Understanding Common Freight Charges & Fees

Freight Charges and Freight Fees: A Guide to Common Costs and Surcharges

According to Freightos research, there’s an average of over 20 freight fees and surcharges in every international freight quote. But what do all those initials mean anyway?

Do you really understand the freight charges and fees on your freight quote and your freight forwarder’s invoice? We’ve listed 28 different freight fees and surcharges, by who generally charges the fee, what stage of the shipment it relates to, a short description of what you’re actually paying and tips relating to different surcharges.

If you’re in need of a quick and straightforward freight rate estimate, we’ve got you covered with our user-friendly and free freight rate calculator. Additionally, if you’re interested in gaining a deeper understanding of the industry and its terminology, be sure to explore our comprehensive freight glossary, where you’ll find clear explanations for common freight terms. Whether you’re a seasoned professional or new to the world of shipping, our tools and resources are here to assist you in navigating the complexities of the freight industry.

Freight Charges Meaning

Freight charges are the costs businesses pay to transport goods from one location to another. These charges cover the actual movement of your goods across oceans, skies, or highways.

The costs vary significantly based on several key factors:

• Transportation mode: Air freight offers speed but costs more, ocean freight provides better rates for larger shipments but takes longer, and land transport bridges the gaps between ports and final destinations
• Distance and route: Longer distances naturally cost more, but popular shipping lanes (like China to US) often have more competitive rates due to higher vessel availability
• Seasonality: Peak seasons like Lunar New Year or holiday shopping periods typically see higher rates due to increased demand
• Cargo specifics: Size, weight, and special handling requirements (like refrigeration) affect pricing

Understanding these charges helps businesses:

• Create accurate pricing strategies for their products
• Plan optimal shipping schedules to avoid peak season rates
• Choose the most cost-effective shipping modes for their needs
• Maintain healthy profit margins by accounting for all logistics costs upfront

Types of Freight Charges

Before Main Transit

Some of these charges may also apply after Main Transit.

• Cargo Insurance
• Customs Bond
• Booking Fee
• ISF Filing
• Container Fumigation Fee 
• Pickup Fee
• Customs Duty (at Origin) 
• Terminal Handling Charges 
• Security Surcharge
• Congestion Surcharge
• Consolidation Fee

Main Transit

• Ocean Freight/Air Freight Charge
• War Risk Surcharge 
• Bunker Adjustment Factor (BAF)
• Currency Adjustment Factor (CAF)
• Panama Transit Fee
• Peak Season Surcharge

Destination

• Customs Clearance Fee 
• Customs Duty (Destination)
• Merchandise Processing Fee (MPF)
• Harbor Maintenance Fees (HMF)
• PierPass Charge
• Alameda Corridor Surcharge (ACS) 
• Demurrage and Detention / Warehouse Fees 
• Telex Release/EDI Fee
• Delivery Fee 
• Chassis Usage Fee
• Container Cleaning Fee

Freight Forwarder Charges

A freight forwarder handles all the nitty-gritty details of global shipping, from actually reserving space for your goods to documentation and paperwork to international regulations. Here’s how the charges typically break down:

Common charges:

• Booking fees: For reserving space with carriers
• Handling charges: Covering the processing of goods at warehouses or terminals
• Documentation fees: For preparing and managing all your shipping documents

Additional costs: Freight forwarders often manage customs duties, insurance, and regulatory compliance, which adds additional charges. Specialized services like managing hazardous or oversized goods or complying with FDA regulations may also mean extra fees.

Tips to reduce costs:

1. Consolidate shipments to make better use of container space
2. Compare quotes from multiple freight forwarders (this is extra easy when using a platform like Freightos.com!)
3. Understand your cargo type and requirements to avoid surprise charges

Air Freight Charges

Shipping by air is almost always more expensive than shipping by sea. This is because planes have far more limited space than freight ships and use much more energy. However, sometimes air is the right choice: it is faster than ocean freight and sometimes more reliable for high-value goods.

Here are some key air freight charges:

• Air Waybill (AWB) fees: This is a special document for air shipping, roughly (but not completely) equivalent to a bill of lading in ocean shipping. It contains crucial details about your shipment including a description of the goods, as well as payment and insurance information. You can learn more about the air waybill here.
• Fuel surcharges: These are adjustments for fluctuating fuel costs.
• Security fees: These fees cover airport freight security.

Who should use air freight?

If you’re shipping time-sensitive goods like electronics, pharmaceuticals, and seasonal items, air freight is likely the right choice. And whatever you’re shipping, sometimes you need your goods immediately – and it might be worth prioritizing speed and reliability over cost.

Here are some tips to save on air freight costs:

1. Package your goods as efficiently as possible. Don’t waste space on parcels that are too big, because in air freight that extra space adds up fast.
2. Work with your supplier and forwarder to plan your inventory schedule to avoid peak seasons as much as possible.
3. Consolidate goods as much as possible.

Ocean Freight Charges

By now you know that ocean freight is typically cheaper than air freight: you can ship much larger volumes at much lower costs if you have the extra time to wait for your goods. That said, ocean freight does have its own set of charges, including:

• Bunker Adjustment Factor (BAF), which covers fluctuating fuel costs
• Currency Adjustment Factor (CAF), accounting for exchange rate changes
• Terminal Handling Charges (THC), which are the fees for processing cargo at ports

Who should choose ocean freight?

If you’re shipping bulky or heavy goods, you’ll have significant savings choosing ocean freight. Planning your supply chain well means you can ship in advance and take advantage of these lower prices.

Here are some tips to save on ocean freight costs:

1. Work carefully with your forwarder to plan your delivery including any special equipment, so you’re not hit with extra charges later.
2. Ship during off-peak seasons whenever possible
3. Make sure your documentation is correct and complete to avoid customs delays and fees

International Freight Charges

Shipping internationally means some extra fees for crossing borders. Here are some of the main ones:

• Customs duties: These are taxes imposed by governments on imports, and they vary by country and by item.
• VAT or GST and import/export fees: Additional charges based on the shipment’s value.

Speak to your freight forwarder or customs broker to understand in advance what charges you’ll need to pay for your shipment, depending on your goods, your origin, and your destination. Budget for these costs and make sure to get all your paperwork in on time to avoid extra charges.

Understanding Additional Surcharges and Fees

Even more charges? Unfortunately yes – sometimes you’ll face extra surcharges and fees, and they can add up.

Here are some common ones:

• Congestion fees: Applied during periods of high port activity.
• Seasonal surcharges: Added during peak shopping or holiday seasons.
• Security surcharges: Whenever carriers need to provide additional security measures due to regulations or global events
• Fees for delays: If your goods are held up at customs, you’ll face additional charges. This is why accurate documentation is so important.

A lot of surcharges can’t be avoided, but importers and exporters should prioritize working with partners that provide clear and transparent freight quotes. You should always be able to tell what you’re paying for and why.

Tips for Reducing Freight Charges and Fees

Freight charges can be overwhelming, but there are ways to make sure you’re not overpaying. Here are some keys to keep in mind:

1. Measure your goods accurately: Get accurate measurements from your supplier, and ask them to include all packaging. If your forwarder has to remeasure or repackage your goods, that will cost you extra.
2. Plan shipments in advance: A well-planned supply chain means you can ship as much as possible during less busy seasons and get hit with fewer surcharges.
3. Compare quotes accurately: When you get freight quotes, check that they include the same services. For example, if you need a door-to-door shipment, make sure every quote features every leg of the journey. (By the way, this is automatic on Freightos.com!)
4. Don’t neglect the paperwork: Is all your customs documentation in order? Is your HS code correct? Do you need any special filings? Paperwork is a headache, but speaking to your forwarder in advance to make sure you’ve covered everything you need will save you cost and hassles down the road.