PRESENTATION ON FACTORS AFFECTING FREIGHT RATES

PRESENTED TO:BY :-NISHITA LALWANI(12028)

WHAT IS FREIGHT COST ?

The cost incurred in moving goods. It includes packing, palletizing, documentation and loading unloading charges, carriage costs, and marine insurance costs.

INTRODUCTION
While transporting commodities through oceanic routes, ocean freight plays the most important role among other factors. The levy of ocean freight however depends on a number of factors. This is why transporters hire shipping vessels need to be careful when it comes to understanding the rates applicable. Understanding ocean freight rates and the ways and means of its applicability is important because if a shipper undertakes to transport the goods without proper knowledge, then he could end up making a huge loss.

FACTORS AFFECTING FREIGHT RATES

1. Intended destination: The intended destination is an important factor when it comes to calculating ocean freight rates. In simple terms, the longer the journey, the higher the ocean shipping rates and viceversa.

2. Service Charges: Any extra charge levied by port authorities like the security service charges also tends to affect the ocean freight rate.

3. Season: For certain goods, the season becomes a very important factor. Grains and fruits transported during a particular freight season will have higher cargo rates and vice versa

4. Currency: In todays times, the common denomination used for international transaction purposes is the dollar. Ocean freight rate depends on the fluctuating rate of exchanges and therefore is likely to be levied on the latest prevailing exchange rate.

5. Fines and Fees: If there is any delay in ship reaching the port because of overcrowding, then there might be a fine imposed which affects the ocean shipping rates.

6. Terminal Fees: The ocean freight also depends on the fees to be paid while embarking the journey from a port and after reaching the intended destination. These fees known as terminal fees also affect ocean freight rate

7. Bunker Capacity: Bunkers are containers to store the fuel. Rising fuel prices and the latest prevailing fuel rates will affect the freight charges.

8. Container Capacity: The containers used to store the goods function on the simple economic principle of economies of scale. If the shipper does not have enough goods to fill the containers to their optimum capacity, it will affect the freight charges by way of the shipper having to pay more in spite of lesser quantity.

ADVANTAGES OF FREIGHT
1. Eco-friendly 2. No traffic jam 3. Cost friendly

CONCLUSION
Ocean shipping rates are generally pre-set and are standardized. But frequent shippers can make use of client-business relationship to avail of discounts and waivers. In a similar manner, shippers who use chartered vessels to transport their goods have to pay an amount which is settled on the day the transporting agreement is made between both parties.