Ocean freight rates are on the rise. Is it time to renegotiate your rates?

Ocean freight rates are on the rise.  This is notably real of ocean container shipments.  In the past a few months regular ocean freight rates (container transport notably) have climbed up to 55%.  Have you renegotiated your rates currently?  If not, now is the time!

There are really a several fees that may be a element of the complete ocean / shipping transport expenses on a common import cargo.  Some may be negotiable with the carrier / forwarder (supplied adequate volume and frequency) and if you fully grasp how ocean freight rates are calculated. 

Let us get a look at what some ocean freight expense elements might be:

BAF – Bunker Adjustment Factor Surcharge

ACC – Alameda Corridor Surcharge

PNC – Panama Canal Cost

SUZ – Suez Transit Surcharge

PSS – Peak Season Surcharge

AMS – Progress Manifest Surcharge

CHS – Chassis Utilization Surcharge

CAF – Forex Adjustment Factor

DDC – Location Delivery Cost

THC – Terminal Dealing with Cost

ARB – Origin Arbitraries

AGS – Aden Gulf Surcharge

WRS – War Danger Surcharge

Relying on your conditions of sale (Incoterms) you may shell out origin fees including:

ORC – Origin Obtaining Cost

ODF – Origin Documentation Fees

THC – Terminal Dealing with Fees

DTHC – Location Terminal Dealing with Fees

If your cargo is transferring inland in the US, you may shell out:

DDC – Location Delivery Fees

IPI – Inland Level Intermodal or MLB – MiniLandBridge

IFC – Inland Gas Surcharge

In addition, your container freight amount may depend on the real commodity becoming shipped. 

Of program there are the myriad of other expenses not directly affiliated with the ocean freight or container amount, some of which contain:

Importer security Submitting (ISF or 10+2)

Customs Brokerage

Duty & Taxes

Stripping and / or Transloading of Containers

Interim warehousing

and, and, and …

Properly negotiating ocean freight is not so uncomplicated and is dependent on understanding extra element.  Will you have numerous “a person-time” shipments, or extra a repetitive business enterprise with each and every shipper?  How considerably product are you shipping at a person time, or if repetitive, each and every cargo?  If repetitive, how generally?  The solutions to these issues also decide if you want to use a freight forwarder or negotiate directly with the ocean carriers.

Doorway to doorway transit time is also a massive thought.  Will you ship to a key or “gateway” port and then truck to numerous distribution facilities?  Or will it all go to a person DC?  If you are scheduling on transferring the containers intact to an inland DC, some problem may arise dependent on the ocean carrier, and rail fees can be really substantial.  A forwarder (or the customs broker) can generally regulate the container shipping trucking to and from the port considerably much better than a carrier (if the carrier even would).  If not you will have to set up the trucking.

Decision of your customs brokers would potentially depend on your decision of routing.  The delay at customs will depend on the precision and completeness of your vendors’ documents, as nicely as the performance of the picked broker.

Plan for results!  Very poor scheduling can final result in considerably headache and unwanted price.  Fantastic results will adhere to your very good scheduling.

If you need extra element or clarification, we will be content to do the job with you to setup a bid or RFP (Request For Proposal), or to audit or critique your present rates and procedures for attainable improvement.

Get in touch with us currently at [email protected] for extra data.

  

Ray McGuire Consulting Group  supplies way, tools and training to help you rapidly and successfully execute worldwide and domestic logistics, inventory management, agent/supplier interactions, basic safety, social and governmental compliance or security systems.

Rising velocity-to-market even though decreasing expenses!