1. LOGO CHAPTER 7 Freight rates

2. www.1ppt.com 目 录目 录目 录目 录 The constituents of the freight rate Factors influencing the formulation of freight rates A ir freight rates Theory of freight rates C anal and inland waterways freight rates I nternational road haulage freight rates I nternational rail services rates M aritime container rates S ea freight rates C alculation of freight rates R oyal Mail International

3. 7.1 Theory of freight rates Freight is the reward payable to the carrier for the carriage of goods in a mercantile or recognized condition ready to be delivered to the merchant.

4. The pricing of air or sea transport services, usually in combination with land transport services, is dependent on the forces of supply and demand, but the factors affecting both supply and demand are perhaps mjore complicated than is the case of most other industries and services. The demand for a particular international transport service mode(s) is basically derived from the demand for the commodities carried and is, therefore, affected by the elasticity of demand for these commodities.

5. The price eventually fixed for a chartered vessel or aircraft depends largely on the relationship between buyers and sellers. Where both groups are numerous and have equal bargaining power, and where demand is fairly elastic, conditions of relative perfert competition prevail. Under these conditions for chartered tonnage, prices are fixed by the ‘ haggling of the market ’ and are known as contract prices. The market for tramp charters operates under such conditions and the contract is drawn up as a agreement known as a charterparty.

6. Under these conditions, the rate structure for tramps is a very simple product and emerges from the competitive interplay of supply and demand. Chartering can also extend to Ro-Ro vehicles in the trades and markets beyond. The shipper/freight forwarder can charter a portion of the vehicle from the road operator either on a regular or spasmodic basis.

7. Air freight rates operative on regular scheduled international services are decided collectively by the airlines through the IATA mechanism which adopts policy of parity on the level of rates on individual services/routes. The rates reflect market conditions and service cost. A major share of the air freight market is now conveyed under agent sponsorship involving consolidation arrangements and integrators.

8. Overall, a properly compiled tariff should encourage the movement of all classes of cargo to ensure the best balance between revenue production and the full utilization of the transport unit.

9. Rate making has changed significantly in recent years as a result of the development of multi- modalism. No longer is the rate based on one carrier on a port-to-port or airport-to-airport basis;it also involves two or three carriers providing a dedicated door-to-door service featuring one overall composite rate and the sea/land-bridge from the Far East to North America using the gateway ports of Vancouver, Los Angeles, Seattle and double-stack contrainer trains.overall, the rate would feature the following: 7.2 The constituents of the freight rate

10. Consignor premises and collection to Ipoh, based on zonal road rate charge. Processing of cargo/handling/packaging/documentation at Ipoh.. Agents ’ charges including customs formalities.

11. Rail journey Ipoh to Port Klang. Handling charges to Port Klang raised by the port authority to cover transhipment costs. Shipowner ’ s freight costs Port Klang to Port Dubai.

12. Handling and transhipment charges at Port Dubai to convey goods from port to airport; these are raised by the port authority and agent. Handling charges at Dubai Airport, including documentation and the agent; these are raised by the airport authority and agent.

13. Air freight charges from Dubai to Frankfurt raised by the airline. Handling/documentation/customs import duty at Frankfurt Airport. These are raised by the airport authority and the agent. Delivery by rail or road to consignee ’ s warehouse; rail charges raised by the German railways; and road charges raised by road hauliers.

14. Basically, the tariff raised for a consignment can embrace a number of elements other than the sea, air, plus inland transport tariff and these are listed below.

15. Tariff cargo rate. The customs clearance charge. Freight forwarder ’ s commission. Customs duty.

16. Disbursements. Cargo insurance premium. Delivery/collection charge. Transhipment charge.

17. Documentation charge. Demurrage. Handling cost. Wharfage charge.

18. Cargo dues. Rebate. Bunker or fuel surcharge. Currency surcharge.

19. Surcharges are usually raised for heavy lifts such as indivisible consignments and on excessive height or length of Ro-Ro rated traffic, together with any other traffic where special facilities are required.

20. 7.3 Factors influencing the formulation of freight rates We will now examine the salient factors which influence the formulation of freight rates.

21. Competition. Keen competition on rates exists among various modes of transport. For example, in the UD-Europe trade, competition exists amongst air freight agents offering consolidated services, Le Shuttle (Euro Tunnel), ISO containerization in the Asia/Europe, Asia/North America and Europe/North America trades and international road haulage.

22. The nature of the commodity, its quantity, period of shipment(s) and overall cubic measurements/dimensions/value. The origin and destination of the cargo. The overall transit cost.

23. The nature of packaging and convenience of handling. The susceptibility of the cargo to damage and pilferage. The general loadability of the transport unit.

24. Provision of additional facilities to accommodate the cargo, namely heavy lifts, strong room, livestock facilities, etc. The mode(s) of transport.

25. Actual routeing of cargo consignment. Alternative routes tend to exist, particularly in air freight, with differing rate structures and overall transport costs. Logistics-the supply chain value added benefit.

26. 7.4 Air freight rates The formulation of air freight rates is controlled by the International Air Transport Association(IATA) insofar as major world airlines are affiliated to it, representing approximately 98 percent of international air freight services.

27. International air cargo is charged by weight, calculated either as actual gross weight or in equivalent volumetric units, whichever is the greater. Thus air cargo is charged by weight except where the volume is more than 366 in3/kg. In such cases, volumetric charges apply and each unit of 366 in3 is charged as 1 kg. To calculate this, the maximun dimensions of the piece should be multiplied together to give a volume in cubic inches.

28. This volume must be divided by 366 and the result will be the vulumetric weight. If this is more than the actual weight, then the volumetric weight will be the chargeable weight. Where the consignment consists of pieces varying indensity, the volumetric calculation will be based on the whole consignment. For metric measurements, 6000 cm3 = 1 kg.

29. A brief examination of each air freight rate classification now follows: Specific commodity rates. Classification rates (surcharges and rebates). Valuation charge.

30. General cargo rates. Unit load device (ULD) rates. Cabotage. Express handling units.

31. 7.4.1 Charges Payment of charges. Charges forward. Cash on delivery. Disbursements. Perishable cargo.

32. Mixed cargo. Packaging of the consignment will be charged on the basis of the highest rated article in the consignment. Cargo subject to regulations relating to the carriage of dangerous goods must be offered separately, and clearly indicated in the Shipper ’ s Declaration.

33. 7.4.2 Air freight consolidation

34. 7.5 Canal and inland waterways freight rates The portion of the international transit conveyed by canal will have a tariff based on distance, commodity type, transhipment cost, handling charges and any other miscellaneous charges.

35. Distribution of international trade by inland waterway based on the major European ports is very extensive on the Continent for a variety of reasons. Rates are based on weight or cubic measurement and vary by commodity and trade. It is a highly competitive method of distribution for certain commodities and/or trades and one which is likely to continue to expand as the system is modernized and further developed.

36. 7.6 International road haulage freight rates The rates charged to the international road freight forwarder to convey the vehicle and/or trailer on the vehicular ferry are based on the trailer/vehicle length, and whether it is empty or loaded, accompanied or unaccompanied.

37. To the shipper using the international road freight forwarders servicemuch of which is groupage traffic-the actual rate is based on the cubic measurement or weight of the cargo, whichever produces the graeater revenue.

38. 7.7 International rail services rates Details of the international rail service rates are given below: Cargo wagons. Groupage services offering collection and delivery between UK fretght villages and key industrial and commercial centres.

39. Purpose-built car transporter wagons in complete train load formation. Rate are negotiated direct with suppliers to move the cars between factories and distribution points. Maritime ISO container trains. Rates are negotiated with the container operators to convey TEUs between seaport and container terminals usually in complete train load formation.

40. Intermodal services, the UK and the Continent. This involves 1200 intermodal wagons operating between UK-based rail Euro terminals and 15 Continental industrial centres. The wagons are 2.77 m high and 2.5 m wide and refrigerated units are 2.75 m high and 2.6 m wide. They can accommodate swap-bodies and containers in the form of tilts, tanks, reefers, flats, dry boxes, etc. rates are based on a range of options to meet shippers ’ needs including the chartering of wagon space on a regular or irregular basis, to the chartering of a complete train.

41. The Le Shuttle rate for the road haulage vehicle travelling between the portals will be based on the vehicle unit. Hauliers who can guarantee a certain volume of business annually will be given a discounted rate.

42. 7.8 Maritime container rates The mega container operator with a fleet in excess of 250000 TEUs tends to formulate their rate structure on three factors: the cost of the services; the value added benefit the service provides to the shipper; the opportunities in the market place for containerized goods.

43. An illustration of consolidator rates strategy under NVOCC is given below: Shipowner rate 50 individual shipments of 2 tonne at LCL rate of US ＄ 60 per tonne charged by the shipping line(US ＄ 60*100 tonne) US ＄ 6000. Consolidator rate

44. 50 individual shipments of 2 tonne at consolidator rate of US ＄ 30 per tonne(US ＄ 30*100 tonne) US ＄ 3000 Total Rate Difference US ＄ 3000

45. Rate per tonne charged by consolidator to individual Shippers(50 shipments at 2 tonne = US ＄ 5000) US ＄ 50

46. Saving per tonne to shippers(i.e. US ＄ 60- US ＄ 50) US ＄ 10

47. Margin of profit per tonne to consolidator (i.e. US ＄ 50- US ＄ 30) US ＄ 20

48. Saving to shippers (50 shipments at 2 tonne US ＄ 6000 Shipowner ’ s rate-50 shipment at 2 tonne US ＄ 5000 Consolidator rate) US ＄ 1000

49. Profit to consolidator US ＄ 2000

50. The above demonstrates a situation where the shipowner ’ s LCL rate per tonne is US ＄ 60, whereas the NVOCC consolidator rate to shippers is US ＄ 50, yielding a profit to the consolidator of US ＄ 20 per tonne on the basis that the wholesale rate is US ＄ 30 per tonne quoted by the shipowner.

51. 7.9 Sea freight rates In more recent years there has been a tendency in an increasing number of liner cargo trades to impose a surcharge on the basic rate. This includes bunkering or fuel surcharge, currency surcharge and finally surcharges raised on heavy lifts such as indivisible consignments or on excessive height or length of Ro-Ro traffic.

52. 7.10 Calculation of freight rates To illustrate the calculation of the freight rate applicable to all transport modes, an example is given below ： Consider the despatch of the following luxurt food items from Birmingham to Milan; all items are packed in tri-wall cartons: 6 cartons 120*80*80 cm; weight of each carton 50 kg

53. Freight rates are: Air ￡ 2.50 per chargeable kg Sea US ＄ 150 per tonne W/M (assume ＄ 1.8 = ￡ 1) Road ￡ 200 per 1000 chargeable kg

54. Chargeable weight/volume ratios for each mode should be assumed to be: Air 6 CBM = 1000kg Sea 1 CBM = 1000 kg (CBM = cubic metre) Road 3 CBM = 1000 kg

55. Air-Volumetric- 12*80*80 One carton = ————— kg 6000 12*80*80 Six cartons = 6 * ————— kg = 768 kg 6000

56. Air freight rate — ￡ 2.50 per kilogram Total air freight volumetric — 768 kg * ￡ 2.50 = ￡ 1920

57. Weight 1 carton 50 kg 6 cartons, 6*50 kg = 300 kg Air freight rate — ￡ 2.50 per kilogram Total air freight — weight = 300 kg * ￡ 2.50 = ￡ 750 Sea — rate — US ＄ 150 per tonne (1000 kg) Rate sterling US ＄ 150 / 1.8 = ￡ 83.33 per tonne Rate sterling per kilogram ￡ 83.33 / 1000 = ￡ 00.08

58. Volummetric 12*80*80 1 carton = ————— kg 6000 6*12*80*80 6 carton = —————— kg = 4608 kg 6000

59. Sea freight rate — ￡ 00.08 per kilogram Total sea fright rate volumetric 4608 kg * ￡ 00.08 = ￡ 368.64

60. Weight One carton = 50 kg Six cartons, 6*50 kg = 300 kg Sea fright rate — ￡ 00.08 per kilogram Total sea freight rate = 300 kg * ￡ 00.08 = ￡ 24.00

61. In some trades the rate would be based on the nearest tonne, in which case the volumetric rate would rise from 4608 kg to 5000 kg and yield ￡ 416.65, and the weight from 300 kg to 1000 kg to product ￡ 83.33.

62. Road Rate ￡ 200 per chargeable 1000 kg Road rate per kilogram ￡ 200 / 1000 = ￡ 00.20 Volumetric

63. 12*80*80 1 carton = —————— kg 3000 6*12*80*80 6 carton = ——————— kg = 1536 kg 3000

64. Road freight rate ￡ 00.20 per kilogram Total road freight 1536 kg * ￡ 00.20 = ￡ 307.20

65. weight 1 carton 50 kg 6 carton, 6*50 kg = 300 kg Road freight rate ￡ 00.20 per kilogram Total road freight rate 300 kg * ￡ 00.20 = ￡ 60.

66. Most carriers would calculate the road freight when mention is made of ‘ per 1000 kg ’ chargeable on the basis of rounding up to the nearest 1000 kg.hence the volumetric would rise from 1536 kg to 2000 kg yielding ￡ 400, and the weight from 300 kg to 1000 kg producing ￡ 200.

67. The carrier would charge the volumetric or weight rate which will yield the highest income. Accordingly, in the example the answer would be as follows:

68. Air (volumetric) ￡ 1920 Sea (volumetric) ￡ 364.64 ( ￡ 416.65, nearest tonne) Road (volumetric) ￡ 307.20 ( ￡ 400, nearest 1000 kg).

69. An alphabetical list of salient freight rates is given below: Ad valorem. This is based on the declared value of the cargo whereby merchandise declared at ￡ 1000 with 2.5 percent ad valorem rate would be charged ￡ 25. Antiques. Antiques including art treasures require special packaging by an accredited company and special freight rates apply. Freight forwarders tend to specialize in this business.

70. Bloodstock. This involves the movement of racehorses. Special arrangements and rates apply by air and Ro-Ro ferry. All must be accompanied by a groom. Box. A container rate. Commodity. Commodity box. A container rate.

71. Consolidated. The rate is for consolidated consignments usually based on W/M option. Also termed the ‘ groupage rate ’. Dangerous cargo. Conveyed under ADR, RID, IMO and IATAregulations, involving a rate about 50 percent above the general cargo rate. Dead freight. This usually arises when a charterer fails to provide a full cargo for a ship.

72. Express Air Freight Service. For packages, documents, usually involving couriers. FAK(freight all kinds). This rate applies to all types of cargo irrespective of commodity type. Fixture. chartering a vessel Groupage. See consolidated entry.

73. Household effects. Removal of household furniture. Special packaging and rates apply. Some agents specialize in this business. Indivisible loads. Such consignments are of excessive weight or dimensions and require special handling equipment and arrangements.

74. Livestock. Special rates and arrangements apply. Lump sum freight. This is an amount payable for the use of the whole or portion of a ship. Pallets. Rates applicable to palletized cargo. Postal. There is a wide variety of postal services ideal for documents, small packages and samples.

75. Project forwarding. This involves the coordination through a freight forwarder of all the international transportation arrangements of all products relative to a major capital project such as a new airport terminal, power station, etc.

76. Rebate. A discount on a published rate attained through negotiation on a guaranteed volume over specified period, etc. Ro-Ro rates. Applicable to road haulage movement. Trade vehicles. Rates involving the movement of trade cars, lorries, buses, etc. W/M. Option weight/measurement ship option based on weight or measurement evaluation.

77. 7.11 Royal Mail International Royal Mail International (RMI) operates a strategic business witin Royao Mail. Overall, it is the foremost UK based international carrier and has effective links with the world ’ s postal administrations and offers a guaranteed delivery to 225 countries.

78. Thanks For Your Attention The End