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A freight quote is much more than just a sea or train shipping service price list.
In the simplest terms, a freight quotation is a summary of charges levied by a
carrier for the movement of cargo from Point A to Point B.
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Pre-Carriage
Carriage
On-Carriage
For each group, a list of common fees are provided in the chart. Depending on
the mode of transport such as Door to Door, Port to Port and other associated
services involved, a shipper or consignee will end up paying many other charges.
Some of the common charges are listed within each group after the common
fees. Some of you may know some of these charges under other names due to
the various abbreviations and descriptions of these charges. Many of these fees
can fall into more group.
Pre-Carriage
Carriage
On-Carriage
Pre-Carriage – is the term given to any inland movement that takes place prior
to the container being loaded at a port of loading.
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Such activity can take place at the same location as the port of loading, or at a
location close to the port of loading.
There are many activities that happen in a containerized shipment prior to the
container being delivered at the port for export.
Packing charges - A fee that may be charged by a 3rd party warehouse for the
packing of the cargo into the container at their premises.
If cargo is packed directly at the shipper’s premises, then this charge will not be
applicable in this contract.
Customs Clearance - A fee paid to the customs broker for arranging your
customs clearance.
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The pre-carriage activity may be carried out either by the carrier using road or
rail modes (Carrier Haulage) or by the merchant using road or rail modes
(Merchant Haulage).
Related Reading
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Pre-Carriage
Carriage
On-Carriage
Carriage – is the term given to the actual movement of the cargo on sea by the
shipping line from the port of load to the port of discharge.
There are literally hundreds of carriers around the world offering services
globally. Depending on the contract of carriage and the service type mutually
agreed between the carrier and the shipper, each carrier will have their own
applicable charges in their shipping service pricelist.
Ocean Freight Rate - Basic freight charge for movement of container from Port
A to Port B
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Low Sulphur Surcharge - Charged for the use of fuel that has lower emission
BL Fee - Bill of Lading Fee. A fee charged by the shipping line for the processing
of the bill of lading on behalf of the client.
The charge is usually a at rate per container, and it is not necessarily applied in
all trades or at all times, rather it is only applied when such trade imbalances
necessitate large expenditure on shifting empty containers from one place to
another.
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Accessorial Charges - Charges that are applied to the base tariff rate or base
contract rate, e.g., bunkers, container, currency, destination/delivery.
Aden War Risk Surcharge - A surcharge on goods transiting the Gulf of Aden
used to compensate shippers for additional costs including crew risk
compensation, cancellation of economical speed, and redeployment of vessels.
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AI - Abbreviation for “All Inclusive.” The total price to move cargo from origin to
destination, inclusive of all charges (limited to transportation costs).
Base Rate - The cost of shipping a container from one point to another. Rates
uctuate frequently based on a number of different factors.
Cargo Data Declaration Fee - A surcharge assessed for the additional costs of
declaring cargo information in advance to the European Union authorities as
required for authorities to evaluate any potential security and safety threats.
Port Dues - Fees charged by the harbour authority on ships using the port`s
facilities.
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applies to equipment. If you store a container at the port beyond free days, then
demurrage and detention applies. If you keep a container for too long on any
other premise (not on the port’s premises), then only detention applies.
Bonus Information
How to Gain Transparency into Ocean Freight Rates
Pre-Carriage
Carriage
On-Carriage
On-Carriage – is the term given to any inland movement that takes place after
the container is discharged at a port of discharge.
Such activity can take place at the same location as the port of discharge, or at
a location close to the port of discharge.
It may be carried out either by the carrier using road or rail modes (Carrier
Haulage) or by the merchant using road or rail modes (Merchant Haulage).
Unpacking charges - A fee that maybe charged by a 3rd party warehouse for the
unpacking of the cargo from the container at their premises. If cargo is
unpacked directly at the consignee’s premises, then this charge will not be
applicable in this contract.
Customs Clearance - A fee paid to the customs broker for arranging your
customs clearance which may include the payment of any Customs Duty, VAT
and other charges relating to Customs.
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Release Fee - A fee charged by the destination port to release cargo for further
movement or action.
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You may have noticed on your freight quote that the carrier has indicated that
quotations are subject to their Terms of Carriage, including its choice of law and
jurisdiction, which makes the quotation legal and binding.
The quotation may also come with a plethora of its own terms and conditions.
Once a quote has been accepted and the cargo has been shipped, there is no
room for any dispute on that quotation because the carrier has been very clear
in their offering.
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It is therefore very important for a shipper to read and understand all the terms
and conditions clearly and properly before agreeing to ship with that carrier on
the basis of that particular quotation.
Some shipping lines also have conditions like where there is an existing service
contract between the carrier and the shipper and there is a separate quotation
with additional charges or requests, in those cases, the quotation (incorporating
the Carrier’s Terms for Carriage and Service Contract Terms) shall prevail over
the service contract.
Not at all. If the shipper understands the full scope of the carriage and
breakdown of the carrier’s costs down to the last cent, there will be no
ambiguity.
It is prudent for you as the shipper to go through each and every item of the
freight quote to understand the costs so that there are no grey areas between
you and the carrier at the time of payment or cargo release..
Remember that YOU are choosing the carrier, so you are entitled to ask them to
explain all charges in detail. Don’t get ripped off because you didn’t check and
query the charges in advance and when you do query later it may be too late.
Conclusion
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Disruptions and innovation are changing today’s supply chain at a rapid clip.
Charges, especially ocean freight rates and bunker surcharges can change at a
moment’s notice.
Leave a comment
Very good post and well researched. Thanks for this very educational content.
Reply to Virgil Ratliff
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3/22/2018 The Secret to Understanding Sea Freight Rates
Nicely done! Very concise and explained thoroughly! Thanks for posting!
Reply to Josie McHale
Hi Josie, Glad you found this post useful. Rate sheets are mind boggling. Thanks for
the feedback!
Well done! Anyone TOUCHING sea freight shipments or selling them needs to understand
the many pieces that roll up into an ocean freight rate.
Reply to Kevin Krause
Very nice article, this information is very important because of the need for to
understand the many variables of producing a sea freight quote. Thanks
Hi Kevin, thanks for reading the blog post and for your feedback. Much appreciated!
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Really helpful, giving inside knowledge to understand and negotiating in better ways for
company bene ts and personal growth.
Thanks again, also need to know the way for calculation of total cost for export or import
shipment, what factors should be considered and how? appreciate , if you please put
some light on it
Reply to ANUJ BHARDWAJ
Thanks for the useful, explanatory and break down Sea Freight Rates. it is a great job, not
to be found on every site. As ANUJ BHARDWAJ pointed out it would be much
appreciated to put some light on how to calculate the nal rate for a FLC freight going
from A to B with some examples. Thanks.
Reply to Nasser
https://www.xeneta.com/blog/understanding-freight-rate-sheet 18/23
3/22/2018 The Secret to Understanding Sea Freight Rates
Thank you for providing a deeper knowledge into the sea freight rates as well as letting
the viewers understand the charges levied upon while undergoing a shipment process
through Ocean. This information has helped my relative to evaluate and examine various
shipping companies while Car Shipping California. When GDP of the world is increasing,
such insights as explained above give relief to ourselves as well to our pockets. While
wandering through various sites she got this (http://www.wewilltransportit.com/auto-
shipping-california/) and while understanding their services your informative blog helped
her come to a decision.
Reply to Casandra Russell
Found your blog. Its really nice on courier. I appreciate your article. Its important to get
quality courier services. So thanks for sharing all that important information.
Reply to Mark Hamilton
Dear Katherine,
It's been very interesting and informative stuff that is sure to add value to the reader's
professional understanding of the Shipping freight. Keep it up!
Reply to Ifftikhar Ahmed
https://www.xeneta.com/blog/understanding-freight-rate-sheet 19/23
3/22/2018 The Secret to Understanding Sea Freight Rates
I AM STUDYING " SUPPLY CHAIN MANAGEMENT WITH 6 SIGMA " , AND THIS POST IS
VERY HELPFULL FOR US. THANKS, M. SHAFIQ
Reply to SHAFIQUR RAHMAN MOHAMMAD
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