Maritime transport is undoubtedly one of the most widely used and efficient means of transport for the shipment of goods. The fundamental factor that makes this type of transport strong lies in its vessels and the way it organizes the goods on a container basis. This makes maritime transport very flexible and easy to adapt for different commodities and types of industries.
One of the advantages of maritime transport is that its costs are much cheaper than those of other types of transport, such as air or land transport.
When calculating the cost of shipping goods by sea, a very important concept comes into play: ocean freight.
Let’s take a look at what ocean freight rates are and how they affect the final cost price of using ocean transportation.
What are marine freights
Ocean freight is the contract or final price associated with the transportation of goods by sea from one port to another. In other words, it is the cost associated with the transportation of goods by cargo vessel.
There is no single ocean freight rate, it varies according to certain concepts.
One of the terms that have a major impact on the final price is the ocean freight rate.
Each type of freight has its own special characteristics that make its price vary. Let’s take a look at the types of freight that exist and their main differences.
Types of marine freight
Ocean freight, internationally called Liner, is designed under the conditions that a shipping company is willing to ship the goods.
Thus, the main freights that we can find are the following:
Line Term
It is a freight that includes all phases of maritime transport. These phases are:
- Loading at the port.
- Proper stowage, distribution and placement of cargo on a vessel.
- Unloading of goods at the port of destination.
All handling costs at the ports of loading and unloading (variable according to the port) are also included. The user shall be responsible for bringing the cargo close to the ship’s side.
Free In
This type of freight will take care of the associated costs at the port of destination for: transportation, unloading and unloading. Everything related to the initial charge is at the user’s expense.
Free Out
This case is the opposite of the previous section. Freight includes loading, stowage and transportation from the port of origin. The freight forwarder will bear the cost of unloading and derivative functions at the port of destination.
Free In and Out (F.I.O.)
This is a type of freight that only deals with the transportation of the goods. It does not handle the loading or unloading of goods at the ports.
The transport company has no responsibility for the handling, risk… of the handling of the goods.
Free in Out and Stowed (F.I.O.S)
This is a slightly more complete charter than the previous one. In addition to transportation includes the cost of stowage on board.
Neither the loading, unloading or stowage of the goods on board the vessel are included in the freight price.
Free In, Out, Stowed and Trimmed
It is a freight very similar to the F.I.O.S. type, adding the expenses for the transfer of cargo in the warehouses plus the cost of transporting the goods.
Free in/ Liner Out (F.I.L.O.)
The forwarding company is responsible for the costs related to unloading. The user contracting the maritime transportation service is responsible for the cost of loading, stowage and securing of the goods on the vessel.
Liner in / free Out (L.I.F.O.)
The freight forwarder is responsible for the cost of the functions associated with Lines In freight and Free Out freight.
The user is responsible for the associated costs of unloading or unstowing.
Freight rates define responsibilities when loading and unloading goods. But in addition to the type of freight, there are other concepts that will add more to the final value of the freight to be contracted.
How to calculate marine freight rates
The freight rate is one of the basic concepts for freight calculation. But other factors also come into play that modify the final value of the freight.
We will list other more important concepts that are added to the freight calculation, in addition to the freight rate:
- Surcharges. Surcharges (fuel, currency adjustments, etc.) are added to compensate for certain variations in costs and/or vessel operations.
- Type of load and volume. In this section, terms such as maritime shipment in a full container for a single shipper, or maritime groupage in loads from different shippers come into play.
- Cost per Container. The greater the number of containers, the higher the cost.
In short, the final price of freight varies greatly, not only because of the type of freight associated with its transportation. The type of load and volume is also a determining factor.
Nor should we forget the origin and destination of the ports, which have their own prices for the use of loading and unloading.
Even so, maritime freight transport remains one of the most cost-effective and efficient means of transport compared to other modes of transport.
