If a freight forwarder – the individual or company that manages your international freight shipment – gives you a rate that sounds too good to be true, then it probably is.
Many promise the world but underdeliver.
Literally.
That’s why it’s important for you to understand the costs and fees included in your forwarder’s shipping estimate.
This plain-English guide breaks down how to determine what you’re seeing in that freight quote and if that low rate is as great a bargain as it seems.
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What is a typical Freight Forwarder cost structure?
Freight forwarders often take advantage of new and uneducated shippers by offering a low price upfront only to incur endless charges later on.
That is why having even an elementary idea of the costs involved when employing a freight forwarder can help you save time and money.
And stress.
So. Much. Stress.
Let’s take a look at the charges you must know:
Cargo Type
The simplest costs to understand are the ones associated with your cargo type.
After all, you probably have a pretty good idea about the product that you’re importing.
If your product is perishable, OVERSIZED, or hazardous and requires a special container or careful handling, it’s obviously going to cost more.
Less obvious is a product that requires FDA oversight. Items like makeup and drugs typically incur an FDA filing fee.
Know your cargo type to avoid any surprises down the road.
Weight and Volume
The weight of your shipment is equally important to the volume of your shipment because either one can determine your cargo’s chargeable weight.
The cost to ship your cargo is determined by comparing the actual weight and the volumetric weight. The greater of the two is the one that is used to determine how much you will be charged.
If your goods are light, but take up a lot of space, they might be more expensive to ship than something very dense, but smaller.
[tip] Weight and volume are two important considerations people make when sourcing goods. [/tip]
Packing and Palletization
A shipping container is like a puzzle – when it’s loaded, the pieces (ie, the cargo) need to fit precisely in order to make the best use of the space.
This is achieved through proper packing and palletization.
Most forwarders offer this service at an additional charge, but you should make sure that the one you’re working with understands the legislation of the country they’re shipping to.
It’s also important to understand the different options when it comes to the containers themselves…
Container Costs
Generally speaking, containers come in two sizes:
- 20-foot equivalent (TEU)
- 40-foot equivalent (FEU)
Where your shipment gets placed depends on its size.
But what happens if you don’t require the full capacity of a container?
The fact is that most shipments don’t require a full container load (FCL), so they are combined with other shipments in a single unit and you are only charged for space your goods occupy. This is called less-than container load (LCL).
Note: Air freight containers have their own sizes.
Carrier Costs
All those charges and we’ve only just arrived at the principal cost of any shipment!
The carrier cost is the expense associated with sending your shipment by land, sea, or air and moving it to its destination port.
There are two factors that influence this cost:
- Distance Travelled
- Route Popularity
Distance traveled is an obvious influencer as it stands to reason that sending something further away is more costly than sending it to a nearby location.
But routes that are more frequently traveled tend to be less expensive than less common routes. In those cases, sending goods further might be cheaper.
Documentation Fees
There are over one hundred documents that can play a role in freight shipping.
Thankfully, there are really only nine that you need to know… Unless you’re shipping plutonium.
Pretty much every freight forwarder will know exactly what documents need to be included with your shipment and documentation fees are always included as part of your initial quote.
If your goods require special documents, your forwarder costs will be greater.
Insurance
All carriers are required to have liability insurance, but your shipment is vulnerable if it doesn’t have additional coverage.
Forwarders know this and some are so controversy-averse that they include additional insurance as part of their rate so as to avoid any quarrels with you later on.
Other forwarders simply make it available as an add-on service.
You can purchase cargo insurance from a third-party insurer if your forwarder does not offer it.
Administration Charge
Freight forwarders simplify the complex process of sending your freight where it needs to go.
For that, they take a much-deserved fee.
Think about it: the organization, coordination, and management of shipping freight takes a lot of time to perform and even longer to perfect.
Just keep in mind that a higher administration charge does not necessarily correlate with a higher level of service.
Additional Freight Forwarder charges
The more freight you ship, the more you will encounter the bane of the common shipper:
Surcharges and fees.
Additional costs can come up at any point in the shipment process, be it before, during, or even after main transit.
Common additional freight forwarder charges include the Currency Adjustment Factor (CAF) and the Fumigation Fee.
Others, like the War Risk Surcharge, are much, much less common.
You can learn more about surcharges and fees in our complete guide.
How much do Freight Forwarders charge?
The pricing structure of freight forwarders is a nuanced and multifaceted aspect of international shipping logistics. Unlike off-the-shelf products with fixed prices, freight forwarding services are highly tailored to the unique needs of each shipment. This means that determining the cost of a freight forwarder involves navigating a complex web of variables and considerations.
Freight forwarders operate in a dynamic environment where the range of services they provide can vary significantly. Some forwarders may include certain costs upfront in their pricing, while others offer these as optional add-ons, allowing clients to customize their shipping solutions. Additionally, some forwarders specialize in specific services, while others offer a broader range of logistics solutions.
In light of this, it becomes paramount for businesses to ask the right questions when seeking the services of a freight forwarder. Instead of merely inquiring about the bottom-line cost, it’s crucial to delve into the specifics of what is included in the freight quote. What services are covered? Are there additional fees for specific tasks or services? How are customs duties and taxes handled? What about insurance coverage?
In essence, the cost of a freight forwarder should be viewed not in isolation but as part of the broader value proposition that encompasses expertise, efficiency, and reliability in managing the intricacies of international shipping.
Is it best to use a cheap Freight Forwarder?
If you are considering using a cheap freight forwarder, it’s worth figuring out why they cost less than everyone else.
Some questions you might ask are:
- How far will they take my shipment in the delivery process (ie, destination port vs. factory gate)?
- What are they not offering me that others would?
- Are they reputable and have people shared their own experiences with them online?
Sometimes a service is inexpensive for a reason. It’s up to you to dig a little to figure out if that reason will negatively affect you.
How much does a Freight Forwarder cost? Get a quote online now
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For a freight estimate, you can reference the freight forwarding cost calculator:
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