Freight
Content
Freight
Capt. Swaminathan Rajagopalan
Freight
• Goods carried by a vessel or vehicle, especially by a commercial carrier; cargo. • A burden; a load. • Commercial transportation of goods. • The charge for transporting goods. Also called freightage.
A CHARGE paid for carriage or transportation of goods by air, land or sea.
Freight
Goods May be transported as either: • Pre-Paid • Collect
Freight Terms, Not to be mistaken for the INCO Terms of CIF & FOB. In exchange of the freight, the carrier executes the voyage as requested by the MERCHANT.
Freight
Break bulk cargo calculations • Break bulk cargo, is cargo that is unitized, palletized or strapped. This cargo is measured along the greatest length, width and height of the entire shipment. The cargo is also weighed. Shipping lines quote break bulk cargo per "freight ton", which is either 1 metric ton or 1 cbm, which ever yields the greatest revenue. Example: A case has a gross mass of 2 Mt. Dimensions are: 2.5 X 1 X 2 metres
Freight
The tariff rate quoted by the shipping line is: USD 110.00 weight or measure (freight ton) • Step 1 • Multiply 2.5 X 1 X 2 = 5 metres Compare to the mass = 2 Mt. • Step 2 • Calculate the freight with the greater amount either the mass or the dimension. 5 X USD 110.00 = USD 550.00 • Freight would be paid on the measurement and not the weight. All shipping lines carrying cargo in a break-bulk form insist on payment based on a minimum freight charge which is equivalent to one freight ton, one cbm or one metric ton.
Freight – Surcharges
The price that a carrier, that is, a ship-owner or charterer, charges for transporting cargo is known as the freight rate. The freight rate depends on many factors, including the cost of operating the vessel (for example, crew wages, fuel, maintenance and insurance); the capital costs of buying the vessel, such as deposit, interest and depreciation; and the cost of the shore-side operation, which covers office personnel, rent and marketing. Freight rates are not all-inclusive but a subject to numerous additions
Freight
Full Container load calculations and surcharges • Freight rates for containers are based on the container as a unit of freight irrespective of the commodity or commodities loaded therein, (FAK) Freight All Kinds. • The shipping lines quote per box (container) either a 20’ Feet or 40’ Feet container. From time to time, abnormal or exceptional costs arise in respect of which no provision has been made in the tariffs. • The biggest operational expense for a shipping line is the fuel cost. • A shipping line cannot predict the movement of the US Dollar or the sudden increase of the international oil price.
Freight
• These increases have to be taken into account by the shipping line in order to ensure that the shipping line continues to operate at a profit. • These increases are called surcharges. All shipping lines accordingly retain the right to impose an adjustment factor upon their rates taking into account these fluctuations. • All surcharges are expressed as a percentage of the basic freight rate or an amount per Teu or Unit. • Surcharges are regularly reviewed in the light of unforeseen circumstances, which may arise and bring cause for a surcharge increase.
Freight
• Bunker Adjustment Factor (BAF) • "Bunkers" is the generic name given to fuels and lubricants that provide energy to power ships. The cost of bunker oil fluctuates continually and with comparatively little warning. • Example: Freight rate: Port Elizabeth to Singapore Freight rate: US Dollar: 1 250.00 per 6-M container + BAF 5.2% US Dollar 1 250.00 X 5.2% = US Dollar 65.00 Total Freight rate: U S Dollar 1 315.00
Freight
• Currency Adjustment Factor (CAF) • The currency adjustment factor is a mechanism for taking into account fluctuations in exchange rates, these fluctuations occur when expenses are paid in one currency and revenue earned in another by a shipping company. The currency adjustment factor is a mechanism for taking into account these exchange rate fluctuations. It is always expressed as a percentage of the basic freight and is subject to regular review. • Example: Freight rate: Port Elizabeth to Singapore Freight rate: US Dollar: 1 250.00 per 6-M container + CAF 6.3% US Dollar 1 250.00 X 6.3% = US Dollar 78.75 Add the two amounts together Freight rate: U S Dollar 1 328.75
Freight – Surcharges
• War Surcharge The outbreak of hostilities between nations can have a serious effect upon carriers servicing international trade even though they may sail under a neutral flag. Carriers sailing within the vicinity of a war zone may impose a war surcharge on freight to compensate for the higher risks involved and the higher levels of insurance premium, which they may be obliged to pay.
Freight – Surcharges
Port Congestion Surcharge • Congestion in a port for a period of time can involve considerable idle time for vessels serving that port. • When a ship lies idle, this creates a huge amount of loss for the ship's owner. Shipping lines therefore have the right to impose a surcharge on the freight to recover revenue lost. Another factor which influences port congestion surcharge would be labour disputes. Port congestion surcharges are calculated as a percentage of the freight rate.
Freight – Surcharges
• • • • • • • • • • • • • • • Heavy weight Surcharge. River Plate Surcharge. Low Water Surcharge. Peak Season Surcharge. Hazardous Cargo Surcharge. Low Sulphur Fuel Surcharge ISPS CSF AGS – Piracy Surcharge PIDC Container Sea Charges GOH Surcharge Suez Canal Surcharge Winter Surcharge Equipment Imbalance surcharge
Freight – Bunker Trend
Freight
In English law, the B/L is not itself the contract between the original parties; it is simply evidence of its terms. Therefore the B/L may not in all cases establish the identity of the person liable to pay freight to the carrier. It is necessary in each case to establish with whom the carrier contracted; this is because the carriage is for reward and the personal liability to pay the reward is a contractual liability. The terms upon which the goods have been shipped may not be in all respects the same as those set out in the bill of lading. It therefore does not necessarily follow that in any given case, the named shipper is to be under a personal liability for the payment of the freight.
Freight
The personal liability is that of the person with whom the performing carrier has contracted to carry the goods. This will normally be the shipper but may be shipping as the agent of the consignee, in which case the contract will be with the consignee. If for example the consignee is the owner of the goods, he is prima facie liable to pay freight for them, as being the person with whom the contract of carriage is presumed to have been made. Where goods have been shipped by a forwarding or shipping agent, who has booked on a vessel and is known to be acting for a shipper whose name has not been disclosed, the forwarding or shipping agent incurs personal liability for the freight by reason of a longestablished usage in the forwarding industry.
Freight
A contract to pay the freight will not always be implied from the fact of shipment and the issue of a bill of lading. It is possible for there to be more complex contractual schemes; the performing carrier may be in contractual relations with others as well, as for example where there is a voyage or time charter.
Freight Index – Tramp Charter
Freight – Dry Bulk Index
Freight – Container Index
Freight – When Earned
“The reward payable to the carrier for the safe carriage and delivery of the goods. At common law, no freight is payable unless the shipowner has substantially performed his obligation under the contract of carriage by tending delivery of the goods at the discharge port, and no freight is payable if the goods are lost on the voyage or if for any reason (other than the fault of the shipper) the goods are not tendered for delivery at the port of destination. If the carrier is able to deliver the goods, albeit in a damaged condition, at the port of destination, he is entitled to his freight in full without deduction for the damage, although he may be liable in damages to those interested in the goods.
Freight – When Earned
The traditional position as to when freight is earned is often varied in practice by the inclusion of special terms in the bill of lading to the effect that freight is deemed earned on loading or on signing the bill of lading. In such circumstances, the carrier will be entitled to his freight even if the goods are lost on the voyage and will be able to recover unpaid freight despite the loss of the goods.
Freight – When Earned
• A voyage charter is the hiring of a vessel and crew for a voyage between a load port and a discharge port. The charterer pays the vessel owner on a per-ton or lump-sum basis. The owner pays the port costs (excluding stevedoring), fuel costs and crew costs. The payment for the use of the vessel is known as freight. A voyage charter specifies a period, known as laytime, for unloading the cargo. If laytime is exceeded, the charterer must pay demurrage. If laytime is saved, the charter party may require the shipowner to pay despatch to the charterer. • A Contract of Affreightment is a contract similar to a voyage charter, but ship-owner undertakes to carry a number of cargoes within a specified period of time on a specified route. Agreed frequency of cargoes may require more than one ship.
Freight – When Earned
• A time charter is the hiring of a vessel for a specific period of time; the owner still manages the vessel but the charterer selects the ports and directs the vessel where to go. The charterer pays for all fuel the vessel consumes, port charges, and a daily hire to the owner of the vessel.[2] • A trip time charter is a comparatively short time charter agreed for a specified route only (as opposed to the standard time charter where charterer is free to employ the vessel within agreed trading areas).
Freight – When Earned
• A bareboat charter or demise charter is an arrangement for the hiring of a vessel whereby no administration or technical maintenance is included as part of the agreement. The charterer obtains possession and full control of the vessel along with the legal and financial responsibility for it. The charterer pays for all operating expenses, including fuel, crew, port expenses and P&I and hull insurance. In commercial demise chartering, the charter period may last for many years; and may end with the charterer acquiring title (ownership) of the ship. In this case, a demise charter is a form of hire-purchase from the owners, who may well have been the shipbuilders. Demise chartering is common for tankers and bulkcarriers.
Capt. Swaminathan Rajagopalan
Freight
• Goods carried by a vessel or vehicle, especially by a commercial carrier; cargo. • A burden; a load. • Commercial transportation of goods. • The charge for transporting goods. Also called freightage.
A CHARGE paid for carriage or transportation of goods by air, land or sea.
Freight
Goods May be transported as either: • Pre-Paid • Collect
Freight Terms, Not to be mistaken for the INCO Terms of CIF & FOB. In exchange of the freight, the carrier executes the voyage as requested by the MERCHANT.
Freight
Break bulk cargo calculations • Break bulk cargo, is cargo that is unitized, palletized or strapped. This cargo is measured along the greatest length, width and height of the entire shipment. The cargo is also weighed. Shipping lines quote break bulk cargo per "freight ton", which is either 1 metric ton or 1 cbm, which ever yields the greatest revenue. Example: A case has a gross mass of 2 Mt. Dimensions are: 2.5 X 1 X 2 metres
Freight
The tariff rate quoted by the shipping line is: USD 110.00 weight or measure (freight ton) • Step 1 • Multiply 2.5 X 1 X 2 = 5 metres Compare to the mass = 2 Mt. • Step 2 • Calculate the freight with the greater amount either the mass or the dimension. 5 X USD 110.00 = USD 550.00 • Freight would be paid on the measurement and not the weight. All shipping lines carrying cargo in a break-bulk form insist on payment based on a minimum freight charge which is equivalent to one freight ton, one cbm or one metric ton.
Freight – Surcharges
The price that a carrier, that is, a ship-owner or charterer, charges for transporting cargo is known as the freight rate. The freight rate depends on many factors, including the cost of operating the vessel (for example, crew wages, fuel, maintenance and insurance); the capital costs of buying the vessel, such as deposit, interest and depreciation; and the cost of the shore-side operation, which covers office personnel, rent and marketing. Freight rates are not all-inclusive but a subject to numerous additions
Freight
Full Container load calculations and surcharges • Freight rates for containers are based on the container as a unit of freight irrespective of the commodity or commodities loaded therein, (FAK) Freight All Kinds. • The shipping lines quote per box (container) either a 20’ Feet or 40’ Feet container. From time to time, abnormal or exceptional costs arise in respect of which no provision has been made in the tariffs. • The biggest operational expense for a shipping line is the fuel cost. • A shipping line cannot predict the movement of the US Dollar or the sudden increase of the international oil price.
Freight
• These increases have to be taken into account by the shipping line in order to ensure that the shipping line continues to operate at a profit. • These increases are called surcharges. All shipping lines accordingly retain the right to impose an adjustment factor upon their rates taking into account these fluctuations. • All surcharges are expressed as a percentage of the basic freight rate or an amount per Teu or Unit. • Surcharges are regularly reviewed in the light of unforeseen circumstances, which may arise and bring cause for a surcharge increase.
Freight
• Bunker Adjustment Factor (BAF) • "Bunkers" is the generic name given to fuels and lubricants that provide energy to power ships. The cost of bunker oil fluctuates continually and with comparatively little warning. • Example: Freight rate: Port Elizabeth to Singapore Freight rate: US Dollar: 1 250.00 per 6-M container + BAF 5.2% US Dollar 1 250.00 X 5.2% = US Dollar 65.00 Total Freight rate: U S Dollar 1 315.00
Freight
• Currency Adjustment Factor (CAF) • The currency adjustment factor is a mechanism for taking into account fluctuations in exchange rates, these fluctuations occur when expenses are paid in one currency and revenue earned in another by a shipping company. The currency adjustment factor is a mechanism for taking into account these exchange rate fluctuations. It is always expressed as a percentage of the basic freight and is subject to regular review. • Example: Freight rate: Port Elizabeth to Singapore Freight rate: US Dollar: 1 250.00 per 6-M container + CAF 6.3% US Dollar 1 250.00 X 6.3% = US Dollar 78.75 Add the two amounts together Freight rate: U S Dollar 1 328.75
Freight – Surcharges
• War Surcharge The outbreak of hostilities between nations can have a serious effect upon carriers servicing international trade even though they may sail under a neutral flag. Carriers sailing within the vicinity of a war zone may impose a war surcharge on freight to compensate for the higher risks involved and the higher levels of insurance premium, which they may be obliged to pay.
Freight – Surcharges
Port Congestion Surcharge • Congestion in a port for a period of time can involve considerable idle time for vessels serving that port. • When a ship lies idle, this creates a huge amount of loss for the ship's owner. Shipping lines therefore have the right to impose a surcharge on the freight to recover revenue lost. Another factor which influences port congestion surcharge would be labour disputes. Port congestion surcharges are calculated as a percentage of the freight rate.
Freight – Surcharges
• • • • • • • • • • • • • • • Heavy weight Surcharge. River Plate Surcharge. Low Water Surcharge. Peak Season Surcharge. Hazardous Cargo Surcharge. Low Sulphur Fuel Surcharge ISPS CSF AGS – Piracy Surcharge PIDC Container Sea Charges GOH Surcharge Suez Canal Surcharge Winter Surcharge Equipment Imbalance surcharge
Freight – Bunker Trend
Freight
In English law, the B/L is not itself the contract between the original parties; it is simply evidence of its terms. Therefore the B/L may not in all cases establish the identity of the person liable to pay freight to the carrier. It is necessary in each case to establish with whom the carrier contracted; this is because the carriage is for reward and the personal liability to pay the reward is a contractual liability. The terms upon which the goods have been shipped may not be in all respects the same as those set out in the bill of lading. It therefore does not necessarily follow that in any given case, the named shipper is to be under a personal liability for the payment of the freight.
Freight
The personal liability is that of the person with whom the performing carrier has contracted to carry the goods. This will normally be the shipper but may be shipping as the agent of the consignee, in which case the contract will be with the consignee. If for example the consignee is the owner of the goods, he is prima facie liable to pay freight for them, as being the person with whom the contract of carriage is presumed to have been made. Where goods have been shipped by a forwarding or shipping agent, who has booked on a vessel and is known to be acting for a shipper whose name has not been disclosed, the forwarding or shipping agent incurs personal liability for the freight by reason of a longestablished usage in the forwarding industry.
Freight
A contract to pay the freight will not always be implied from the fact of shipment and the issue of a bill of lading. It is possible for there to be more complex contractual schemes; the performing carrier may be in contractual relations with others as well, as for example where there is a voyage or time charter.
Freight Index – Tramp Charter
Freight – Dry Bulk Index
Freight – Container Index
Freight – When Earned
“The reward payable to the carrier for the safe carriage and delivery of the goods. At common law, no freight is payable unless the shipowner has substantially performed his obligation under the contract of carriage by tending delivery of the goods at the discharge port, and no freight is payable if the goods are lost on the voyage or if for any reason (other than the fault of the shipper) the goods are not tendered for delivery at the port of destination. If the carrier is able to deliver the goods, albeit in a damaged condition, at the port of destination, he is entitled to his freight in full without deduction for the damage, although he may be liable in damages to those interested in the goods.
Freight – When Earned
The traditional position as to when freight is earned is often varied in practice by the inclusion of special terms in the bill of lading to the effect that freight is deemed earned on loading or on signing the bill of lading. In such circumstances, the carrier will be entitled to his freight even if the goods are lost on the voyage and will be able to recover unpaid freight despite the loss of the goods.
Freight – When Earned
• A voyage charter is the hiring of a vessel and crew for a voyage between a load port and a discharge port. The charterer pays the vessel owner on a per-ton or lump-sum basis. The owner pays the port costs (excluding stevedoring), fuel costs and crew costs. The payment for the use of the vessel is known as freight. A voyage charter specifies a period, known as laytime, for unloading the cargo. If laytime is exceeded, the charterer must pay demurrage. If laytime is saved, the charter party may require the shipowner to pay despatch to the charterer. • A Contract of Affreightment is a contract similar to a voyage charter, but ship-owner undertakes to carry a number of cargoes within a specified period of time on a specified route. Agreed frequency of cargoes may require more than one ship.
Freight – When Earned
• A time charter is the hiring of a vessel for a specific period of time; the owner still manages the vessel but the charterer selects the ports and directs the vessel where to go. The charterer pays for all fuel the vessel consumes, port charges, and a daily hire to the owner of the vessel.[2] • A trip time charter is a comparatively short time charter agreed for a specified route only (as opposed to the standard time charter where charterer is free to employ the vessel within agreed trading areas).
Freight – When Earned
• A bareboat charter or demise charter is an arrangement for the hiring of a vessel whereby no administration or technical maintenance is included as part of the agreement. The charterer obtains possession and full control of the vessel along with the legal and financial responsibility for it. The charterer pays for all operating expenses, including fuel, crew, port expenses and P&I and hull insurance. In commercial demise chartering, the charter period may last for many years; and may end with the charterer acquiring title (ownership) of the ship. In this case, a demise charter is a form of hire-purchase from the owners, who may well have been the shipbuilders. Demise chartering is common for tankers and bulkcarriers.
