COMMON COSTS OF GOODS TRANSPORTATION BY SEA
Costs are the most concerning factor in terms of goods transportation. That being said, not every sort of cost is fixed but sometimes it fluctuates in an abnormal way, making companies struggle with exact estimation, especially within sea transport. To minimize this, companies need to have the understanding of common costs in the transport means. Let’s dig into this with MDCT Logistics by reading the information below!
Present-day ocean freights cost
According to the latest statistics from Drewry in 2023, container index of 8 predominant routes worldwide decreased to 1.898 USD/container 40 feet, in other words, it went down by 80%, compared to that of last year. In more detail:
- Ocean freight price for delivery from Vietnam to the US or EU,... is about 60-100 million VND/container (dropped a third compared to the peak in 2021)
- Ocean freight price for delivery from Vietnam to China also fell off to 8-15 million VND/container.
It is obvious that the decrease in ocean freight has opened a new door for local and foreign firms to compensate pecuniary losses in a couple of years ago, free up congested ports and stimulate international trade.
Common costs of transportation by sea
O/F (Ocean freight): a cost of solely transporting consignments from the port of departure to the port of destination.
THC (Terminal Handling Charge): a fee of each container for services in ports such as container handling, transferring containers from container yard to the pier.
Seal Fee: This is a fee collected at the departure spot of the shipment based on the number of shipping containers. It is used to buy seals used to seal containers of shipping lines. Each seal has a specific and unique number printed on it for tracking and control of goods. In addition, the customs can use this number to monitor and combat smuggling.
DOC (Documentation fee): This is charged by the forwarder to pay for all the work related to documents, and invoice.
D/O (Delivery Order fee): When importing a shipment, the consignee needs to go to the shipline/forwarder to get the delivery order and present it at the container freight station or present EIR (full load container) to receive the goods. Shipping lines/forwarders release a delivery order and collect fees.
Trucking fee: a charge for inland transport in import export.
Customs clearance fee: fee relates to customs procedures to clear a consignment, including fees of custom declarations and other fees, for example: fees on quality examination registration, customs fees imposed by the government.
Export entrustment: If the seller cannot export himself or wants to entrust export to a logistics company or forwarder, he will pay this cost.
Import entrustment: The buyer will pay this cost if he entrusts import to a logistics company.
C/O form E fee: CO form E is the certificate of origin form E, released according to the Framework Agreement on Comprehensive Economic Cooperation between China and ASEAN (ACFTA). It shows that goods having origins in members of this framework and helps the importer to receive discounted tariffs. For types of commodities specified in this framework, the buyer can require the seller to get through procedures and attain a CO form E and the seller will pay this cost.
CIC (Container Imbalance Charge): Simply put, it is a charge for transferring empty containers to places that need them. It is collected by shipping lines to compensate for extra costs coming from transferring a big amount of empty containers from a place having an excessive amount of them to a place suffering from the shortage.
EIR (Equipment Interchange Receipt): An Equipment Interchange Receipt (EIR) is a document that is issued by a carrier or its respective agent to the cargo owner, when a container is moved from one location to another. These locations are often referred to as interchange points and can be between vessels, depots, yards or terminals. And the goods owners have to pay for this receipt.
EMF (Equipment Management Fee): A fee collected by some shipping lines to manage containers. However, only some shipping lines charge this fee such as Cosco, EMC,...
Infrastructure expenditure: this cost is collected to make revenue funding for the maintenance and improvement of facilities of ports that helps reduce congestion and accidents at ports.
CCF (cleaning container fee): this fee is paid for shipping lines so they will clean the containers used by the importer and then return them to depots.
Other fees and additional fees in sea freighting
Short of the mentioned common costs, businesses should grasp the understanding of the following fees and additional fees when using sea transportation.
PCS (Port Congestion Surcharge): this is applied when the loading or unloading port is congested, possibly making ships to be late, leading to additional charges arising that shipment owners have to pay.
PSS (Peak Season Surcharge): This type of surcharge is imposed by shipping lines in peak seasons happening from August to October, when there is a dramatic increase in demand for transportation of finished products to prepare for Christmas and Thanksgiving in the American and European markets.
SCS (Suez Canal Surcharge) The Suez Canal Surcharge is an accessorial fee levied by carriers to shippers or consignees for cargo that is moved through the Suez Canal.
CAF (Currency Adjustment Factor): a fee placed on top of freighting charges for carrier companies developed to account for constantly changing exchange rates between the dollar and other currencies. Its goal is to offset any losses from fluctuating exchange rates for carriers.
COD (Change of Destination): It is a surcharge collected by shipping lines to offset costs incurred in case the goods owner requests to change the destination port, such as: loading and unloading fee, island transfer fee, container storage fee, road transportation ...
DDC (Destination Delivery Charge): a surcharge aiming at offsetting the cost of unloading shipments from the ships and organizing containers in terminals and the cost of going through port gates. Payment is up to arrangement between the buyer and the seller.
ISF (Importer Security Filing): Beside automatic American customs declaration, from January, 2010, American customs and border protection officially added procedures of security declaration for importers.
GRI (General Rate Increase): This charge is only imposed during peak seasons.
LSS (Low Sulfur Surcharge): this charge is imposed in sea transportation.
This is some information that MDCT Logistics summarizes about common charges and surcharges in sea transportation. To have a better understanding of them and where they are applied, please contact MDCT Logistics at hotline 0865 763 169 (totally free) for consultation by a team of experts. Or you can send your information to: hrs.mdctlogistics@gmail.com for consultation.
