What Factors Affect Shipping Costs
Posted on November 4, 2013
The cost of shipping goods by sea can vary significantly as it is affected by various elements that are beyond the freight-forwarder's control. While the rising price of fuel is a very obvious factor, there are other charges that are perhaps less often thought about.
When it comes to shipping, size matters. Transporting goods on larger ships results in economies of scale, as will using containers to their full capacity. The new generation of so-called ‘superships’, vessels of unprecedented dimensions, should also, in the long run, lead to lower shipping costs, not only because of their holding ability, but because they are much more fuel efficient.
The origin and destination of the shipment both have an effect on costs, as port authorities set their own charges, such as the Terminal Handling Charges which, as the name implies, is due for handling the cargo in the port of origin, as well as the destination. In the case of international shipping, these costs are made even more variable by exchange rates.
Other factors such as the weather may also be responsible for increased fees: busy ports need to be able to turn ships around quickly and follow strict schedules to avoid over-crowding, and they may charge fines for ships being late, even if the cause is adverse environmental conditions.
On the other hand, some areas of shipping rates can be subjected to contracts and pre-set terms, mitigating, to some extent, those more volatile prices. Frequent shippers can negotiate discounts and waivers, and build business relationships with other freight-forwarders to consolidate shipments. This allows them to even out fluctuating rates, and offer competitive rate to their clients.
Click here to see our quick reference guide to making car shipping easy.