Introduction to Container Shipping Freight Structure and Surcharges

Introduction: Export customers are often confused by various fee items during ocean freight inquiries. This article summarizes the export ocean freight structure (container liner) and currently common ocean freight surcharges to help everyone better understand each fee. (The full text is approximately 2,890 words and takes about 10 minutes to read)

Part I: Ocean Freight Structure (Container Liner)

The first part of ocean freight is the Basic Ocean Freight, generally quoted in US dollars per container type. Basic Ocean Freight (O/F) is the most significant part of shipping costs. Compared to relatively fixed port local charges, O/F fluctuates significantly; prices for the same port of loading/discharge may adjust weekly. Under FOB terms, the basic ocean freight is paid by the overseas importer; under CIF terms, it is paid by the exporter.

The second part consists of various Ocean Surcharges or Additionals, generally quoted in USD. Due to various reasons related to ships, cargo, ports, etc., carriers may incur increased expenses or economic losses. To compensate for these, surcharges are added on top of the basic freight. Under CIF terms, surcharges are generally borne by the shipper, but some are collected by default, requiring prior coordination with the consignee and booking agent.

The third part includes various Port Surcharges (local charges) at the port of loading, generally quoted in RMB. These typically include document/file fees, Terminal Handling Charges (THC), information fees, seal fees, station fees, port charges, drayage fees, security fees, equipment fees, manifest fees, and VGM declaration fees, etc.

Part II: Introduction to Ocean Surcharges

This section outlines common container liner surcharges. These vary by port and carrier, so coordination with agents is necessary during booking.

Surcharges Related to Fuel Price Fluctuations:

• BAF Bunker Adjustment Factor In international shipping, vessels use large amounts of fuel. Due to oil price fluctuations, carriers charge a BAF based on actual fuel costs. Note that BAF may adjust frequently as oil prices change daily.
• FAF Fuel Adjustment Factor Generally used for Japan routes, similar to BAF but with a different name.
• EBS Emergency Bunker Surcharge An emergency surcharge added when international crude oil prices rise beyond carriers' expectations, typically during periods when basic freight cannot be increased. EBS is added on top of BAF/FAF.
• LSS Low Sulphur Fuel Surcharge Introduced to support energy-saving and emission-reduction policies. Since January 1, 2015, vessels must use fuel with a sulfur content not exceeding 0.1% m/m. Carriers charge LSS to cover the resulting increased costs.

Surcharges Related to Exchange Rate Fluctuations:

• CAF Currency Adjustment Factor (Non-Japan routes)
• YAS Yen Appreciation Surcharge (Specific to Japan routes)
• CRC Currency Recovery Charges (Specific to Korea routes)

Surcharges Related to Destination Manifest Entry:

• AMS Automatic Manifest System (Specific to the US)
• ACI Advance Commercial Information (Specific to Canada)
• AFR Advance Filing Rules (Specific to Japan)
• ENS Entry Summary Declaration (European Union rule)

Surcharges Related to Canals:

• SCS Suez Canal Surcharge
• PTF Panama Canal Transit Fee

Surcharges Related to Cargo Weight/Dimensions:

• HLA (Heavy-Lift Additional): Charged when single items exceed a certain weight, requiring special equipment or handling.
• LLA (Long Length Additional): Charged when single items exceed a certain length (generally over 9 meters, or over 6 meters for container cargo).

Other Surcharges:

• CIC Container Imbalance Charge: To compensate for the cost of repositioning empty containers due to trade imbalances.
• ECRS Emergency Cost Recovery Surcharge: For significant increases in operating costs, such as due to severe weather.
• PCS Port Congestion Surcharge: Charged when port congestion leads to increased vessel waiting times and costs.
• PSS Peak Season Surcharge: Charged during busy peak seasons.
• GRI General Rate Increase: General rate increase typically used for South American and US routes.