Ocean freight allows the majority of international trade to occur. Because container shipping is vital to our economy, it’s important to note which factors influence ocean freight prices. Some of these factors are within the shipper’s control, while the others are external factors that you will need to learn to navigate expertly. Once you’re familiar with these factors, you’ll know how to ship your cargo containers at the lowest rate possible.
Intended Destination
One of the biggest factors that influences freight shipping costs is the intended destination of your cargo. The concept is pretty straightforward: the farther your shipping container travels, the higher the ocean freight costs will be.
Container Capacity
It’s in the shipper’s best interest to fill the shipping container to maximum capacity because if the container is full, the freight costs will be lower. A container that is not filled to the brim with goods will cost the shipper more to transport.
General Rate Increase
One external factor that shippers do not have control over is the General Rate Increase (GRI), which adjusts freight rates between shipping lines. GRI is commonly applied to imports, but it can be applied to exports. This rate increase aims to help carriers when there is low market movement as part of a seasonal cycle. If the year is stable, the GRI will only be applied once.
High Seasons
Shippers must take into account shipping seasons when deciding the best time to ship their own cargo. Holidays drive up the amount of merchandise being sent across the world. This results in higher freight charges and may even call for a peak season surcharge.
It’s important to note that July to December is a high season for many global companies. January/February is also a high season for companies that trade with China since this is the season for Chinese New Year.
Emergency Bunker Surcharge
A surcharge is implemented when there’s a sudden increase in fuel costs. This emergency bunker surcharge (EBS) is applied by shipping lines at their own discretion, meaning they can implement it even when they only anticipate rising fuel prices.
Trucking Shortage
The shortage of truckers in the United States also greatly affects shipping container rates. Supply chains have come to sudden halts due to the logistical issue of too few drivers. Because of the trucking shortage, companies are turning to ocean freight to reach their destinations. With this increase in demand for ocean freights comes higher container shipping costs.
Ship Your Goods in Confidence With Quality Shipping Containers
While many of the factors affecting container shipping rates are outside of a shipper’s control, they can minimize the effects of the freight costs on their bottom line through careful planning and ensuring all their documentation is in order. As the industry continues to improve, shippers will be able to transport their goods in as simple and straightforward a manner as possible.
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