The shipping rate is the cost of transporting a specific cargo from origin to destination. A number of factors influence this concept, all of which might aid with budgeting. This content will introduce you to pricing, factors affecting the increase or decrease in costs, and the parts that are involved in the transportation process and will cost you money.
Shipping Rate Pricing Formula
There is no set formula for calculating the price, and each company will declare the final price based on its costs, profit margin, and intermediaries. Warehouses, packaging, insurance, preparing freight forwarding documents, labor wages, fuel price, equipment depreciation, taxes, customs duties, product inspection charges, container costs, licensing, and the company’s monthly cost and profit margins are typical expenses effective in the final price. There are also other items that are not permanent and are sometimes added to the above list, such as temporary rate increases on special days and special occasions such as Christmas, Halloween, Golden Week, and so on.
There are a number of factors that affect shipping rates. The most important factor is the distance the goods have to travel. Shipping rates also depend on the type of goods being shipped, the weight of the goods, and the size of the shipment. Other factors that can affect shipping rates include the time of year and the availability of shipping services. Some of this factors are explained below.
The type of cargo, such as food, animals, chemicals, auto parts, homeware, cars, and other goods, might affect the shipping rate. Each has its own sensitivities and requirements, and you should refer to its rules.
There are four different types of shipments that are commonly utilized:
- Land freight
- Rail freight
You can choose any of the aforementioned methods based on your expectations and priorities. Sea and air freight are two popular ways to transport loads. Air transportation is a quick option, but it also has the highest shipping rate. Sea transport, on the other hand, is a green option way that is also suitable for bulky and heavy cargo. If the sea is not in the path of transportation, rail and road freight are the other two available options. Rail transportation is the most economical and greenest type of transportation. However, transporting the freight from the station to the destination necessitates the use of trucks, which is inconvenient. The road transport method, on the other hand, can be done in a door to door way.
The size of the containers is another factor that determines the price. You can select the container size and vessel type based on the volume of your cargo to ensure that the least amount of space is wasted. This is also a cost-effective option in terms of the shipping rate.
Quantity of Shipments
The more items you have, the less you need to split the container with another circuit, and the lower your shipping rate will be. The approaches are grouped into two groups in this case: FCL and LCL. The FCL method is used in cases where the product covers the entire volume of the container, and when your goods are not as large as the maximum capacity of the container, you have to share the container in an LCL way.
Weight and Volume
The dimensions and weight of the cargo are priced at the same price as long as they do not exceed the allowable limits (check oversized cargo article) of each region, but as the volume and weight of the cargo increase, the price increases accordingly.
Customs duties, inspection fees, quarantine fees, insurance, and General Rate Increase (GRI) are some of the items that vary per country. Depending on its infrastructure and rules, each country imposes varying additional transit costs. These additional fees might be applied to any industry sector.
One of the apparent elements that emphasize the cost is the distance between the origin and destination. The longer the distance traveled, the higher the transportation expenses.
Insurance companies charge varying shipping rates for various items. This rate is appropriate for the sensitivity of the product, the difficulty of controlling the product, and the product’s riskiness.
According to the above points and their importance, choose the best method that suits your load. For example, to avoid sending non-priority cargo in the peak season, check the cargo for contamination and pests beforehand so that it does not have problems at the destination. If possible, transport items to the destination rather than the port. Also, from the four methods of transportation, select the one that best meets your needs.
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Is it cheaper to ship fewer items?
Technically no, businesses are trying to increase their cargo volume to reduce costs. Of course, this is especially true for cargo-scale loads.
How many types of containers do we have?
There are approximately 16 types of containers, 11 of which are functional and two types are often used in sea transportation.
When is the peak season?
Normally, the peak season is from August through October, unless something unusual happens, such as a significant surge in fuel prices or a coronavirus pandemic.