Container Charges
- Most pricing in containerisation are set by shipping conferences.
- These are companies that have formed an association to agree on and set freight rates and passenger fares over different routes.
- There are different shipping conferences for different regions of the world.
- A part from setting rates, they adopt a wide number of policies such as allocation of customers, loyalty contracts, and open pricing contracts.
Types of Container Charges
Demurrage on import and export
- Demurrage refers to costs incurred by a customer for using equipment when loaded cargo containers are left at the port terminal for longer than the allowed free time.
- Demurrage is charged when containers are still full and under the control of the shipping line, and have not been cleared through customs or picked up by the consignee.
- Demurrage charges are applied for storage of container while in the shipping line terminal/port full with cargo.
Detention on imports and exports
- Detention refers to costs incurred by the customer for using equipment beyond the given free time, typically outside of the terminal.
- Detention is charged when the carrier’s equipment is still in use by the shipper or consignee beyond the Last Free Day (LFD), regardless if full or empty.
- There are two main types of detention fees: per diem and driver detention.
- Per diem (per day) is a detention fee where a fixed rate is charged per container per day until the equipment is returned to the port or container yard.
- Driver detention refers to a fee, typically charged at an hourly rate, that a carrier may assess when driver wait time, either at the origin/pickup or destination/delivery location, exceeds the given free time for loading or unloading the truck.
Container Charges – LCL or FCL
- The terms LCL and FCL refer to the two main modes of container shipments: FCL for Full Container Load and LCL for Less than Container Loads.
- An FCL shipment, or full container shipment, as its name suggests, is a shipment that occupies the entire space of a container without having to share it with other merchandise.
- LCL, or groupage, as it is otherwise known, refers to shipments that take up only a portion of the entire container, and is shipped alongside other merchandise from other shippers in the same container.
In determining charges various container shipment statuses are considered as discussed below:
HOUSE/HOUSE (FCL/FCL)
- A full container load (FCL) is an ocean shipment in which the cargo occupies a full container (of any size).
HOUSE/PORT (FCL/LCL)
- A FCL shipment is used when a shipper bears the cost of the entire container and uses it exclusively for a single shipment, even if they do not have enough goods to fill it up.
- The unpacking of the container at destination must be carried out by the carrier and the consignee collects his cargo as LCL.
PORT/HOUSE (LCL/FCL)
- A Less Container Load/Full Container Load is a way of quoting container freight rates in which the carrier agrees to pack the container at the outset Less Container Load (LCL) but unpacking at destination must be carried out by the receiver or consignee.
PORT/PORT (LCL/LCL)
- Less Container Load (LCL) shipment means shippers share the containers with other shipments and only need to pay for the space used Less than Container Load (LCL) is a mode of shipping via ocean.
- If you don’t have enough cargo to fill up an entire container. An LCL shipment will be consolidated with other LCL shipments into one container.
- It is a way of quoting container freight rates in which the carrier agrees to pack the container on departure as well as unpack the container at destination.
Learning Activities
As a freight forwarder, you have been tasked by your clients to move the following cargos:
- Coal from Australia to EAC
- Meat products from EAC to Europe
- Flowers from EAC to Europe
- Avocadoes from EAC to Europe
- Liquefied Petroleum Gas (LPG) from Tanzania to Ghana
- Cars from Europe to EAC
- Ammunition from the US to EAC
- Heavy machinery from China to EAC
- Gold from DRC to the United Kingdom
Required
- The appropriate type of containers for each export situation. Justify your choice for the container
- The markings and labels which are found in such containers
- The determination of container charges to your clients.
Assignment
- Explain the advantages and disadvantages of containers
- Explain why a freight forwarder may opt to ship cargo in a dry container made of steel.
- Explain how an exporter of coffee would incur detention charges at the port of Mombasa as well as other related charges