In international sea freight, shipping rates are not static, but are constantly changing. Especially in recent years, with the changes in the world economy, shipping rates have also been ups and downs and unpredictable. Therefore, changes in ocean freight rates have become a focus of great attention for international sea freight. So what are the factors that affect the fluctuations of international sea freight rates?
First, transportation costs
In the process of providing transportation services, costs such as purchasing facilities and equipment, fuel spare parts, hiring labor, setting up management agencies, etc. are incurred, collectively referred to as transportation costs. From the perspective of value theory, value determines price. From the perspective of shipping companies, a large part of the reason for setting freight rates is to cover costs, so transportation costs are the main factor affecting freight rates.
In the field of shipping, transportation costs can be divided into: capital costs, operating costs and voyage costs.
(1) Capital cost
Capital cost refers to the actual cost of purchasing a ship, which is the most basic cost of the ship, including loans, interest and taxes when purchasing the ship. Generally speaking, the cost of each voyage includes the capital cost of the ship, operating costs and voyage variable costs. When estimating voyage costs, it can be based on annual capital cost calculations. The annual capital cost can be equivalent to depreciation expense, and the annual depreciation amount is the ratio of the ship’s capital cost to the ship’s economic life. Further, the daily depreciation amount can be calculated. In the short term, the cost of capital can be considered a fixed cost.
(2) Operating costs
Operating costs refer to the recurring maintenance costs required to maintain a ship in seaworthy condition. Regardless of whether the ship is shipping or not, this part of the cost must be spent for its operation, so it is also called operating expenses.
Operating expenses mainly include: crew wages and training expenses, labor insurance, welfare benefits and other expenses, ship insurance premiums, insurance and indemnity expenses, etc., ship maintenance expenses such as painting fees, maintenance fees, spare parts fees, etc., lubricating oil expenses, Material costs include all expenses incurred by the liner company in setting up various management departments and agencies to engage in management work such as scheduling, business, finance, maintenance, and safety supervision required for operations.
Operating costs are incurred whether the ship sails or not, so operating costs are also fixed expenses.
(3) Voyage cost
Voyage variable costs refer to the costs incurred by a ship to engage in transportation on a specific voyage. Voyage variable costs include fuel costs, port usage fees, channel fees, tonnage taxes, berthing fees, agency fees, pilot fees, tugboat fees, cargo handling fees, canal tolls, crew navigation allowances, etc. Voyage costs are variable costs in the case of unscheduled routes and can be regarded as fixed costs in the case of scheduled routes.

Second, the structure and competition of the shipping market
The structure and competition of the shipping market are also one of the main factors affecting freight rates. Under different market competition structures, shipping companies need to set different freight rates to adapt to the needs of the market and competition, so as to obtain maximum benefits. The benefits mentioned here of course refer not only to operating income, but also to market share, the company’s long-term economic benefits, etc. Freight rates can be said to be an important part of the competitive strategy of shipping companies, so the competition structure of the shipping market has become another important factor affecting freight rates.
Third, the type and quantity of goods
The type and quantity of goods are also important factors affecting freight rates. Different goods have different properties and characteristics, which affect the ship’s load capacity and cabin capacity utilization, so the freight rates are also different. Special requirements for cargo handling, the ease of damage to the cargo, the possibility of the cargo being stolen, etc. These possible additional costs must be reflected in the freight rate.
In container transportation, freight rates on certain routes also vary depending on the cargo. Shipping companies will provide more favorable freight rates for more stable cargo flows and large quantities of goods. In addition, the special requirements for cargo handling, the ease of damage to the cargo, and the likelihood of the cargo being stolen will all be reflected in the freight rate.

Fourth, route and port conditions
Different routes have different navigation conditions. For example, some routes need to pass through the Panama Canal, and some routes need to pass through the Suez Canal. Different navigation conditions have different impacts on the transportation costs of ships, so they will be reflected in different freight rates. . In addition, the length of the voyage, the weather conditions on the route, the safety of the route, such as whether there is a war or pirates along the route, will all be reflected in the freight rate.
Port conditions that affect freight rates include port loading and unloading rates, port usage fees, port loading and unloading equipment, berth conditions, loading and unloading efficiency, management level, congestion and safety, etc.

  1. Terms of transportation contract
    The transportation conditions stipulated in the contract, such as freight payment method, cost commitment, carrier’s responsibility range, etc., will all affect the freight price.
    There are also other factors that have an impact on sea freight rates, such as the quality of shipping services and the company’s own business goals. The quality of transportation services provided by shipping companies is high. Even if they set relatively high freight rates, customers will still feel that they are worth their money. Different shipping companies will have different business goals, and under the guidance of different business goals, they will set different prices. If a company pursues a large market share, it will choose a low-price strategy; if a company pursues a high-quality image, it will choose a high-quality service and high-price strategy.
    Factors Affecting U.S. Ocean Freight Rates
    U.S. ocean freight is a very important part of international trade, which directly affects the cost and profit of goods. Therefore, it is necessary to understand the factors that affect U.S. ocean freight rates.
    Nature of goods: The nature of goods is an important factor affecting ocean freight. For example, special goods such as dangerous goods, perishable goods, and fragile goods require special handling and packaging, which will increase freight costs. In addition, the density and volume of goods will also affect shipping costs because they are directly related to the shipping space and weight of the goods.
    Transportation distance and route: Transportation distance and route are another important factor affecting ocean freight. Generally speaking, the longer the transportation distance, the higher the shipping cost. In addition, different routes will also have different shipping charges. For example, some routes may pass through multiple ports and require multiple loading and unloading, which will also increase freight costs.
    U.S. shipping companies and port charges: Shipping companies and port charges are also one of the factors that affect ocean freight. Different shipping companies have different charging standards and policies, which will directly affect the freight. In addition, port fees will also increase the cost of goods, including handling fees, warehousing fees, taxes, etc.
    U.S. market competition: Market competition is also a factor affecting ocean freight rates. If competition is fierce on a certain route, shipping companies may lower freight rates to attract more cargo. Conversely, if there is relatively little competition on a certain route, shipping companies may increase freight rates to increase profits.
    U.S. Economic Factors: Economic factors are also a factor that affects ocean freight rates. For example, economic growth and increased trade activity may lead to increased demand for freight, pushing up freight rates. Conversely, an economic downturn and reduced trade activity may lead to lower demand for freight, thereby lowering freight rates.
    In short, there are many factors that affect sea freight, and these factors interact and influence each other. These factors must be taken into consideration when developing a shipping strategy, and corresponding measures must be taken to reduce costs and increase profits.

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