Guide to Carriage Fees also known as Freight Charges

Carriage fees, also known as freight charges or shipping costs, are the expenses incurred when transporting goods from one location to another.

Are you an entrepreneur, a small business owner, or an individual seeking to transport goods across regions? Navigating the realm of shipping and logistics may present a formidable challenge, particularly in grasping carriage fees. This comprehensive guide will deconstruct the complexities of shipping carriage fees, furnishing you with a precise comprehension of their nature, mechanics, and methods for refining your shipping strategy to enhance cost-effectiveness and ensure flawless delivery.

Carriage Fees

Understanding Carriage Fees

Carriage fees, also known as freight charges or shipping costs, are the expenses incurred when transporting goods from one location to another. These fees encompass various components, including transportation, handling, packaging, and other logistical services. Understanding these fees is essential for effective cost management and maintaining a profitable business operation.

Factors Influencing Carriage Fees

Here are some of the factors that can influence carriage fees for shipping:

  • Package weight and size: Bigger and heavier packages cost more to ship.
  • Distance: Shipping farther distances also increases shipping costs.
  • Shipping method: Different methods have different costs; air shipping costs more than ground shipping.
  • Carrier choice: Rates vary between carriers, so it’s important to compare before shipping.
  • Seasonal changes: Shipping costs can rise during peak times, like the holidays.
  • Demand: High demand for a service can drive up its cost.
  • Fuel prices: Shipping costs tend to rise when fuel prices are high.
  • Government regulations: Shipping costs can be affected by tariffs and regulations on imported goods.

What are the different types of Carriage Fees?

The way things are moved affects how they’re charged. Air, sea, and road transportation have different carriage fees. Some fees are the same for all types, but some are just for one. Companies can charge for booking, while moving, before or when delivering. Certain charges apply everywhere, while others are only in a few countries.

Freight companies list the different parts of fees in an airway bill for flying stuff, a bill of lading (BOL) for shipping by sea, and a roadway bill for truck deliveries. Road deliveries have only a few charges, but sea and air deliveries have many kinds of fees that add up. The amount and type of charges a shipping company can add vary for sea, air, and truck deliveries.

Ocean Freight Carriage Fees:

Shipping goods by sea leads to ocean freight carriage fees, which you have to pay. These fees can change based on different things like how heavy and big the stuff is, how far it’s going, the rates at the time, and the details of the shipment.

There are three main types of charges for sending things on ships: freight, free on board (FOB), and delivery duty unpaid (DDU). Freight charges are for everything in the shipping process. FOB charges include costs for moving and loading at the start and end ports, plus insurance. DDU says if the buyer or seller pays customs duties and taxes at the end. Here are the different ocean freight charges:

Freight Category

Freight category charges cover different things. Here are some common parts:

  • Ocean freight (OCE): The main cost of moving one container from one place to another.
  • Bunker adjustment factor (BAF): Extra money to balance fuel price changes.
  • Currency adjustment factor: Added charge if you pay in foreign money, usually a percentage.
  • Interim fuel participation (IFP): Charge for higher fuel prices.
  • Origin fuel surcharge (OFUE): Charge from the starting country, usually a percentage.
  • Origin terminal handling charges (OTHC): Cost for handling containers at the start port.
  • Congestion surcharge (CON): Extra fee for busy ports.
  • Emergency risk surcharge (ERS): Charge for risky routes, includes fuel and security costs.
  • Heavy lift (HEA): Extra fee for heavy cargo.
  • Out of gauge surcharge (OOG): Fee for large containers.
  • Peak season surcharge (PSS): Extra cost during busy trading times.
  • Special equipment surcharge (SPE): Charge for special containers.
  • Hazardous surcharge (HAZ): Extra fee for dangerous goods.
  • Suez canal surcharge (SUE): Charge for using the Suez Canal.
  • Low Sulphur charge (LSC): Fee for ships in the EU.
  • Panama canal surcharge (PCC): Charge for going through the Panama Canal.
  • Aden gulf surcharge (ADE): Extra cost for crossing the Gulf of Yemen due to piracy risk.

Free on board (FOB) Category

These are some common components of FOB category fees:

  • Collection fee (COL): Paying for picking up and taking goods to the destination.
  • Customs entry (CUS): Every country has customs fees for foreign goods coming in.
  • Shipping line bill of lading (BIL): A paper that shows cargo details and is an agreement between the sender and shipping company.
  • Cargo data declaration (CDD): The European Union uses this fee for safety and security checks.
  • Demurrage charges (DEM): The shipping company pays this if they’re late loading or unloading.
  • Load, lash and secure (LLS): Paying for experts who handle loading and securing cargo.

Delivery Duty Unpaid (DDU) Category

DDU category fees have these common parts:

  • Destination fuel surcharge (DFUE): The country where things go charges this based on oil prices.
  • High cube additional (HQA): Pay extra for using a tall container.
  • Container cleaning fee (CCF): Cost to clean a container that doesn’t meet standards when returned.
  • Container fumigation fee: Pay this before pickup, on the ship, or at the port for treating cargo. It might include a fuel charge.
  • Chassis fee (CHF): Extra cost for using a chassis for overland transport.
  • Wharfage (WHA): Port authority charges this for using the wharf.
  • On carriage (ONC): Pay this for moving things inland after they’re taken off the ship.
  • Telex electronic cargo release fee: Covers sending electronic forms and messages to ports and agencies.
  • Destination charges (DES): Pay this at the destination port when giving the container to the buyer, receiver, or agent.
  • Air Freight Carriage Fees:

Air freight is better because it’s quick, dependable, and there’s less chance of things getting damaged compared to road or sea shipping. The cost of air freight depends on how heavy and big the stuff is. Some usual air freight charges are:

  • Fuel surcharge (FSC): This charge considers regional and seasonal fuel cost differences.
  • Security surcharge (SSC): Both the source and destination airports impose this to cover extra security measures; it’s obligatory.
  • Container service charge (CSC): If cargo is kept at the airport terminal, you might pay this.
  • Customs clearance fees: Shippers pay these to customs for allowing goods into a country.
  • Associated trucking fees: Trucking companies receive these charges for picking up and moving cargo between airport stages.
  • Airport screening fee: Airports charge this to screen for dangerous or banned items.
  • Document creation fee: To make documents like bills of lading, you pay this when exporting or importing.
  • Transport document amendment fee (AMF): Changing consignor details or cargo info might lead to this fee.
  • Gateway transfer fee: If you move the shipment to a third party, like an agent, this fee comes up.
  • Messenger fee: Pay for sending documents to brokers, transportation providers, or partners.
  • Cargo insurance: Mandatory fee to insure shipment from loss, damage, or theft.

Truck Freight Carriage Fees:

Factors that decide road freight charges include the shipping methods, truck types, distance from start to end, size, weight of the load, and any special delivery needs. Freight companies set truck freight rates also based on truck availability and demand. Rates can be higher on busy routes and lower where there’s less need. Different charges for truck freight include:

  • Pick-up: Companies collect the goods. This covers fuel, loading, and wages.
  • Handling: If a customer sends items, they sort and arrange them by route and speed. This isn’t needed for full truckloads.
  • Main leg: Actual transport costs include route, fuel, tolls, and taxes.
  • Delivery: Costs for unloading, sorting, and handling before delivery.

Who charges and who pays?

Usually, the carrier (including NVOCC) or their agent bills the BCO or Freight Forwarder for the ocean cost part. The landside charges come from different sources like the port (THC, Wharfage), haulier (cartage), and customs agent (clearing charges, duty).

The payment for these fees is determined by the shipment terms agreed upon between the buyer and seller. Most buyers and sellers rely on the Incoterms or International Commercial terms, a set of predefined commercial terms established by the International Chamber of Commerce. These terms help define each party’s responsibilities and liabilities in this trade.

Choosing the Right Shipping Service

When dealing with shipping carriage fees, it is essential to choose the appropriate shipping service provider. Take into account factors like reliability, reputation, coverage, and customer support when deciding. Collaborating with a well-regarded shipping company guarantees smoother logistics and minimizes the risk of delays.

Additionally, assessing the shipping provider’s track record in handling similar types of shipments can provide valuable insight into their expertise. A reliable shipping partner should offer comprehensive coverage that aligns with your shipping needs, ensuring your goods are well-protected throughout their journey.

Strategies to Reduce Carriage Fees

To truly reduce freight fees and charges, challenge established norms and processes. By      exploring these strategies and examining your freight program with a critical eye, you can uncover significant savings while maintaining effective shipping operations.

Contract steady lane volume: When you provide consistent work to carriers, they can optimize their backhauls, which leads to better efficiency and potentially lower costs. This loyalty and reliability can lead to savings of 2-12% compared to standard lane prices.

Ship on off-peak days: Adjusting your shipping schedule by a day can result in significant savings. Shipping on off-peak days, like Fridays or Mondays, can cut costs by around 10% compared to peak shipping days.

Utilize consolidation programs: Collaborate with local businesses to consolidate shipments to the same retailers. This way, you benefit from shared truckload rates and more efficient deliveries, potentially saving up to 25% on unconsolidated loads.

Build lasting relationships: Long-term contracts with carriers foster efficiency, reduce deadhead miles, and lead to savings of 3-5% annually. These savings can even double during periods of tight capacity.

Extend delivery lead times: Providing ample notice to carriers for future loads lets them optimize resources, resulting in potential savings of 5-20% by minimizing idle trailer costs.

Optimize pallet space: Efficiently using pallet space through proper stacking and packaging can lead to savings of 1-3% per load by reducing the need for excessive protective dunnage.

Offer later pick-up times: Allowing carriers to pick up shipments after regular hours, turning them into backhauls, can lead to savings of 15-20% compared to standard rates.

Maximize pallet space: Optimize product packaging and stacking to fit more cargo onto pallets and into trailers, saving up to $150 per pallet space.

Encourage larger orders: Incentivize customers to place bigger orders, as shipping more product at once can result in savings of up to 50% compared to shipping smaller loads.

Consider proximity to carriers: Choose carriers based near your delivery points to increase the likelihood of your load becoming a backhaul, potentially saving 20% on non-backhaul rates.

    FAQs

  1. What are carriage fees in shipping?

Carriage fees, often referred to as freight charges, encompass the expenses linked  with    moving goods from one location to another.

  • How can I reduce carriage fees?

Strategies like volume discounts, optimizing packaging, and leveraging technology for tracking can help reduce carriage fees.

  • How are carriage fees calculated?

The weight, size, and shipping distance affect carriage fees. Transportation mode (e.g., air or truck) also matters – air shipping is usually costlier. Carriage fees can rise during peak times, like holidays, contrasting with quieter periods like summer.

Are you currently seeking a freight forwarder to assist with your shipping requirements?

Forceget Digital Freight Forwarder is an ideal choice for international shipping solutions. Our services effectively reduce expenses. We negotiate lower shipping rates through our affiliations, handle customs paperwork efficiently, consolidate shipments for savings, provide transparent tracking information, and manage shipments comprehensively for timely, seamless delivery.