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Extrans Global - What is Ocean Freight #1 Basic Freight & Surcharges
1. Charges of Ocean Freight
Ocean Freight sum of Basic Rate + Surcharges + Additional Charges.
1) Basic Freight
The Basic Freight is determined by choosing the higher value between weight-based freight and volume-based freight.
- Calculation Standard
① Freight by Weight - Gross Weight:
Weight is used as the basis for calculating the freight, and the standard metric ton (1,000 kg) is typically used. There are variations such as the Long Ton (2,240 pounds) primarily used in the UK and the Short Ton (2,000 pounds) commonly used in the United States.
*1 M/T (Metric Ton) = 1,000 kg = 2,204 lb
*1 L/T (Long Ton) = 1,016 kg = 2,240 lb
*1 S/T (Short Ton) = 907 kg = 2,000 lb
② Freight by Measurement - Gross Measurement:
Measurement or volume is used as the basis for calculating the freight, and it is typically measured in cubic meters (CBM).
1 CBM = 1m x 1m x 1m = 1m³
③ Revenue ton (R/T):
When determining the freight, the higher of the weight or measurement is used as the basis for calculating the revenue ton (R/T).
+W/M: Weight/Measurement
④ Ad Valorem Freight:
This applies to precious metals and other high-value goods, where the freight is calculated based on a certain percentage of the export price.
2) Surcharges
Surcharges are additional fees imposed based on factors such as the nature of the cargo, port conditions, cargo specificity, and unforeseen circumstances to cover additional costs incurred by the carrier.
① Bunker Adjustment Factor (BAF)
This surcharge is imposed on shippers to compensate for the sudden increase in the price of bunker fuel oil due to a rise in fuel costs. It is usually calculated based on an average amount determined quarterly.
② Emergency Bunker Surcharge (EBS)
In unforeseen situations such as wars or other emergencies where fuel prices rise significantly, this surcharge is applied to cover the increased fuel costs. It is announced after the fact.
③ Currency Adjustment Factor (CAF)
This surcharge is imposed on shippers to protect the carrier against losses resulting from fluctuations in exchange rates for freight charges denominated in foreign currencies.
④ Low Sulfur Surcharge (LSS)
In response to the sulfur emission regulations implemented by major countries worldwide, encouraging the use of low sulfur fuel, this surcharge is imposed for using low sulfur fuel. It has been in effect since January 1, 2020, in accordance with environmental policies.
⑤ Peak Season Surcharge (PSS)
This surcharge is applied during peak seasons to compensate for increased costs due to imbalanced supply and demand for containers and port congestion caused by concentrated volume during specific periods.
⑥ Suez Canal Surcharge
This surcharge is imposed to compensate for additional costs incurred when European-bound vessels have to take an alternative route through the Cape of Good Hope due to the closure of the Suez Canal.
⑦ Container Cleaning Fee (CCF)
This is the cost of cleaning the container. It varies depending on the condition of the container, but is charged if cleaning of the container is required before or after loading the container depending on the characteristics of the cargo.
⑧ Container Imbalance Charge (CIC)
When containers are excessively concentrated in a specific country or region, surcharges are imposed. There are cases where certain countries have an excess of containers, while others experience a shortage. In such situations, there is a cost involved in repositioning empty containers from areas with surplus containers to areas with shortages. This cost is referred to as the cost of container repositioning.
⑨ Port Facility Security Charge (PFS)
⑩ Port Congestion Surcharge (PCS)
This surcharge is imposed on loading and unloading cargo at a specific port when the vessel requires an extended period of time for berthing due to port congestion.
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