What is freight in shipping
What is freight is payment for the process of sending goods by any means of transport, drawn up in accordance with a contract or international law standards. For the movement of goods from the sender to the recipient, it is necessary that the counterparties conclude a freight agreement with each other. This agreement provides an opportunity to regulate the conditions for the provision of air or sea transport and their services between the charterer (sender) and the charterer (carrier, transport owner). This format of the contract requires the charterer to pay for transportation services from the company. And the charterer, in turn, is responsible for the transportation and delivery of goods to the specified place according to the contract. The contract also defines the conditions in the form of duration and number of shipments.
Calculation of costs, how is it done?
In order to understand which type of freight is profitable for commercial purposes, it is necessary to determine what is included in the price. The freight rate may consist of a base rate and a mandatory surcharge.
The base rate is the main part of the payment for transporting goods by various types of transportation. The base rate is affected by the length of the route and the dimensions of the cargo.
A mandatory co-payment is a mandatory part of the contract, because this co-payment will compensate for the unforeseen expenses of the charterer. However, it should be borne in mind that there are several components of the mandatory surcharge, namely: the surplus rate for the preparation of specialized freight documents that accompany the cargo during loading and unloading, as well as the surplus fee for the preparation of goods in the port and additional fees that take into account fuel costs.
What is sea freight? It is executed in connection with the transportation of goods by sea. This type of chartering is still relevant and in some cases is a more profitable solution.
- Low cost compared to other types of chartering.
- By delivering goods in large volumes, sea freight provides the opportunity to transport everything at once, since sea vessels have a large capacity.
- The minimum likelihood of harming the goods during transportation by sea.
- As well as no traffic jams
The disadvantages include parameters such as:
- The time and delivery schedule are less influenced by the sender, unlike other types of chartering.
- Inaccessibility of delivery of goods without additional transportation directly to the customer due to limited port deliveries.
- Weather dependent.
Air freight is issued in connection with the transportation of cargo by air. But also a more modern type of chartering available for delivery to most parts of the world.
But the main advantages of air freight are:
- Delivery speed in comparison with other types of freight transportation.
- More reliable loading and securing of cargo on the plane.
- A large number of airports allow you to expand the delivery map.
Although the disadvantages include the following:
- Limited space for one-time transportation.
- The cost of transportation by air is higher than other types of freight transportation.
- There are also restrictions on the categories of transportation of goods (liquid, bulk goods, etc.)
What is freight you need to know in order to build a commercial supply strategy, since freight in shipping will significantly reduce unnecessary waste and time.