Ocean freight plays a crucial role in international trade. Some businesses are deeply involved in making this happen. In doing this, the role of ship finance is huge. It helps to tackle the financial side and prepare for the major expected expenditure.
However, additional expenses can arise for shippers :
Freight Associated Charges
- Maritime freight charges
This is the main charge in any ocean freight shipment. It is the expense related to transporting the cargo. Based on the shipping company and the choice of route, these charges may vary. International trade flows also affect maritime freight costs. Like any other market, the competitiveness of the products also influences the freight charges.
To attract shippers, carrier companies follow practices to lower the prices. Once charges hit rock bottom, they start raising the price again. This is termed as General Rate Increase or GRI.
- Consolidation fee
LCL shipments come with a consolidation fee. This is a fee charged by a consolidator or freight forwarder. It includes the cost of consolidating the different loads coming from different shippers.
Delay fees can occur during circumstances beyond anyone’s control. They can happen to the most experienced shippers. Delay fees can be applied due to customs examinations, congestion at ports, yards, or terminals or due to other unexpected factors. Warehouses and shipping lines offer free time for the usage of containers and other equipment. Some of the common types of delay fees applied are storage, detention, demurrage, per diem and warehouse fees.
- Customs clearance fees
Customs clearance is a process in which customs authorities check the goods and documentation to make sure it is good to leave or enter the country. The customs clearance fee includes administrative expenses related to processes and procedures. The fee depends on the country. However, an additional fee may even be applied based on the circumstances. These fees may include transportation charges to take cargo to the warehouse and inspection charges. The use of any equipment may also incur an additional fee.
- Customs bond
A Customs Bond is a guarantee for paying duties and taxes. It works as an insurance for the commodity. This type of bond is called a surety and is purchased from a third-party company. This company is responsible to pay the required duties and taxes if the importer fails to pay. The expense of customs bonds depends on many factors. These include the duration of the bond, importing country and the kind of bond.
Destination charges must be considered when calculating shipping costs. These fees are unavoidable. They include local charges like port charges at both destinations. They do not generally fall under the freight charge category because they focus on the charges of moving the cargo at the port.
- Destination agent fee
Hiring an agent at the destination to take care of cargo comes at a cost. Someone must take care of the paperwork. This fee is charged separately from duties and taxes.
- Other destination charges include:
- Cargo data declaration fee
- Security fee
- Handover fee
- Environment fee destination
Maritime transportation includes a lot of paperwork. Even relatively uncomplicated shipments will demand paperwork and filing. The charges for documentation are based on factors that include customs requirements, destination and shipment type. Documentation fees will include:
- Bill of Lading issuance
- Switch Bill of Lading issuance
- Bill of Lading correction
- SOLAS VGM submission fee
Some additional fees may be charged based on the specific zones of the voyage. Apart from port charges at both destinations extra charges may apply for using waterways like the Suez Canal, Panama Canal and higher-risk zones.
Taxes and duties
The value of the merchandise is reflected in the taxes and duties that will be applied. The taxes and duties are paid by the importer in the majority of the cases. However, there are some circumstances where the exporter pays too. The customs office will decide the due amount of taxes and duties.
It is wise to invest in cargo insurance. Generally, shipping carriers provide cargo insurance. Usually that covers the basics only. The insurance cost depends on the value of the cargo. It is advisable to browse different options before choosing insurance.
From destination to destination, the port charges change. Port charges can be in the form of wharfage fees, T3, THC and security deposits.
Inland charges are applied to the cargo when it is moved from port-to-door, door-to-door and door-to-port. This includes the pick-up or delivery of the container from a destination country to another. These charges can be unavoidable. The cost may vary. Some of the inland charges are:
- Chassis repositioning/redelivery fee
- SOLAS VGM weighing fee
- ELD overnight fee
Moving cargo from a destination to another may incur different charges and fees. Some can be reduced while others are fixed. Having a clear idea of fees will help to be prepared and plan the voyage budget accordingly.