What determines the level of ocean freight?
2024-09-18

The level of ocean freight does not depend on the wishes of any particular enterprise, but is determined by the current market supply and demand relationship. Freight rates are the lever that balances the relationship between transportation capacity and demand.

1. The weight and volume of goods: The weight and volume of goods are the basic factors for calculating sea freight costs. Usually, shipping companies will charge based on the larger of the actual weight and volumetric weight of the goods (calculated based on the size of the goods) to ensure that the ship's space is used reasonably. Heavy or oversized goods may require additional fees.

2. Transportation distance: The farther the transportation distance, the higher the cost. Therefore, the distance between the port of origin and the destination port, as well as the choice of shipping route, will directly affect ocean freight rates. Long distance routes usually have higher shipping costs than short distance routes because long-distance transportation requires longer time and more resources.

3. The type and characteristics of the goods: The nature of the goods, such as whether they are fragile, dangerous goods, or have special transportation requirements (such as temperature controlled goods), will have an impact on the freight cost. Some goods may require special handling or protection, which can increase transportation costs.

4. Market situation: The structure, level of competition, supply and demand situation, and seasonal demand of the shipping market will all affect freight prices. During peak season, shipping companies may accept a larger quantity of goods and their prices may increase. Meanwhile, if there is a monopoly in the transportation market, competition among shipping companies may be fierce, and ocean freight rates may also be affected.

5. Freight forwarding companies and transportation service providers: The charging strategies of freight forwarding companies and transportation service providers can also affect ocean freight rates. Large freight forwarding companies can sometimes enjoy discounts on ocean freight rates because they have a large volume of business and good relationships with the target shipping company. Different shipping companies or logistics service providers may have different rates and service levels, so choosing different providers can also affect costs.

6. Fuel surcharge: Fluctuations in fuel prices can have an impact on shipping costs. Some shipping companies may charge fuel surcharges based on changes in fuel prices to offset costs.

In addition, factors such as port charges and exchange rates may also have an impact on ocean freight. It should be noted that these factors may be intertwined and jointly determine the level of ocean freight. Therefore, in practical operation, it is necessary to comprehensively consider multiple factors to evaluate sea freight costs.

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