What is Freight?
Freight is the fee paid for transporting goods from one port to another in maritime transport. Freight is an important component of total cost in international trade. Freight calculation varies depending on distance, cargo volume, weight, and transport conditions. Correct freight calculation is critical for pricing and profitability.
Freight is determined according to the agreement between ship owner or carrier and shipper. Freight market fluctuates according to supply and demand conditions. Liner services and tramp ships have different freight structures.
Freight Calculation Methods
Volume or weight-based calculation is common. In shipping standard, whichever is greater, weight or volume, is used as basis. One cubic meter or one thousand kilograms are considered equivalent. This rule ensures fair pricing for different cargo types.
Container-based pricing is used for standard containers. TEU (Twenty-foot Equivalent Unit) and FEU (Forty-foot Equivalent Unit) are used as units. Volume or weight of cargo inside the container does not affect freight unless it exceeds certain limits.
Freight Components
Basic freight is port-to-port transport fee. Various surcharges are added on top. BAF (Bunker Adjustment Factor) reflects fuel price changes. CAF (Currency Adjustment Factor) balances currency fluctuations.
THC (Terminal Handling Charges) are port terminal service fees. Documentation and bill of lading fees are charged separately. Isolation, hazardous materials, and cold chain surcharges may also apply.
Incoterms and Freight
Incoterms rules determine freight responsibility. Under FOB (Free on Board) terms, buyer pays freight. Under CIF (Cost, Insurance and Freight) terms, seller includes freight and insurance. Correct selection of delivery terms affects costs.
Under DDP (Delivered Duty Paid) terms, all transport costs are sellers responsibility. Under EXW (Ex Works) terms, buyer undertakes all transport organization. Each delivery term has advantages and disadvantages.
Comparing Freight Quotes
Quotes should be obtained from multiple carriers. Transit time is as important as freight. Number of transshipments and waiting times should be evaluated. Surcharges should be checked in detail.
Reliability of shipping line should be researched. Delay and damage history is effective in carrier selection. Long-term agreements can provide better rates.
Freight Insurance
Freight insurance covers risks during transportation. Premium is calculated according to cargo value and transport conditions. Institute Cargo Clauses define different coverage levels. All Risk coverage provides most comprehensive protection.
Conclusion
Freight is an important element of export cost. Correct calculation and quote comparison provide competitive advantage. Professional freight forwarder support offers optimal transport solutions.