Freight rates are simply the price at which a certain cargo is delivered from one point to another. Traditionally thats where the simplicity ends, as the calculations involved in producing these prices can depend on the mode of transport (road freight, air freight or sea freight), the nature and form of the cargo (Loose cargo, containerised cargo etc) the weight or volume of the cargo, and the distance to the delivery destination.
Here at Jenoa Cargo we are trying to simplify this process, and automate these calculations behind the scenes to deliver you an easy to understand total price for your international freight shipment.
However to give you an idea of how shipping freight rates are built up and calculated, we have put together a guide explaining shipping freight rates across the different modes. We will also cover Air freight rates, road freight rates and courier rates, but will begin with sea freight services.
Sea Freight Rates
The two main elements to the cost of transporting goods by sea are:
- The sea freight charges set by the carrier,
- Costs associated with handling and clearing the goods at the ports of loading and discharge.
Another factor that affects the cost of containerised sea freight, is whether the goods require a dedicated full container (FCL) or can be consolidated with other cargo (LCL). Lets break down both below.
FCL (Full Container Load)
FCL is the abbreviation for a "Full Container Load" And the term is pretty self explanatory. The shipping line charges a flat fee per 20′ container, 40′ container or 40′ High cube container, and the amount is dependent on many factors including origin, destination, volume, time of year, plus many other variables. Unless you have a contract with the shipping line or are moving significant volume, you will usually get a more favorable deal from a freight forwarder, who will likely have access (directly or indirectly) to a discounted rate based on certain volume agreements.
LCL (Less than Container Load)
When you do not have enough cargo to fill a shipping container (also known as grouppage shipping), LCL is usually a very viable option. Specialist LCL sea freight consolidators run services to all of the major ports and gateways around the world. They do this by paying for a full container from the shipping line, consolidating multiple smaller shipments at their warehouse, loading and shipping the full container in the usual manner and then earning their profit by charging a pro rata rate per 1000 kgs or 1 Cubic Meter (whichever is greater), known as weight or measure (w/m)
FCL or LCL ?
There are some instances where a shipper will not want to share a container even if LCL is cheaper, but for most the decision of which option to choose comes down to cost.
Consider the below example when shipping from Shanghai to Alexandria, Egypt (fictional rates !) Lets say shipment size of 2000 kgs and 10.000 M3
20 ‘ container would cost $1700 including all costs from collected to arrival port.
LCL rate would be $100 w/m (per 1000 kgs or 1.000 m3) from collected to arrival port.
This leaves the following options
- Pay $1700 if shipping as full container load (FCL), or
- Pay $1000 if shipping as less than container load (LCL)