In recent years, the import and export trade market have become increasingly transparent. The international ocean freight and air freight rates have gradually become transparent.

However, sometimes the ocean freight rate will increase greatly.

Even from China to the neighboring Southeast Asian countries, in some cases, ocean freight will even rise a few hundred dollars, so What are the factors affecting the ocean freight rise and decline? We believe that many traders and overseas freight forwarders are not very familiar with:

 

 

We had got many questions and emails like:

 

What is the main factor affect the ocean freight rate?

 

How Ocean freight rates are determined in China loading port?

 

What are the internal and external factors that affect ocean freight?

 

Why the ocean freight when shipping from China rise a lot, how can I save the ocean freight?

 

 

If I choose the high rate ocean freight, can I ensure the container cargo space when I shipping from China?

 

 

 

 

 

 

These are the most frequent problems and questions the importers met and asked. We find that customers’ perceptions are very low, some questions we got are Very childish, and you can find many understatement articles and blogs in google.com about this theme.

 

BW as a freight forwarding company with more than 15 years of shipping experience, we combine our practical experience to help you summarize.

 

We hope every buyer can really understand the composition of sea freight and price increases, price drop, so that you will feel Really relax, don’t complain about why your freight forwarder can’t secure the cargo space, don’t complain why this shipping company has increased 800USD/40HQ compare with  last month, do they really deceive me?

 

This article is unique, real from time, and have very strong practical guidance.

 

 

Summarize the following factors:

 

1 The nature and quantity of the goods:

2 Location of the origin and destination and port conditions:

3 Seasonal and holiday factors

4 Type and size of the vessel used:

5 Competitors:

6 Exchange rate and currency:

7 Government intervention and protection:

8 Trade policies between countries:

9 Oil prices

10 Fuel surcharge:

11 Port congestion at the loading port and destination port:

12 Local cost of ports:

 

 

 

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Next, specifically, analyze how each factor affects the rise and fall of ocean freight rates.

 

1 The nature and quantity of the goods:

 

Obviously, the freight rate varies according to the type of goods. Usually, the freight rate of valuable goods, textiles, dangerous goods, and livestock is high. Usually it is shipped from China to foreign countries, the same destination port, if dangerous goods, such as lighters. Or the liquid, ocean freight rate will be doubled and expensive compared to general goods.

 

At the same time, if the goods being transported are large-scale equipment, the machine will usually be out of size, that is, we usually say OOG, oversize cargo, usually these goods will occupy more cargo space because of the extra length, width, and height. And need to be placed at the top of the vessel, which directly leads to very expensive ocean freight for this oversized cargo.

 

The number of containers ordered by the importer’s single voyage also directly affects the ocean freight. Generally speaking, if an importer has more than five 40-foot containers shipping from China, he can let his Chinese freight forwarder and local shipping company to negotiate the shipping cost with carriers.

 

2 Location of the origin and destination of the cargo and port conditions:

 

The difference between the origin of the goods and the destination port involves the depth of the port, the loading and unloading conditions, the port tariff level, the billing distance between the ports, the length of the voyage operation time, and whether there is a need to pass the canal, the route, whether there are a fuel port and local oil prices. Many factors affecting route costs and operational economics.

Obviously, if the port and route conditions are better so the ship operators can get better benefits at a lower cost, and the freight rate should be lower than the poor conditions. This will help attract more shoppers.

 

The difference in the destination of the goods may also affect the chances of re-shipment or re-leasing of subsequent voyages and the expected level of freight and rent. Obviously, for destinations with good re-shipment and re-leasing opportunities, the routes and destinations of destinations with high freight rates or rents should also be lower than the destination port with poor opportunities.

 

The usual departure port and destination port directly affect the ocean freight rate, the distance is far, the price is expensive if short distance and the price is low.

 

 

3 Seasonal and holiday factors:

 

Holidays are a key factor affecting the floating of ocean freight. For example, the ocean freight rate will rise all the way before Christmas, especially the goods shipped from China to North America, Europe, and South America.

 

The Ramadan in the Middle East will directly lead to the Chinese ocean freight when you shipping from China, which is sent to the entire Middle East.

 

The ocean freight in Africa has risen rapidly in the months before Ramadan.

 

China’s Spring Festival, China’s Spring Festival generally takes about a month, overseas importers in order to hoard enough goods, will be shipped in the months before the Chinese New Year, especially the month before the Spring Festival until the Spring Festival comes, the cargo space is very tight during that time.so let you shipping agent to book cargo space at least 10-15days before goods finish.

 

Before these important holidays. Usually, the shipping company will increase the ocean freight rate. In the process, it will make a big profit to subsidize the loss in the off-season.

 

The seasonal pattern of the shipment from China to overseas, the peak season is from September to February of the next year. This time lasts about 5-6 months, and the rest is off-season.

 

 

4 Type and size of the vessel used:

 

Different ships use different airworthiness and suitability, so the freight rate or rent should be different. Different ships use different technical conditions and security conditions.

Therefore, internationally, depending on whether they hold a class or not will determine the freight rate or rent and insurance, etc.; use the ship is different.

Their cost components are also different. Therefore, the freight rate or rent directly related to the cost must be different.

 

5 Competitors:

 

In the market economy, the number of competitors, their strength in the market position have a great impact on the freight rate or rent.

As mentioned above, under monopoly market conditions, freight rates or rents are relatively stable, and under the conditions of free competition of many competitors.

Strong people often defeat the weak by manipulating freight or rent, and the competitive means of price reduction is particularly common.

 

In the transportation market, competitors not only have different shipping operators (lessees or lessors), but also competition between shipping operators and other modes of transportation. They each adjust their freight rates and rents to ensure they can get the largest possible share of freight. Competition between multiple forms also leads to a high level of rebate.

 

Fierce competition may even occur from China to many neighboring countries, such as Japan, South Korea, the Philippines, Thailand and other countries, the ocean freight rate of 0USD, this vicious pricing strategy has been happening.

 

Here we remind all importers and other freight forwarding companies abroad, please pay special attention to the low ocean freight rate, because often many shipping companies, they will provide 0usd for the ocean freight in China, and instead charge another in the destination port. The purpose surcharge is the same as or higher than the ocean freight at the port of departure.

 

This shipping trap, buyers and importers who shipping from China should be vigilant to prevent being fooled.

 

 

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6 Exchange rate and currency:

 

In the period of large fluctuations in exchange rates, in order to avoid the economic losses caused by exchange rate risks, shipping companies often need to consider when formulating freight rates and rents or supplement special provisions in the contract annex.

 

Today, the common currency used for international trade is the US dollar. Therefore, the ocean freight rate will also depend on the exchange rate fluctuated by the exchange, so the ocean freight may be levied according to the latest currency exchange rate.

 

7 Government intervention and protection:

 

As everyone knows, the shipping industry, especially the international shipping industry, has been increasingly intervened and protected by governments. Therefore, various government measures will affect the level of freight or rent.

 

For example, more and more governments control or influence the freight rate of some routes; some countries’ operating subsidies help to reduce freight and encourage competition with rivals.

 

The most obvious route is: shipping from China to the Mediterranean Sea, the ocean freight rates of these countries in the Black Sea, as well as from China to Turkey, North America, and parts of South America, have received local government intervention and protection to varying degrees.

 

The phenomenon that occurs is that the goods are shipping from China to overseas, but in the importer and the buyer, the local freight forwarder and the shipping company can get very low ocean freight, compared to the price obtained from the Chinese shipping company approval, this It is advantageous for importers, but it usually occurs during peak seasons and cannot get cargo space, because the shipping companies at the port of departure are not willing to leave limited container space to importers from these countries for maximum benefit.

 

 

 

 

 

8 Trade policies between countries:

 

The most obvious is the trade war between China and the United States. In the early days, many US imports hope their container can arrive in the United States before the effective date of the tariff agreement in order to avoid high tariffs, using advance shipments, or a faster schedule.

 

They completed customs clearance, during that time, the ocean freight rate from China to the United States rose rapidly.

 

Any trade friction will directly affect the cargo volume between the two countries and the ocean freight will be rise or fall.

 

9 Oil prices:

 

As we all know, oil prices are subject to frequent fluctuations, so the postage of freighter transport will also be affected to some extent by the price of oil.

 

10 Fuel surcharge:

 

The IMO (International Maritime Organization) Sulphur Restriction Order will be officially implemented on January 1, 2020. According to the new regulations, starting from January 1, 2020, all ship fuels need to meet the sulfur content, which is not exceeded by the current 3.5% m/m is reduced to no more than 0.5% m/m!

 

Although, the current industry is very controversial. However, IMO has repeatedly stated that the sulfur limit will not be postponed and will be implemented on time from January 1, 2020!

 

And this new regulation will also have an important impact on shipping companies as well as cargo owners and freight forwarders! Foreign authoritative media pointed out that ocean freight will increase by about 20% by then.

 

11 Port conditions at the port of departure and destination port:

 

Regardless of the strike, typhoon, heavy rain, and other factors, the port, and the terminal cannot operate normally, resulting in a large number of ships unable to berth on time, affecting the normal operation of the terminal, directly resulting in inefficient operation of the terminal, and congestion at the port. As a result, the shipping company needs to pay a high extra cost, so the impact on the future ocean freight is very large.

 

12 Local fees at the port:

 

All the additional charges imposed by the port, whether it is the port of departure in China or the port of destination in foreign countries, in addition to the conventional THC, document fees, terminal security fees, VGM, many foreign ports will also have local special surcharges, which directly leads to the ocean freight rate from China to the port also rose.

 

 

 

 

 

 

Why Bestforworld’s ocean freight rate is competitive and guaranteed :

 

1 BW’s customers are located in Europe, Middle East, Africa, North America, Japan, and South Korea, Southeast Asia, Oceania, and South America. Almost all of our customers are distributed all over the world, resulting in that Bestforworld have huge cargo volume monthly, quarterly, annual volume and negotiated the shipping fees with various shipping companies.

 

 

 

2 Our strategic partnership with many shipping companies like MSK,MSC,ONE,APL,COSCO,HMM,OOCL,KMTCZIM,CMA,CNC,RCL,EMC,YML.

Shipping in peak season has caused many importers headaches because the goods are completed, and the freight forwarding also gives a very favorable sea freight, but it is impossible to obtain the cargo space at the port of departure in China.

 

This means This ocean freight is also meaningless and works with Bestforworld whether you are an annual or seasonal project, regardless of the cargo volume of 10  to 20 40HQ containers or a few hundred containers a month.

 

we will specify the shipment according to your actual situation. Agreement with the shipping company to secure the cargo space for your importing from China.

 

 

 

3 There are many freight forwarders in China, but more than 95 percent of the freight forwarders do not understand the real needs of foreign customers and do not understand the many situations that occur in the destination port.

 

Many times, many Chinese freight forwarders arrange low sea freight rates and fast voyages, but why foreign customers are still unhappy because there are some low-cost sea freight shipping companies, the port of destination has a lot of additional costs, and the service is very poor.

Some customers are full of warehouse inventory, and if you use the Clippers, they may not be happy.

 

 

 

As a freight forwarder, according to the special circumstances of each shipment, help customers arrange the shipping plan, choose the appropriate shipping carrier to use,  arranging a suitable voyage and schedule. This will really help importers to import better from China.

 

 

 

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