x Shippers and businesses with import and export shipments by sea need to understand the fees and surcharges, including Ocean Freight fees?
x You don't know how to calculate Ocean Freight fees and wonder who will pay Ocean Freight fees?
x You want to know which items should be shipped via Ocean Freight?…And should you choose a reputable Forwarder unit via O/F?
At Proship.vn, we will clarify the definition of what ocean freight fees are? What are the factors that affect ocean freight fees? How to calculate? Which party is responsible for paying fees, etc. Here, we also list common O/F surcharges as well as reasons to choose to use Forwarder Service via ocean freight.
What is Ocean Freight O/F?
What is the ocean freight fee? Ocean Freight, abbreviated as O/F, is a familiar term in the field of logistics and shipping. In the English definition, it simply means ocean freight but O/F surcharges refers to ocean surcharges.
So, usually Ocean Freight refers to the basic costs involved in transporting goods by sea from one point to another.
Ocean freight surcharges (O/F) in sea transport are not fixed and can change depending on the shipping company's policy. When there is an adjustment to ocean freight surcharges, the shipping company will notify the shipper before officially applying it.
Who must pay the Ocean freight fee?
Do you know what Ocean freight fee is? So, who has to pay the O/F fee? The Ocean Freight fee paid by the buyer or seller depends on the delivery conditions according to Incoterms agreed upon by both parties in the Foreign Trade Contract. From there, the shipping company will collect O/F fees from the shipper (Shipper) or the consignee (Consignee).
If the two parties do not have any further agreement in the Foreign Trade Contract, the Ocean Freight fee payer will stipulate:
- The consignee (Consignee) pays the freight:
If a foreign trade contract is signed with delivery conditions of type E (EXW) and type F (FCA, FAS, FOB);
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- Shipper pays freight:
If a foreign trade contract is signed with delivery conditions of type C (CIP, CPT, CFR) and type D (DDP, CIF, DAT, DDP).
But in reality, it may change more or less depending on other accompanying agreements of the buying and selling parties.
What factors affect ocean freight O/F rates? How to calculate?
Proship will point out the factors that affect ocean freight rates and how they are calculated so that businesses and shippers can clearly understand:
Factors affecting O/F charges
Factors that directly affect O/F charges:
- Fuel prices: Fluctuations in fuel prices can affect shipping lines' costs and freight rates;
- Balance supply and demand: Fares may change according to supply and demand on specific routes;
- Seasonal demand fluctuations: Some routes have increased transportation demand during specific seasons, increasing freight rates;
- Foreign exchange rates: Fluctuations in foreign exchange rates may change freight rates.
How to calculate ocean freight O/F rates
O/F ocean freight charges are calculated based on:
- Commercial routes : Specific routes may have different rates;
- Weight/volume of goods : Some shipping companies calculate freight by weight (kilogram) or cubic meter (cubic meter - CBM);
- Travel distance : Distance from origin to destination affects fares;
- Container size : 20ft, 40ft, 45ft containers have different rates;
- Type of goods : Dry goods, cold goods, dangerous goods may have different freight rates.
For large-sized goods, it is calculated according to the formula:
O/F = (Length x width x height) x Quantity
Common Ocean Freight surcharges
What are the common surcharges for ocean freight exports and imports? Below are the O/F surcharges that shippers must pay, in addition to ocean freight:
O/F surcharge for imported goods
For imported goods, there will be O/F surcharges:
- CFS fee (Container Freight Station fee): This fee is only collected for LCL goods;
- CIC fee (Container Imbalance Charge): Surcharge for shipping empty containers;
- CCF Fee (Cleaning Container Fee): Is the container cleaning fee;
- D/O fee (Delivery Order fee): Delivery order fee;
- Handling fee: Handling fee related to documents and delivery;
- THC Fee (Terminal Handling Charge): THC fee at the import port.
O/F surcharge for exported goods
For exported goods, there will be O/F surcharges:
- AFR fee (Advance Filing Rules): Is the electronic Manifest fee for goods imported into Japan;
- AMS fee (Advanced Manifest System fee): This fee is mandatory because the customs of the US, Canada and some other countries require detailed declaration of goods before the goods are loaded onto ships to be transported to the US, Canada, etc. ;
- B/L fee (Bill of Lading fee): B/L issuance fee;
- CFS fee (Container Freight Station fee): Only collected for retail goods - LCL;
- EBS fee (Emergency Bunker Surcharge): Is a fuel surcharge for cargo routes to Asia;
- ENS fee (Entry Summary Declaration): Is the Manifest declaration fee at the port of arrival for shipments to Europe (EU);
- THC Fee (Terminal Handling Charge): THC fee at the export port;
- Seal fee: Fee paid to shipping lines to purchase seals for containers.
Other types of surcharges
Other surcharges such as:
- BAF fee (Bunker Adjustment Factor): Surcharge to compensate for arising from fuel fees;
- CAF fee (Currency Adjustment Factor): Surcharge for exchange rate fluctuations;
- PCS fee (Port Congestion Surcharge): Port congestion surcharge;
- PSS fee (Peak Season Surcharge): Peak season surcharge;
- SCS Fee (Suez Canal Surcharge): Suez Canal Surcharge;
- LSS fee (Low Sulfur Surcharge): Surcharge for reducing sulfur emissions.
Frequently transported items and benefits when using FWD service via O/F
Proship lists the following commonly transported items and benefits when using Forwarder service via O/F:
Goods are often transported via Ocean Freight
What are the items commonly transported via ocean freight? That is:
- Low value goods: Clothing, household appliances, shoes,...;
- Goods easily affected by the environment: Tobacco, tea, spices, etc.;
- Goods that do not affect other shipments: Machinery, jewelry, industrial equipment and raw materials,...;
- Goods with physical and chemical properties: Solutions, toxic chemicals, gasoline, powders, etc.;
- Liquid goods: Chemicals, petroleum, liquid food,...;
- Bulk cargo: Coal, ore...
Benefits when using FWD services
Using Forwarder services will help businesses save costs. Because Forwarders will find good transportation methods, routes and shipping companies that suit the needs of the business. At the same time, the Forwarder also arranges many small shipments to be packaged and transported to the destination, thus reducing costs for shippers.
If you need to use Forwarder services, you should consider choosing PROSHIP LOGISTICS. We are proud to be a unit specializing in providing competitively priced, safe, effective and fast shipping services.
Proship Logistics has answered what is the Ocean freight fee , what is the item transported via ocean freight, who must pay the O/F fee, what are the common O/F surcharges, etc. Based on this, businesses , shippers can estimate and calculate in advance fixed fees or additional fees during the shipping process.
For any related questions, please contact 0909 344 247 for answers and advice on the best cheap domestic or international sea container shipping solutions from Port - Port, Port - Warehouse.
