Rising Ocean Freight Rates Time For Renegotiation

By Author: Ricardo Lumbardo
Total Articles: 1135
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With container transport ocean freight rates rising by an astronomical 55% in three months, it is easy to see that these rates will continue to climb further. Therefore, this is the optimal time to renegotiate rates.

Several Charges

Several charges can comprise the overall ocean freight rates as well as delivery expenses over typical import shipments. Certain types of these rates can be negotiated with the forwarder or the carrier (if there is enough frequency and volume of shipment), especially if you have a working knowledge of the method of calculating such ocean freight rates. Some of the common components of the ocean freight rates include bunker adjustment factor surcharge, Panama Canal charge, Alameda Corridor surcharge, Advance Manifest surcharge, Suez Transit surcharge, Currency Adjustment Factor, Chassis Usage surcharge, Origin Arbitraries, Destination Delivery charge, terminal handling charge, war risk surcharge, Aden Gulf surcharge etc.

Depends On Incoterms

The origin charges payable on the ocean freight rates will depend on the Incoterms or terms of the sale. These might include origin ...
... documentation fee, origin receiving charge, destination terminal handling charges as well as terminal handling charge. In case the shipment is being transported inland, several charges such as destination delivery charges, MLB or MiniLandBridge also called Inland Point Intermodal, Inland Fuel surcharge etc.

Myriad Charges

Sometimes, the ocean freight rates might involve a host of myriad costs, which may not even be associated with container or ocean freight rate. These charges include duty and taxes, importer security filing (such as 10+2 or ISF), customs brokerage, container transloading as well as, or stripping, interim warehousing and several other charges.

Negotiation Complex

The process of negotiating ocean freight rates is rather complex and you need to have an in-depth knowledge of the way the rates are calculated. Depending on whether this will be a recurring business with every shipper or whether you have several shipments of ‘one-time' nature, the amount of product shipped at a time and if this is repetitive, in each shipment, frequency etc. will decide whether you want direct negotiation with ocean carriers or want to leverage freight forwarder.

Transit Times

The transit times used for door to door shipment will be a critical factor to decide your negotiation on ocean freight rates. Depending on whether you will be shipping to major port and decide to truck across several distribution centers or if it will be sent to a single DC, will decide the ocean freight rates you negotiate. Other aspects include factors like whether you intend to move containers as they are into inland DC in, which case difficulties arise according to rail charges and ocean carrier. The forwarder or customs broker will mostly manage trucking of container delivery from as well as to port better than the carrier itself. Else, you need to arrange trucking requirements.

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