Factors That May Affect Your Ocean Freights Rate

Importing and exporting is becoming common for the effective and fast delivery of goods worldwide. Shipping goods contribute a considerable amount to economic growth. If you are a part of the exporting and importing industry, you must be aware of shipping rates.

Having complete knowledge of the different factors that can affect your shipping rates is crucial. Undertaking responsibility without full knowledge of ocean freight rates can be costly in the end. Therefore, knowing which factors to consider when shipping ocean freight becomes more important. This article highlights all the major factors that can affect your ocean freights rate.

The Location of Your Destination

Common locations may not cost you as much. However, if you have to ship something to an uncommon destination, it may cost you more. Your shipping cost will be higher to ship to places where there are no frequent shipping visits because of fewer containers or limited capacity.

Finding capacity for popular destinations may be difficult because of the high demand for goods. However, the cost may not be as high there.

Currency

Currency is another major factor that will directly affect your ocean freights rate. The US dollar is the most common currency used in shipping across the world. Its rates fluctuate regularly. Therefore, transporters must know the current rates and how it will affect their freights rate.

If the currency rate is lower than your home currency, you can enjoy lower shipping rates. But, if it is higher, your ocean freight rate may be costly.

Seasons

Seasons also affect ocean freight rates. There are two main seasons of the year. One is retail peak season that lasts from mid-August to mid-October. The other one is the new year and lasts between January to February. During these times, the demand for goods is higher, supply is less, and the capacity for transporting goods is limited.

Moreover, unusual inclement weather conditions may reduce the capacity and create a spike in shipping rates.

Container Capacity

The capacity of your container will also determine its ocean freight rate. It is advisable to utilize your whole container if you are not using Less than Container Load (LCL). In LCL, you share your container with others and transport their goods as well. This can help you lower your freight cost by splitting shipping rates.

But you would have to pay for the entire container if you are not using LCL. The costs would be much higher if your container is not full as there will be fewer people to split the cost.

Bunker Fluctuations

The cost of oil determines the cost of the ocean, air, and road transport. When its price increases, the price of almost everything increases. Bunker fuel is closely related to ocean freight rates. If the price of bunker fuel increases so will the price of ocean freight.

Entrance and Terminal Fee

Cargos have to pay a fee when they leave a certain port or during the entrance. This is the entrance and departure fee. The cost of the fee is usually fixed. However, it may fluctuate depending on the weight of the cargo and time delay in the transit.

Sulfur Cap

Recent changes have been made to IMO regulations. It has put a 0.5% sulfur cap on bunker fuel. This resulted in higher freight charges and thus, more competition.

Final WordsThe world’s economy is dependent on cargo shipping. With each passing day, various factors affect the cost of ocean freight. Moreover, geopolitical events and the relationships between ocean freight companies will determine your freight rate. Getting in touch with a reliable trucking company can help prevent you from having to deal with the many hassles of ocean freight transport.

This article discusses ocean freight rates and how it can affect your freight.