Top Factors Affecting the Cost of International Ocean Freight 

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If you are a business with a footprint in multiple countries, the cost of shipping internationally needs to be managed carefully because freight rates fluctuate all the time. Even though you can’t control the factors that cause ocean freight rates to move up and down, you still need to stay on top of the rates to remain competitive and manage your supply chain efficiently. Several factors can influence shipping costs. A few pointers on the main reasons:

Fuel Cost

Whether you are shipping by air, rail, or road, you require fuel to move your cargo. The problem is that fuel costs constantly fluctuate, forcing shippers to accommodate changes in freight rates by the shipping companies. There are many economic and political reasons for oil prices to fluctuate. An international dispute may trigger an embargo on fuel exports by an oil-producing country, or talks on limiting oil production by the oil exporting countries may break down. Some countries may also offer oil at a steep discount to win market share, etc. According to Marine Insights, changing exchange rates also influence shipping rates.

Tariffs and Taxes

International shipping will invariably mean the imposition of taxes on the goods by the importing country that drives up the landed cost of the goods. Trade tariff agreements may also favor or restrict imports from certain countries, affecting the landed prices. It is simple to find ocean freight rates online using a variety of calculators offered by shipping lines and logistics companies.

When a country imposes taxes on the import of certain goods from specified countries, it is invariably reciprocated by the other countries, driving up the effective prices of goods and limiting the flow of goods. International relations directly affect trade tariffs and are often triggered by acts of aggression, sovereignty issues, the proliferation of nuclear weapons, human rights, etc.

Rigorous Screening

Some countries subject incoming cargo to intensive screening at the ports due to security issues or fear of contamination resulting in disease among humans, animals, and crops. You may not be allowed to unload certain items at all ports, while in others, the cargo is liable to undergo slow and thorough screening that can not only take more time but also drive up the cost due to the imposition of a security surcharge. Shippers need to know of these issues to be prepared for the impact and build them into the final price charged to customers.

Traffic Volume and Port Congestion

If you are trying to ship during the busy season like the holiday season in Europe and America or the Chinese New Year, the sheer demand for containers drives up freight rates significantly. Also, congestion at certain ports will delay the discharge of cargo and increase fuel costs due to long berthing queues.

Conclusion 

In addition to the above factors, the urgency of shipping also has a direct and significant impact on the freight cost. If you need to deliver urgently, you may have no choice but to avail of air transport, which is considerably costlier. However, air transport is not feasible for bulky or heavy cargo due to physical and financial constraints.

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