There’s no doubt that ocean freight is an essential cog in the wheel that is world trade. And its influence is undeniable — 90% of the merchandise being transported all around the globe is carried out via ocean freight.
But despite the significant role it plays and the countless parties involved in day-to-day dealings with maritime shipping, there is a myriad of shipping-related charges and fees that may confuse even the most seasoned of shippers.
How much does international shipping cost
The fees and charges in an international shipping cost are wide-ranging. They cover anywhere from port and custom charges to additional fees implemented only under very specific circumstances. Basic freight charges aside, there’s a whole range of factors to consider when calculating your cost of import or export.
Most fees form part of the overall container shipping rates quoted by freight forwarders and carriers. But there are some that aren’t included and may apply depending on your shipment. In this guide, we’ll go into the details of the different fees that can affect your overall international shipping cost.
To help with your understanding, we have categorized these fees into different sections. However, note that certain fees may fall into multiple sections. Here’s a breakdown of the categories we will be addressing in this guide:
- Freight-associated charges
- Carrier-related fees
- Zone-specific charges
- Delay fees
- Taxes and duties
- Customs fees
- Port charges
- Inland charges
- Destination charges
- Documentation fees
- Cargo insurance
- Additional charges
Different charges associated with an international shipping cost
Freight associated charges
Maritime freight charge
The maritime freight charge is the main cost of your ocean freight shipment.
It covers the expenses generated when transporting freight from the port of origin to the port of destination. Its price varies according to the shipping company and chosen route.
On the one hand, maritime freight costs are very much driven by international trade flows. Which is why freight rates for exports from Europe or America to Asia tend to be much cheaper than import freight rates from Asia.
On the other hand, as in all markets, it’s also driven by competitiveness between providers. This results in a price cycle on certain routes that the industry experiences periodically.
To attract shippers, it’s not uncommon for carriers to lower their prices. This causes a domino effect with other carriers following suit. But once this hits its bottom limit, carriers will naturally have to raise their prices to compensate. This is known as a GRI (General Rate Increase).
A consolidation fee applies only to LCL shipments (low-volume shipments that do not warrant their own container). It is charged by the freight forwarder or consolidator and covers the cost of consolidating various LCL loads from different shippers into one single shipping container.
The basic freight rate aside, shipping lines implement a range of different surcharges to compensate any additional expense derived from certain situations, such as the rise in fuel costs and shortages caused by the high demand during the shipping peak season.
While some of these fees can be avoided with good planning, most are difficult to evade. Nevertheless, it’s important to know where some of the more important ones stem from.
Of all the carrier-related surcharges, the most common ones are the EBS, the BAF, the CAF and the PSS. Here’s a look at each one of them.
BAF (Bunker Adjustment Factor)
What is BAF?
The BAF is also commonly known as the bunker surcharge and covers fuel cost.
When is BAF applied?
The BAF applies according to the number of TEUs shipped and is charged by the shipping companies to compensate for fluctuations in fuel prices. This surcharge varies from route to route.
EBS (Emergency Bunker Surcharge)
What is EBS?
The EBS is similar to the BAF in the sense that it covers rise in fuel prices. The EBS can also vary according to the shipping container type and shipping route.
When is EBS applied?
Under FMC regulations in the US, the EBS is announced 30-days in advance. But in most other parts of the world, it’s applied at the last minute. This is unlike the BAF, which is often announced in advance.
CAF (Currency Adjustment Factor)
What is CAF?
The CAF covers exchange rate risks from one currency to another.
When is CAF applied?
It typically applies when there are significant fluctuations in exchange rates and is charged as a percentage of the ocean freight rate.
PSS (Peak Season Surcharge)
What is PSS?
Carriers implement PSS during the shipping peak season (between July and October) to cover the increase in operational costs.
This can greatly increase your overall international shipping costs as carriers are already charging higher freight rates during this peak period.
When is PSS applied?
The PSS is limited to and applied during the shipping peak season.
Lesser-known carrier-related fees
Besides the above-mentioned fees, there are some other lesser-known carrier-related fees that are applicable only under special circumstances such as when shipping over- or odd-sized merchandise, etc.
Here are some of such fees:
- Container seal
- Container cleaning fee
- War risk
- Equipment reposition surcharge
- Container management fee
- Congestion surcharge
- Container seal change fee
For more information on these lesser-known fees, you may refer to our blog post on the 10 lesser-known shipping charges all shippers should know about.
If you think your shipment may be affected by any of these carrier-related surcharges, we recommend you to consult your freight forwarder to get a clearer picture on how they may affect the overall cost of your shipment.
Your overall international shipping cost may also be affected by your chosen trade lane, especially if it passes through specific zones and/or canals where additional charges are imposed.
Besides specific origin and destination port charges, extra fees may apply for the use of waterways such as the Panama Canal and Suez Canal, high-risk zones, etc.
Here is a list of some of the most common zone-specific charges. For more information on how your desired trade lane may be affected by these charges, get in touch with your freight forwarder.
- PCC (Panama Canal Charge)
- Piracy Risk
- SUE (Suez Canal Surcharge)
- LSC (Low Sulfur Charge)
- ADE (Aden Gulf Surcharge) / GAS (Gulf of Aden Surcharge)
- LWS (Low Water Surcharge)
- SMD (Security Manifest Documentation Fee)
- RPT (River Plate Toll)
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