Ocean freight rate is the a price at which a certain cargo is delivered from one point to another through shipping depending on the form of the cargo, the weight of the cargo, and the distance to the delivery destination. Most shipping services use dimensional weight for calculating the price, which takes into account both weight and volume of the cargo.
Most of the time, ocean freight rates are rhythmical. It follows the strengths and weaknesses of the economies of the countries the carrier service. As most Asian countries have strong economies, vessels leaving Pacific Rim countries are filled with Ocean cargo. Therefore, ocean freight rates from the Pacific tend to be much higher than those coming from the USA. This is because a large number of containers are going back to the Pacific Rim empty from the USA. Most of the time, carriers charge premiums for space on their vessels and on the pier.
Some of the fees and surcharges that most forwarders or customs brokers or ocean carriers charge their customers are as follows:
- Origin and Destination Terminal Handling Charges
- Peak Season Surcharge
- Automated Manifest Security Surcharge
- Congestion Surcharge
- Bill of Lading Issuance Fees
- Detention/Demurrage Fees
- Currency Adjustment Factor
- Bunker Adjustment Factor
- Others, as applicable
Although it can be quite seasonal on certain routes, the volume of grain trade is relatively stable between years. Meanwhile, trade volume of some of the industrial commodities including iron ore, steam coal, coking coal, cement, bauxite and forest products have in the past been more cyclical. Just like other commodities, ocean freight rates for grain and oilseeds are determined by the interaction of the demand for cargoes by ocean vessel owners and the supply of dry bulk cargoes by traders. Panamax-sized, Handimax-sized and Handy-sized vessels tend to be used more for grain trade, as sources and destinations for cargoes are more dispersed than for industrial commodities. Meanwhile, Larger Cape-sized vessels tend to be preferred for commodities like coal and iron ore for which cargo sources and destination are more concentrated.
There had been some very substantial cost increases for ship owners. However, with current freight rates this does not seem to have been a deterrent to investment. The freight market, specific to the grains sector, is the recovery in wheat output and export availability. Although the volume in seaborn trade is not expected to change much, voyage lengths are likely to shorten, reducing aggregate demand for ocean freight services by this sector.
As freight rates are rhythmical; ocean rates often fluctuate based on the market, the economy and the geographical location of the port. As at some point fees can be unpredictable, sea freight can be devastating if shippers quote the incorrect sea freight prices, especially for multi-container deals. Therefore, when planning to ship goods, it is very important to know what you are shipping, where you are sending it off, and which forwarder, carrier, or shipper can give you the best quote.