Container shipment-cost structure

S.L.Ganapathi

Container shipment types

LCL/FCL also known as CFS/CY LCL/LCL CFS/CFS FCL/FCL CY/CY FCL/LCL CY/CFS LCL shipments are routed through Container Freight Stations (CFS) which are common user sheds where the cargoes are received custom examined and containerised or vice versa for imports FCL shipments are containerised at the factories/ warehouses of shippers and delivered to the lines at Yard or vice versa for imports Container Yard-CY and Container Freight Station -CFS

Empty Container Yard

Delivery Of Cargo Empty Container Container Yard

CFS

Full Container

Ship

FCL Container from Factory

no

activity

Executed by
CFS CFS

Charge nomenclatur e
CFS Charges

Collected by from shippers

CFS Only for LCL

1) 2)

Unloading of trucks Presenting for customs examination Stuffing of containers

LCL service charges/LCL THC

NVOCC/line

3)

CFS for lines

4) 5)

Movement of containers to yard Movement of Containers to ship side

CFS for line Transporters/ Port for Line

In the case FCL Port Collects its From line and line includes it in THC Line

For Both FCL and LCL-FCL containers are delivered by the shippers to Yard S/Line pays for loading unloading in liner business

( For FCL this is THC only)

6)

Loading of Containers onto the ship

Stevedores/P ort

Shore side charges for containerized shipments

Freight Rates
LCL QuotesUSD Per CBM or 1000 kilos whichever higher-the figure on which is the freight is charged is also called Revenue Ton or Freight Ton Plus LCL service charges per cbm or 1000 kilos whichever is higher also known as LCL THC

FCL Quotes
FCL Rate USD per twenty footer per forty footer Note forty footer rate is most of the time is not double of twenty footer and is marginally lower than double THC is quoted in the currency of country of origin/destination It is also quoted per twenty footer and per forty footer-in India the rate is double for forty footer In UK /Europe it is the same for both types of containers

FCL Quotes
FCL box rates Commodity Box rates In some sectors higher value cargoes attract a higher box rate as compared to low value cargoes Freight All Kinds Box rate (FAK box rates) In this case whatever cargoes one puts inside the box will the rate per unit will be the same

FCL Quotes
Exceptions to Regular rates Dangerous Goods Special containers e.g. Open tops /Flat racks/ refrigerated container Over Dimensioned cargoes in containers

Surcharges
BAF or Bunker Surcharge Ships normally runs on Heavy Fuel Oil (Furnace Oil) and the auxiliary engine (for lighting and energy) runs on either Light Diesel Oil or normal diesel oil As the price of these oils go up the lines recover the increase in the form of a surcharge the amount being determined on the basis of distances This is normally on per container basis Currency adjustment factor or CAF When a ship operates in a certain trade routes the ship spends its expenses in various currencies the revenue is universally in dollars- if the currencies of expense strengthen against dollars the lines will protect revenue by a positive CAF Some Charges specific to US trades ISPS-Internal Port Security Charge ACD- Advance Customs Declaration Charges

Surcharges
Temporary Surcharges Congestion Surcharge- specific to a port which is congested and there is waiting period for ships/containers Peak Season Surcharge In the India US trade the peak season is from June to October- this gives the chance for the lines to realise higher freights

Miscellaneous Charges
B/L Fees- at the time of exports A nominal sum ranging from Rs 500 to Rs800/- is collected as B/L fees to cover-this is linked to the B/L and not number of containers A) Stationery costs B) Admin costs B/L is generated by the lines through their systemsmay be web enabled At the time of Imports A) Delivery Order fees is collected by agents to cover manifesting and agency efforts B) Container Cleaning & Administration charges are also collected These charges are in the nature of supplementary revenues and insulate cost of efforts from market fluctuations of freight

The mechanics of Price fixation

Tariff by conferences and rate agreements Conferences and Rate agreements are a grouping amongst the shipping lines operating in a particular trade for self regulation on tariff matters and for approaching common problems with authorities for particular trade routes In the era of restricted markets they were a powerful body and the rates they set used to be mandatory Nowadays they do not regulate rate applications but help in determining surcharges/shore side charges etc One of the oldest conference system is India Pakistan-Bangladesh UK/Europe conference consisting of several sub divisions this is probably 100 years old Tariff by lines operation within a band Open Tariffs Spot rates versus contract rates Shipping Contracts is between very large shippers/forwarders and the lines This has rate specified and period specified with Minimum Quantity Commitments (MQC) Sometimes discounts are also offered on deferred basis after the shipper ships the committed quantity

Break Bulk Liner shipping

Cargo Delivery In packages Port Trust Shed

Movement of cargo To ships side Loading onto the ship

Break Bulk Liner Shipping- cost break up

Sl.No Activity

Performed by Port

Charge nomenclat ure Port Charge/ Wharfage

Paid by

Collected by Port Trust

Offloading cargo from trucks and stacking Presenting for Exam and repacking Carting the goods to the ship side Loading the goods onto ships

Shippers

Port

Port

Shippers included in freight

Stevedore s employed by Lines

Included in freight

Lines

FCL Versus LCL

We classify the goods as LCL if the goods are delivered at the CFS or taken delivery off at the CFS and Containerization or devanning at the CFS in the case of Exports and imports respectively Even in the case of a consignment which is enough to fill the containers this happens because many a times the factories/warehouses are not equipped to handle containerized cargoes But most of the times small lots which are not enough in volume/ weight to fill a container is taken to CFS and clubbed with other cargoes The Question is when should one treat a lot as FCL or LCL

Sl.no 1) 2)

Activity and Cost Item Off Loading trucks and Stacking at CFS Presentation for customs exam ,opening and sealing Vanning of containers Movement of empty /full finally to CY Off loading at CY

FCL N N

LCL Y Y

3) 4) 5)

N N Y

Y Y Y

6)
7)

Movement to ship side and loading on ship

Unloading at disport and movement to yard

Y
Y

Y
Y

8)
9) 10) 11) 12)

Movement from yard to CFS

Loading on transit vehicles Devanning of containers at CFS Presentation for customs exam at CFS Loading of Domestic Trucks

N
Y N N N

Y
Y Y Y Y

Activity Chart comparison FCL vs LCL