Understanding International Freight Forwarding Costs

The task of comparing international freight costs has become increasingly more difficult.

When undertaking this task it is important to ensure that all components of the overall cost are taken into account.

For Sea Freight shipments, comparing only the base rate may prove a costly error.

In many cases the combined value of the most common surcharges such as the bunker adjustment factor (BAF), the peak season surcharge (PSS) and security surcharges (SS) can effectively double the overall freight costs.

In addition, many of the above mentioned surcharges can vary from one shipping line to another. They may also differ depending on the route or the ports of origin and destination. Typically these surcharges are represented as cost per unit.
E.g. Per full container load (FCL) or per cubic metre (CBM) for less than full container loads (LCL)

These surcharges when combined with frequent general rate increases (GRI) and rate restoration (RR) activities adds even further complexity to the task of making an “apples to apples” comparison.

Local handling charges at the destination such as terminal handling charges (THC), port service charges (PSC), equipment handling charges (EHC) and shipping line or freight forwarder documentation charges and statutory customs reporting charges should all be considered as part of the overall freight cost.

The same caution must be exercised when comparing the overall cost of airfreight shipments. In addition to the base rate a number of surcharges will usually apply. These include a surcharge to cover fuel price fluctuations (FSC) and a security surcharge (SSC). These surcharges can take the form of a fixed fee per shipment or as cost per unit.
E.g. Per Airway Bill of Lading (AWB) or per KG

Similar local handling charges apply for airfreight shipments. These include international terminal handling fees (ITF), airline handling fees (AHF) and airline or freight forwarder documentation charges and statutory customs reporting charges.

As previously mentioned, international freight and local handling charges will vary depending on the carrier, the freight forwarder and the port of origin and or port of destination.

Therefore, when comparing the rates of the shipping lines and freight forwarders it is imperative to ensure that all of these variations are taken into account when calculating the total freight cost of an import shipment.

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