Freight costs fluctuate as frequently as the prices fluctuate in the share market. The whole shipping process has different layers to it which are interconnected and are affected by even the slightest change in the economy. Freight costs too depend upon a number of macroeconomic factors and market mechanisms. The price a company pays as freight quotation includes a lot of costs that include custom charges, warehouse fees, security charges, inland haulage, taxes and so on.
Use an online freight calculator to easily calculate and compare the freight costs of different shipping lines.
Although the freight charges that you pay for a particular shipment primarily depends upon local factors like size and volume of the cargo to be shipped, type of container that you choose, mode of transportation, carrier charges etc., the basic freight costs fluctuate due to a number of other reasons as well.
4 major reasons that cause a fluctuation in freight costs:
- Market Forces: The demand and supply forces directly impact freight costs. If the demand is higher than the availability of supplies, the freight costs will increase and vice-versa. For instance, during the season of particular consumer goods like fruits, vegetables, etc. the demand for ships for transporting these items is higher than supply. This causes a fluctuation in the freight costs as the scarcity of ships induce people to charge higher prices.
- Fuel and Labour cost: The change in prices of fuel and the availability of labour also affect freight costs. Prices of crude oils can fluctuate wildly which increases the cost of transportation of the shipping company. Similarly, scarcity of labours leads to increased wages which also adds to the cost of the company. Shipping industries require skilled labourers so as to avoid rough handling, theft, or any other accidents. Therefore, the increase in the cost of transportation affects the freight costs as shipping companies tend to manage the additional expense by increasing the revenue.
- Weather Conditions: Climate changes also play a vital role in the shipping industry. Bad weather can negatively impact the shipment process. Whether it be air, water or road transportation, heavy rain or snowfall can cause disruptions. Also, the occurrence of any natural disaster like tsunami, flood or hurricane can extremely affect the shipment process to an extent where the services might have to be stopped for a few days. During situations like this, freight costs fluctuate enormously.
- Macroeconomic Factors: Government policies and economic conditions also have an impact on the freight costs of shipment. Increase/decrease in the percentage of taxes like VAT or excise duties, fall or rise in GDP and GNP, inflation and so on largely hamper the import/export market. The exchange rate also plays an important role as a rise in the price of Dollar can increase the costs involved in international shipment. Freight costs also tend to fluctuate during a period of recession in the economy.
Export and import industry of a country depends largely upon the global shipping industry which is run with the coordination of a lot of interlinked parties. A minute change in any of the factors can impact the entire process of shipping including freight costs. Understanding what causes these fluctuations can help you to plan and execute your shipping more efficiently.
How To Calculate Freight Costs?
Freight quotations of different freight forwarders may differ depending upon the cost surcharge items that are included in the freight that you pay. The cost of freight costs depends upon factors such as mode of shipment, type of container (FCL/LCL), size and volume of cargo, type of cargo, etc. Various shipping lines offer different facilities and freight costs which must be evaluated before shipping a consignment. But, how to know the best freight rate in the market? A simple calculation can help you choose the best offer. Click here to easily check freight cost online.
Freight costs can be calculated easily with the help of freight calculators that are available online. You can use the freight calculator provided by Cogoport for calculating freight costs through your PC or smartphone. All you need to do is follow the following steps:
- Go to the online portal linked above.
- Click on “Freight Rate Discovery” tab under the products column.
- Click on Try now and fill up the required details.
- Sign up and access the freight calculator.
- Follow the instructions to get the freight costs of different shipping lines.
Fluctuations in freight costs are inevitable. One cannot simply avoid it if he plans to sustain in the shipping industry. Therefore, it is better to stay updated about the market conditions and take the required precautions accordingly. Also, calculate freight costs with the help of an online freight calculator to choose the best rate available in the market.