Explanation of cargo value – Sea freight charges

The value of the cargo in a container is the most critical variable for logisticians to understand and manage the logistics costs and sea freight charges of the company. If you deliver your good as FOB (Free on Board), you do not need to focus on the issues we will discuss. If you use CIF (Cost Insurance Freight), read what we offer to you. For a better explanation, we refer to the “container shipping costs and cargo value” table given in “The Geography of Transportation Systems”.

Suppose that, $500,000 worth of cargo is loaded in a 40’ container from Port of Loading (POL) Hamburg to Port of Discharge (POD) Los Angeles. The cost of container transportation freight is $5,000. The share of the container transport freight is calculated as follows;

$5,000 freight / 500,000 value of the cargo  x 100 = 1 %

What does this rate tell us?

First of all, we need to know the “type of product” to comment on. Let’s assume the type of product as clothing (mid-range). Then refer to the table given in here It can be observed that this rate is higher than the high value (0.86 %) provided in the table.

After realizing this fact, the task of the logistician is to reduce the cost of freight. How can you do that?

1)    Make negotiation

Negotiation mainly depends on your cargo volume.  If you do not have enough cargo volume for the talks, what would you do? As ShipsGo, we offer you to increase your knowledge & information on this route. Just click the service finder for the details of Hamburg – Los Angeles

Learn also the possibility of shipments from/to the alternative ports. This information could help you to understand the weaknesses and strengths of the liner transport companies on this route. You can reinforce yourself before negotiating.

2)    Look for the better freight

Sometimes, freight forwarders can give better freights than liner transport companies. ShipsGo Forwarder Partnership program accepts very well-known freight forwarders all around the world. These forwarders are listed in the routes regarding their expertise. You have a chance to communicate with them to get a freight quote.