You need to know what does the “true” sea freight cost include
Sea freight cost can be regarded as the largest expense in international trade in addition to the goods value, and sometimes it is even higher than goods value (especially when a small quantity of goods is transported). This article explains what is sea freight cost, what does the “true” complete sea freight cost include, and briefly analyzes what you might not know about sea freight cost quotes, to help you understand the sea freight cost correctly, do sea freight cost estimate more accurately, and then calculate the trade cost and make reasonable commodity pricing.
What is sea freight cost?
Sea freight cost refers to the remuneration charged by the shipowner or freight forwarder after they accept the entrustment of the consignor or consignee, to transport the goods from the port of loading to the port of destination in accordance with the freight forwarding services contract requirements.
What does the “true” sea freight cost include?
Usually customers regard sea freight cost as “pure” sea freight cost(you can click the article “How to Calculate Basic Shipping Fee” to know more about how is sea freight cost calculated), but in practice, the complete “true” sea freight cost breakdown will include three parts: local charge of port of loading, “pure” sea freight cost and local charge of port of destination. In addition to “pure” sea freight cost, “true” sea freight cost will also include various incidental charges.
These incidental charges are collected by different parties. Some are collected by the shipowner, some are collected by the shipping port terminal, and some are collected by the destination port terminal, and some others are even charged by the freight forwarder in their own name to increase profits. Moreover, many charges do not have clear standards and are very flexible, some of them even will be charged to both consignor(shipper) or consignee.
This can easily lead to two traps:
Trap 1: Freight forwarder overcharge by setting up multiple fee categories,
In order to get the order successfully, many freight forwarder will quote you a low attractive sea freight cost, and then charge high local fees at the port of departure and port of destination to guarantee their profits. They will create a variety of expense categories to make their fees looks high but reasonable.
Trap 2: The freight forwarder adjusts and transfers some of the cost between the consignee and the consignor to achieve their various purposes.
Generally speaking, when the freight forwarder is found by consignee (buyer) , it means that the consignee is the customer of the freight forwarder. At this time, the freight forwarder will reduce the consignee’s local cost, provide a low quotation to obtain the buyer’s order, and then pass the cost to the consignor, overcharge the consignor to balance their own profits.
After knowing these unknown things, we can see that we can’t be greedy for a temporary bargain, and never assume that the lower sea freight cost of the freight forwarder gave you, the better.
Especially the consignee (buyer), you need to know that no matter who pays the cost nominally, it is actually counted on the buyer in the end, because the seller usually counts these costs into the product quotation to the buyer.
If you want to enjoy professional and high-quality freight forwarding agent service, when choosing a freight forwarder, we recommend that you do not make a decision based on freight forwarder quote price alone, please conduct a comprehensive inspection of the freight forwarder from various aspects.
If you are interested in learning more about quotations and freight forwarding, please contact us and we are willing to tell you everything we know.