Understanding Freight Costs: A Complete Breakdown
Learn what goes into freight pricing, from base rates to surcharges, and how to calculate total shipping costs.
Freight costs can seem mysterious, with numerous line items and surcharges that vary by carrier and route. Understanding these components helps you negotiate better rates and accurately budget for shipping.
Ocean Freight Cost Components
Base Ocean Freight: The core rate for moving your container from port to port. Quoted per container (FCL) or per CBM (LCL). Rates fluctuate based on supply/demand, fuel costs, and seasonal factors.
Bunker Adjustment Factor (BAF): Fuel surcharge that fluctuates with oil prices. Can be significant portion of total cost.
Peak Season Surcharge (PSS): Applied during high-volume periods, typically Q3-Q4 for Asia-US trade.
Terminal Handling Charges (THC): Fees for loading/unloading containers at origin and destination ports. Typically $100-300 per container.
Documentation Fee: Carrier charges for processing bills of lading. Usually $25-75.
Destination Charges
Drayage: Trucking from port to warehouse. Varies significantly by distance and location. LA/Long Beach drayage typically $300-800.
Chassis Fee: Daily rental for the trailer that carries your container. $20-50 per day.
Port Fees: Various terminal charges, congestion fees, and handling charges.
Demurrage/Detention: Penalties for keeping containers beyond free time. Can quickly add up - $150-300 per day.
Customs Clearance Costs
Customs Broker Fee: $125-250 for standard entries.
Merchandise Processing Fee: 0.3464% of cargo value (min $27.75, max $538.40).
Harbor Maintenance Fee: 0.125% of cargo value for ocean shipments.
Import Duties: Based on HTS classification and cargo value.
Calculating Total Landed Cost
Add all costs together: Freight + Origin charges + Destination charges + Customs fees + Duties + Insurance + Inland transportation.
Don't forget hidden costs like warehouse receiving fees, cargo insurance (typically 0.3-0.5% of value), and your internal handling costs.
