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Anatomy of a freight rate

The ocean freight number is maybe half the invoice. Here is every line item and who normally pays it.

L01 / 027 min readL2 · Core

A client asks "what's the rate to Hamburg?" and hears one number. The invoice has fourteen lines. Closing that gap is the job.

01Origin charges

ChargeWhat it isNormally paid by
Export customs clearanceFiling the declarationShipper
Trucking / haulageFactory to port or CFSShipper
THC originTerminal handlingShipper (varies by Incoterm)
B/L / documentation feeIssuing the billShipper
Seal feeContainer sealShipper
VGM feeWeight declaration filingShipper
CFS charge (LCL only)Stuffing at the consolidation warehouseShipper

02Main leg

ChargeWhat it is
Ocean freight / air freightThe base rate for the voyage
BAF / FAFFuel surcharge
CAFCurrency adjustment, where the rate is in a currency other than the trade currency
ISPSSecurity surcharge
PSSPeak season surcharge
War risk / emergency surchargeRoute-specific, appears with little notice
Low water / canal surchargeRoute-specific

03Destination charges

ChargeWhat it isNormally paid by
THC destinationTerminal handling at arrivalConsignee (varies by Incoterm)
DO feeDelivery order releaseConsignee
Import customs clearanceFiling the import declarationConsignee
Duty and VATStatutoryConsignee (importer of record)
TruckingPort to doorConsignee
Demurrage / detentionIf free time is exceededWhoever caused it, in theory

04Reading a carrier rate sheet

  • Validity window. Ocean rates commonly hold 15–30 days; some lanes reprice on the 1st and 15th.
  • Basis. Per container for FCL; per revenue ton (1 CBM or 1,000 kg, whichever is greater) for LCL; per chargeable kg for air, with a rate scale that steps down at weight breaks — typically +45, +100, +300, +500, +1000 kg.
  • What is included. Some rates are freight only; some are "all-in" including origin THC and documentation. Never assume.
  • Named account or FAK. Freight All Kinds rates apply to any commodity; named-account rates are tied to a specific shipper and cannot be reused.

05Building a quote that holds

  1. Start from the carrier rate with its validity date.
  2. Add every origin and destination charge in your scope.
  3. Add your margin — as a stated handling fee, not hidden inside the freight, if the client is sophisticated enough to compare.
  4. State the exclusions explicitly: duty, VAT, inspection, demurrage, storage, packing, insurance, permits, out-of-gauge handling.
  5. State the validity, the currency, and the exchange rate basis.
  6. State the assumptions: cargo ready date, commodity, weight and dimensions, whether cargo is hazardous or stackable.

A quote without exclusions is an open-ended promise. A quote without a validity date is a promise you cannot keep in a moving market.

Key terms
THC
Terminal Handling Charge — the terminal's fee for moving the container between quay and stack. Charged at both ends.
BAF
Bunker Adjustment Factor — the fuel surcharge, adjusted periodically.
All-in
A quote including every charge in the agreed scope, with exclusions stated explicitly.