What Are Freight Charges, How Is It Calculated?
The freight charges terminology that has been used in the transportation sector for a long time used to cover transportation but expanded to other methods like road transportation and other models as the sector grew. Freight charges in maritime dates back to ancient times. But freight charges in maritime is considered as the fee that the freight owner must pay in transportation operations via ship under the legal framework. Freight charge demand for transportation service is extremely important for the operations in the logistics sector to move forward.
What Is Freight Charge?
To give a simple answer to “What is freight charge?” question, the answer is it is the shipment cost or the fee demanded to transport the freight. Freight charges terminology that has multidimensional and systematic use plays a serious role in pricing policies in the logistics sector. As international transportation services such as Universal Logistics use the term frequently, freight charges is becoming a standard in the sector. Legal documents such as affreightment can be used for determining the pricing details between the freight owner and the logistics firm. Especially for logistics planning for countries with international shipping, affreightment must be declared for cost calculations.
What Is Affreightment?
Affreightment prepared under a legal framework is a document that expresses who will pay the fee for which services and under which conditions. Freight cost in import aims to create the necessary payment infrastructure especially for products that will be imported from abroad. This balances the accounting procedure differences between the countries and facilitates payment transfer. Affreightment prepared by the transportation firm guarantees the service content and validity of the payment.
How Is Freight Charge Calculated?
In freight charge calculation process, the calculation process can show differences since the procedures for road, maritime and airline transportation are different. Freight that will be transported with airline transport are calculated based on freight tonnage value. In addition to that, the distance helps to determine the calculated freight charge.
Freight Charge in Maritime Transportation
As expressed before, freight charges in maritime is a procedure that enables calculating the cost of the goods for maritime transportation. Accordingly, freight charge calculation in maritime processes consider freight tonnage value. Shipping can be planned by scaling 1 ton for 1 m3 area. It is important to well-organize freight charge calculation and affreightment processes especially for international level maritime transportation activities.
Freight Charge in Air Transport
The freight charge calculation for airline transportation might be different than other methods. For airline freight charge calculation, priceable weight is important. In general, all airline tariffs clearly express the permitted weight depending on vehicle and distance. To identify this top limit which is also called priceable weight, gross weight and top limit are compared. This way the most important criteria for freight charge is identified. In addition to that, factors like freight tariff are important for freight charge calculation process. Different calculation methods can be used for freight tariffs especially for customs clearance services for international shipping. Valuable goods transportation which is a common shipping method in aviation requires expensive freight charge prices.
Freight Charge in Road Transportation
Road freight charge calculation pricing policy might change based on supply-demand balance. The seasonal international cargo demand fluctuations might impact the freight charge calculation process. Other than that, freight charge calculation for road transportation considers the palette weight and freight amount. Similarly, the palette size for loading can be shown as a criterion that affects freight charge calculation process. Then, volume weight of the loading is considered for calculation. At this stage, the freight volume and the total weight balance is considered. In another stage, all data are considered to calculate the freight charge from priceable weight.
What Is Freight Charge in Export?
Freight charge in export represents the fees that needs to be paid for the transferred freights in foreign trade processes. Just like other methods, freight charge calculation in export is determined according to freight weight volume and other physical properties. In addition to all that, there are different criteria for calculation. These include whether the transportation vehicle is suitable for project needs or the transportation conditions. Similarly, the factors that might impact the customs clearance procedures must be considered.
Why Is Freight Charge Important?
It won’t be wrong to say there are lots of factors that make freight charges important in international transportation processes. The legal document called affreightment is accepted as the service undertaking. This binding contract includes the transportation price and assurance. Affreightment guarantees freight transportation under contract terms. Similarly, freight charge invoice for each project prevents any accounting problems that might arise after the completion of the project.