To transport goods to customers, One of the types of transportation used by many businesses is sea transportation. In there, Sea freight rates are always an issue of concern for many units.

During the current economic recession, Sea freight rates also vary widely, affects the parties in the process of import and export of goods.

Find out with Cuong Quoc Logistics ocean freight rates Currently and how to calculate sea freight rates through the shares below!

Current status of sea freight rates

Faced with the general global situation, The shipping market has been undergoing many major changes.

As of September 2022, Boat rental prices for different ship sizes are reduced by 30-50% , down 30-60% from the peak in March 2022.

Although the current rent is still 4 times higher than two years ago, However, The significant decline rate still surprised the market. Simultaneously, This speed is also forecast to decrease further in the short term.

Meanwhile, Ocean freight rates continue to decline as Container Freight Rate Index (World Container Index) down 28% in the past month, equivalent to a decrease of 54% since February 2022.

Many industry experts agree that the typical annual shipping peak will likely not occur this year due to high retailer inventories and weak consumer demand..

In the domestic market, The output of goods through the port has gradually decreased in recent months. Total container throughput at the port increased by 17,5% year-on-year in August and only up 2,2% in the first 8 months of 2022.

Although the YoY growth rate has recovered since August due to last year's low comparative base, but monthly transport output is gradually decreasing.

>>> See more: Economic recession, Freight prices plummeted, What are the prospects for seaport stocks??

Base for calculating ocean freight charges

Each type of goods will have a different way of calculating freight rates. Normally, Freight rates will be applied according to the principle of comparison. Before deciding on shipping costs, Goods will be weighed and volume measured.

Currently, Most goods are calculated by volume (CBM unit) before. Then convert it to weight (KGS). Once the converted weight is determined, the formula will be applied to calculate the size of the goods.

Factors affecting sea freight rates

To determine sea freight rates, You must rely on the following factors:

• Volume & cargo size: For orders with large weight and volume, Freight rates are often higher than for orders with smaller weights and volumes. This is the deciding factor in sea freight rates
• Type of goods: With special goods, easily damaged, fragile, during transportation, You must pay an additional fee to ensure safety during transportation.

• Delivery address of goods: If the delivery address is farther away than the warehouse, or delivery addresses in remote areas, remote area, In less developed traffic areas, delivery charges are also higher.
• Request to preserve orders: If order (food, frozen goods,…) If preservation is required during transportation, the sender must pay additional costs for this activity.
• Pricing policy of each shipping unit: Each shipping unit has a different pricing policy. Therefore, when deciding to choose a shipping unit, You need to refer to the prices and choose the unit with the most cost-effective price.

>>> See more: What are CIF and FOB?? Role of buyer and seller in CIF and FOB contracts

How to calculate ocean freight rates

Sea freight rates for FCL goods

FCL (Full Container Load) is loading whole containers, The shipper and consignee are responsible for packing and unloading the goods from the container. When the shipper has a uniform volume of goods sufficient to fill a container or multiple containers, People rent one or more containers to ship goods.

To calculate ocean freight rates for FCL goods, Normally we only need to care about the actual weight of the goods within the maximum allowable limit of the container, that is, the container's payload parameters.

At that time, cWe will be offered ocean freight rates per container unit by forwarders.

For example: Sea freight charges from Hai Phong to Cua Lo are: 3.000.000d/20' and 4.000.000d/40'.

However, in reality there are many changes that we need to adapt to, especially for light goods, Transport companies often give priority and apply more competitive prices, so it is not necessarily the same route that charges are the same for FCL goods..

Ocean freight rates for LCL goods

LCL (Less than Container Load) is a way to transport goods when the shipper does not have enough goods to fill an entire container, but need to combine with some batches of other shippers.

At that time, The service company will combine multiple individual shipments (LCL shipments), arrange, Classify and pack into containers, Then arrange transportation from loading port to destination port. Combining and packing like this is called consolidation, hay consolidation.

To calculate ocean freight rates for LCL goods, you need to go through the following steps:

• Step 1: Determine the volume of the shipment:

Size of bale type 1 x number of bales 1 + size of bale type 2 x number of bales 2 +…+ size of bale type n x number of bales n = total CBM (m3)

To determine the size of a certain type of bale:

Size of each bale = length (cm) x wide (cm) x high (cm) /1.000.000 = long (m) x wide (m) x high (m)

• Step 2: Determine shipment weight: total weight of all packages in a shipment.
• Step 3: Determine the billable weight: Compare volumetric weight and cargo weight, Whichever is bigger, take it.
• Step 4: Calculate shipping costs for LCL goods by sea:

Before calculating shipping charges, we need to determine the volumetric weight of the shipment from the volume parameters (block number) of the shipment. The way to convert from cubic number to volumetric weight is as follows:

1 CBM = 1000kg (It depends on the shipping company)

After conversion, People will compare the actual weight and volumetric weight of the goods. Whichever value is greater will be used to calculate shipping charges.

Shipping fee = Chargeable weight x Shipping unit price.

Compare sea transport, road transport & airway

When transporting goods, Businesses can transport via sea and road. Each method has its own advantages and disadvantages.

To choose a method of transporting goods that meets the time, expense, safety of goods, You can rely on the following comparison table of types of transportation:

	Advantage	Disadvantages
Sea transport	– Serves most types of goods, especially bulky goods, large quantity. – Traffic congestion at sea rarely occurs. – Carrying capacity is not limited. – Low sea freight bets.	– Delivery time is affected by weather, natural conditions. – Delivery time is slow. – Must combine other modes of transportation to deliver goods to the importer.
Road transport	– Flexible during transportation, not dependent on fixed hours and schedules. – Delivery time and delivery location depend on negotiation between the buyers and sellers. – Choose your own means, Transport route and quantity of goods transported. – Fast delivery time. – Without going through any intermediaries, no hidden costs.	– Costs at long-distance toll stations. – Cause of traffic jam during transportation. – Not suitable for bulky goods, volume is too large.
Air transport	– Fast delivery speed – Ensuring goods safety during transportation	– Transportation costs are expensive – Requires high scientific level – Only suitable for transporting light, high-value goods – Documentation requires greater control, more closely, Must have all kinds of documents to be able to transport

Note when transporting goods by sea

In addition to the cost of shipping goods by sea, You need to pay attention to the following notes during transportation:

• Avoid sending fragile or dangerous goods to the shipping unit because these are the types of goods that easily incur additional costs during transportation..
• Bulky goods, Large size and weight will often have high shipping costs.
• To ensure goods are delivered safely, Recipients can choose additional insurance services. However, if the goods do not really need this service, You may not choose to avoid additional costs.
• If necessary, use additional packaging services, insurance, When loading and unloading goods, you must ask the technical side. With large quantity of goods, You can negotiate with the technical team to reduce shipping costs.

Conclude

Our above shares have provided readers with the most complete and accurate information about ocean freight rates. Hope our sharing will be helpful to you.

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Cuong Quoc Freight Forwarding Company Limited

Office: 7th floor, Parami Building, 140 Bach Dang, Tan Son Hoa Ward, Ho Chi Minh City

Hotline: 0972 66 71 66

Email: info@cql.com.vn

Website: https://cql.com.vn/