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How to Understand Freight Quotes

Freight charges form a considerable part of the overall cost of any order. In some cases, the shipping invoice will be even more expensive than the cost of goods. Therefore, since ocean freight quote is more detailed than air freight and land freight, it is important to understand how things go.

In sea freight, there are two main types of pricing, the LCL (Less than Container Load) and the FCL (Full Container Load). But both of them will have some charges that are per unit (CBM/Ton in LCL and Container/TEU in FCL). Some other charges, however, come and go based on seasonality such as Congestion, GRI (General Rate Increase), … etc.

It is the job of a freight forwarder to make the trader’s life easier when it comes to an ocean freight quote.

Container Management Fee

The cost per container varies from one shipping line to another and from one port to another as well. It depends also on the type and size of the shipping container. A reefer container or an open-top shipping container will be more expensive as usually vessels will carry less of them and for the reefer shipping container, it needs a gen-set (Generator Set) to keep the temperature control.

Understanding Freight Shipping Terms and Definitions

One other part of any sea freight quotation will be depending on the shipping terms or in other words INCOTERMS (International Commercial Terms). Some of these INCOTERMS ARE :

EXW (Ex-Works): A commercial and shipping term where the buyer/importer is responsible for collecting the cargo from the shipper ( seller ) location after loading on board of the truck ( FOT ). Transportation cost and risk of the goods are carried by the buyer or importer from the collection point.

FOB (Free On Board): A commercial and shipping term indicating that shipper is responsible for the cost of transportation and risk of cargo till on board of the vessel or airplane. From this point onward it is the responsibility of the buyer or importer.

CFR (Cost and Freight): A commercial and shipping term where the exporter/seller has to deliver the cargo till port or airport of destination agreed with the importer/buyer. All freight charges and risk of cargo up to destination port are carried by the exporter/seller.

CIF (Cost, Insurance & Freight): This is a shipping and commercial term that indicates that the seller or shipper is responsible for the cost of transportation up to the port or airport of destination agreed with the buyer or the consignee. Seller/Shipper should also provide insurance covering the cargo during this transportation process


Cost Per B/L or Shipment <h2>
The B/L (Bill of Lading) is a document issued for the shipper ( or the seller ) by the carrier or freight forwarder as a contract of transportation and receipt of cargo. This contract explains the conditions of transportation and acts as a title by which the ownership and control of the goods can be transferred. The bill of lading is usually printed in 3 original signed documents and 3 copies. Bill of Lading ( B/L ) has more than one type. Here are some B/L types:

MASTER B/L: A bill of lading issued by the carrier or shipping line to a freight forwarder that contains that details of the whole lot ( which may be consolidated in more than one HOUSE B/L.

HOUSE B/L: A bill of lading issued by the freight forwarder or cargo agent when acting as a carrier to the actual shipper ( or seller ). Terms and conditions usually are similar to the ones in the MASTER B/L.

CONGEN B/L: A form of a bill of lading that is used for chartering and chartered vessels.

ORDER B/L: In this negotiable B/L the goods are consigned ” to the order of ” a certain consignee ( in most of the cases it is a bank of the buyer or consignee when a Letter of Credit ( L/C ) is created ).

The cost of B/L is different from one shipping line to another. Some carriers are currently pushing shippers to use the digital bill of lading. With some carriers like CMA-CGM, it actually costs less to do online booking. The B/L cost is per shipment and usually will be US$ 75-150.

Typical Contents of a Sea Freight Quote <h2>
The total cost of shipping in a sea freight quote can be broken down into several items. Some of these items are :

Pre-Carriage :
This is the pick up of empty container from the origin port or container yard and trucking to shipper’s facility to be loaded and then taken back to the origin port or container yard to be prepared for loading on board of the vessel.

Export Customs Clearance (Export Documentation) :
The export customs processing at origin port as a declaration and approval for the shipped cargo to leave the origin country to the chosen destination.

Basic Ocean Freight:
It covers the basic freight charges by the shipping line from the port of origin to port of destination which can be either direct route or may go through one or more transit points.


BAF (Bunker Adjustment Factor):
This is a surcharge to cover the fluctuation in oil prices and applied either per container or per TEU (Twenty-foot Equivalent Unit). This means if the charge is US$ 100 / 20 ft container, it will be US$ 200 for a 40 ft or 40 HC container. However, it is in most of the cases more than US$ 200.

ISPS (International Ship and Port facility Security Code):
This is a security surcharge that appeared after the 9/11 attacks. The IMO (International Maritime Organization) realized that what happened in the air may happen as well in the sea. Therefore, some procedures and measures were applied to different ports around the world. This surcharge is calculated on per container or TEU.

B/L (Documentation):
Bill of Lading fees that is applied per shipment and in some shipping lines costs less when the container booking is done online.

Congestion surcharge:
In high season some container yards and ports are having more demand than others. Therefore, this extra charge is applicable to cover this increase in demand and redirect it to other ports.

GRI (General Rate Increase):
This increase is done by many carriers more than once per year and it is applicable on certain routes to balance the rate based on supply and demand of empty containers, especially on major routes around the world such as the Far East to North America.


PSS (Peak Season Surcharge):
The PSS is similar to GRI and applicable in peak seasons around the world to support the high demand. It may be stopped, waived, or lowered depending on the carriers’ cost calculations.

Import Customs Clearance:
The cost of customs documentation processing at the point of destination as permission to allow the cargo to enter the destination country and usually customs fees and taxes accompany this step.

On Carriage:
On carriage is the cost of picking up the container from destination port and delivering it by land to the consignee’s (recipient’s) facility to be offloaded and return the empty container to the destination port.

Demurrage charges:
In origin and destination ports once the empty container is picked up, there is a free time given to load (or offload) the container and return it to the container yard. If the shipper or consignee takes more than free time, demurrage charges are applicable per container per day as compensation for keeping the container away from the port.

Digital Sea Freight Quote

As we can see the quotation and processing of an ocean freight shipment can have a lot of steps and details that affect the shipping cost and processing time. This is why Globitex came up with the digital freight forwarding concept to simplify the whole thing to its customers and allow them to make the best decisions. Having a Globitex account will allow users to get several options to cover the sea freight shipping needs with full transparency and no hidden costs. Also, the shipment processing is all automated to minimize the costly mistakes that may occur and expedite the shipment processing lead time.