Ocean shipping costs can be anything but simple, especially to anyone who is not already familiar with the dazzling variety of individual charges that add up to the total cost of getting your cargo from “there” to “here”. For containerized shipping – the most common type of ocean shipment for mid-sized and smaller quantities of cargo – here are a few pointers for navigating shipping costs, and understanding how they are structured.
Many types of ocean cargo are most efficiently (and economically) moved in full ocean container quantities, often referred to as “full container load” or FCL. For many smaller shipments, the freight cost for an “exclusive use” container can be very high, compared to the value of an individual small shipment. For these smaller shipments, it often makes sense to share the freight cost of a full container among two or more shippers or consignees. When this is done, each shipment is commonly referred to as being “less than container load” or LCL.
Depending on the terms of sale, ocean transportation may be “booked” with an ocean carrier by either the shipper or the consignee, or the agent of either. Especially for mid-size and smaller shipments, terms of sale frequently include prepaid ocean freight as part of the total invoice value. In this case, the shipment booking is normally done by the shipper.
For LCL shipments, the shipper will normally book the cargo to move in a "consolidated container" with other shippers' cargoes, rather than alone as a full container shipment. Basically, this means that you and several other shippers / consignees are sharing a container, in which your and their shipments are all stowed for movement from the origin port to at least the discharge port, and sometimes the destination port, if the two are different.
This situation has some predictable direct effects, some more favorable than others. Because the shipping cost of the full container is shared among multiple shippers / consignees, the effective cost per cubic meter (or metric ton) of the "main ocean freight" for the goods in a particular shipment can be much less that the "main ocean freight" cost for the same amount of goods moving in an "exclusive use" 20 foot container.
When the shipper has prepaid the “main ocean freight” for a shipment, either FCL or LCL, this includes the cost to get that shipment (in either an “exclusive use” or a consolidated container) to “ship’s rail” at the port of discharge. If the shipment ocean freight is prepaid to a point beyond the port of discharge, that prepayment normally also includes inland freight to the ocean carrier’s designated terminal at the port of delivery. Offsetting this savings is the set of additional charges that typically apply to individual shipments within a "consolidated container" of otherwise unrelated shipments.
However, when the ports of discharge and delivery are the same, this "main ocean freight" normally does not include any of the costs and charges after the container crosses "ship's rail" during discharge at the discharge port marine terminal. When ports of discharge and delivery are different, the “main ocean freight” normally includes costs and charges up to arrival at the terminal at the port of delivery, but not after arrival there.
For FCL shipments, most ocean carriers have a destination “terminal handling charge” (THC) which is normally billed as a collect charge to the consignee. The THC amount varies from carrier to carrier, and in some cases varies by terminal location and type of container used, but is typically from two hundred to several hundred dollars per container. This charge must be paid to the ocean carrier (or in some cases, to the terminal operator), before the shipment can be released at the carrier’s destination terminal.
For LCL shipments, the additional charges past “ship’s rail” or arrival at the delivery port terminal are also normally billed as a collect charge to the consignee. These additional charges normally include pro rata costs, divided among the consignees of the various individual shipments within the consolidated container, for destination collect charges such as:
document transfer charge by consolidator's destination agent
assorted "security fees" and similar charges billed by consolidator's destination agent
cost of "destination Terminal Handling Charge" (destination THC) at destination port marine terminal
cost of trucking of container from destination port marine terminal to destination Container Freight Station (CFS)
cost of unloading container at destination CFS
forklift, load-out, and other handling fees billed by destination CFS
These charges may be billed by the consolidator's destination agent, by the destination CFS, or (most often) some of these charges are billed by each. All of these charges must be paid before the shipment can be released from the destination CFS.
If a consolidated container is designated for exam by US Customs or another agency, the exam costs are normally paid by the consolidator’s destination agent, and rebilled pro rata by the agent, to the consignees of the individual shipments in that container.
Depending on the specific details of each individual shipment, the savings on "main ocean freight" by moving a shipment in a "consolidated container" may be either more or less than the cost of the destination charges billed to the consignee on a "consolidated container" shipment which is made available at a Container Freight Station, instead of as a full marine container, made available at a discharge or destination port terminal.
For most relatively small consolidated shipments, the cost of delivery from destination CFS to the importer's final destination will be based on the total weight and cubic measure of the shipment, plus whether any special requirements such as "liftgate delivery" apply. This contrasts with the delivery of a full marine container from an ocean carrier’s marine or inland terminal to an importer's final destination, which is generally based on a standard rate for delivery from a particular terminal to a specific destination area, plus extra charges for any "excess driver standby" time at any one or more of loaded container pick-up location, delivery location, and empty container return location.
As part of Transmark Customs Broker’s services to our valued clients, TCB normally pays all of these charges that are applicable to any individual shipment, on behalf of our client, and includes each as an additional line item on TCB’s billing invoice to the client. Centralizing this responsibility reduces the risk of port delays, and helps move your cargo faster.
We believe that an important part of TCB's job as your customs broker is taking care of these annoying details, so that you don't have to spend your time and energy on them. Quite frankly, that's part of what we do to earn your business.