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Freight rates can refer to carrying goods a distance or chartering a vessel for one voyage. Rates are determined by cargo type, size, distance, and quantity. Promotional carriage rates may be offered for certain routes or customers. Charter rates include vessel use and owner-provided staff. Rates vary by shipping company policy, cargo nature, and time of year.
The term “freight rate” can refer to two different rates, one for carrying goods a specified distance and the other for chartering an entire vessel for one voyage. Shipping industry regulators require clear quotes on freight rates, and carriers follow standards and conventions when determining the rate they charge. A carrier may also selectively offer a promotional carriage rate at a lower cost in some settings.
When transporting goods, the carrier charges a freight rate based on the type and size of the cargo, the distance and the quantity of cargo. The per unit weight rate tends to decrease with large loads and long distances, as the carrier can make more money on these transactions than by transporting small loads short distances. Format can also be important, as some loads are easier to handle than others. Containerized and bulk packaging, for example, may have different freight rates.
A promotional carriage fare may be available for certain routes, times of the year or customers. The shipper may offer a special rate to a new customer to encourage loyalty, or may provide a promotional rate when a vessel is not fully loaded and wants to get the most out of the voyage. Information on standard and promotional rates is available through shipping offices and industry publications.
In the case of a charter, the freight rate is more commonly known as “freight” only. Companies can charter entire vessels for large cargo or sensitive cargo. They pay for the use of the vessel between ports and the owner covers port dues and provides staff to handle the vessel and cargo. The contract usually includes provisions that the owner receives a bonus if the vessel arrives in port early and the client receives compensation if the vessel fails to meet the loading and unloading deadlines.
The freight rate for a rental can be a fixed rate or a per-unit-of-weight rate. Shipping companies’ policies vary and it may be advisable to ask around for quotes. The time of year and the nature of the cargo may vary in some cases. For example, cheap rates may be available when a shipper is trying to get boats out of a certain port to other ports for the purpose of fetching new cargoes, while the rate may be very high if there are few vessels in a certain port and a number of clients are competing for their services.
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