Ocean Freight Rates Are On The Move! Have You Renegotiated Your Rates Lately? By: Ray McGuire
Ocean freight rates are on the move. This is particularly true of ocean container shipments. In the last three months average ocean freight rates (container transport particularly) have fluctuated 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? The answers to these questions also 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.
Let’s take a look at what some ocean freight cost components might be:
| 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 …
Plan for success! Poor planning can result in much headache and unnecessary expense. Great success will follow your good planning.
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.
Contact us today at inquiry@raymcguire.com for more information.
Especially in today’s economic environment, one must be able to quickly show areas for improvement in working capital while improving processes and efficiencies.
With extensive experience in the Asian, European, and US markets, we help you build and operate highly efficient international import and export supply chains.
At Ray McGuire Consulting Group we consistently and successfully help you define and implement international logistics, Customs, C-TPAT, NAFTA, Importer Security Filing, TSA, social and vendor compliance, cross-dock, pick & pack fulfillment, and distribution solutions. We have expert knowledge and experience in C-TPAT certification (Customs-Trade Partnership Against Terrorism), Importer Security Filing (ISF or 10+2), AES, FAST, TSA, and other supply chain security programs
Consistently increasing speed-to-market while reducing costs!
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ocean freight, ocean container, ocean freight rates, import, export, logistics