine shipping costs is the destination – where are the goods coming from and where are they going? The less traveled a destination is, the more it’ll cost for you to transport goods there since very few carriers travel there. That also means there’s lesser capacity available. On the other hand, the more popular a destination is, the likelier it will be for you to encounter capacity issues as there is the demand for available space is high.
Fuel costs influence all types of freight shipping, and bunker fuel isn’t exempt. It’s closely linked to oil costs and tends to fall and rise with that of oil. Due to this, most carriers apply what’s known as a fuel surcharge to their ocean shipping rates.
There are two peak seasons in the shipping calendar. One season is during the Chinese New Year (between January and February), and the other is the holiday retail season (which lasts from around mid-August to around mid-October). During peak seasons, demand for cargo space is generally high while supply is almost non-existent. This causes prices to skyrocket due to scarce container capacity.
Furthermore, the rates for shipments that require controlled temperature environments are influenced by how the weather is during different times of the year. When bad weather sets in, most smaller ships are forced to dock to avoid being caught up in storms in the high seas. When that happens during peak season, it creates spikes in shipping costs.
Service Charges – and Fees!
If you plan on using ocean freight to transport goods, keep in mind that your goods will be charged a terminal fee at the departure and arrival ports. Please note that you might be charged extra fees by port authorities and shipping lines for things like security and handling of hazardous materials.
The American Dollar is the currency used for international transactions. However, in today’s global market, you are advised to factor forex rate fluctuations into your rate calculations as fluctuations in the money markets do have an influence on ocean shipping rates and shouldn’t be ignored.
Most ocean freight is calculated based on measure or weight, whichever is greater. That means that it would be more advantageous to fill up a container carrying your goods than to have it transported half full. Unless you’re shipping LCL (Less-than-Container Load), you’ll be required to pay the full cost of the container – filled or not.