A Guide to Understanding All the Hidden Costs in a Freight Quote

Do you have the right questions to inquire so that you ensure to receive an all-inclusive freight quote? Do you know how to break down the prices once you have received the proposal to assure yourself that there are no hidden costs in your freight quote?.

Also, are you acquainted with the potential fees that may reflect on your final invoice? So it’s crucial to be in control of your freight shipping costs by understanding how to interpret your proposal with a proper breakdown.

Here is a self-help guide to all the costs associated with freight quote, that you definitely should be aware of; however, before getting started with this, let’s address why it is important.

A Side Tip: You can click here to discover more about freight rates & quotes instantly to compare and find the best freight quote option(s) for your business.

Find out all the hidden costs in a freight quote for getting an accurate estimate using a sea freight calculator

Imagine opening your final invoice for your freight shipment and observing an amount totaling higher than you foresaw. For some reason or other, you notice a couple of additional fees have been tacked on to your order. This not only costs heavy on your pockets but you start distrusting your shipper.

However, truth be told, there are a number of costs that even the shippers are unaware of while booking cargo. These fees may add up in the long run, essentially causing higher cumulative costs and inescapably resulting in dissatisfied customers.

Nonetheless, if you get yourself well informed on these possible hidden costs while setting up your logistics needs, you will have less of a chance of seeing surprise expenses added in your final freight shipping quote.

A quick tip: A sea freight calculator does help in evaluating all the costs to be incurred for your freight shipment, thus providing an accurate estimate. To understand how to use a  sea freight calculator, first it’s crucial to be aware of all the hidden costs in a freight quote.

Given below is a list of pointers, navigating through all the possible hidden costs in a freight quote, to help you get a more accurate estimate of your shipment price using a sea freight calculator. Let’s jump in!

  • Cargo Insurance- Do ensure that cargo insurance gets included like a separate line item. Many times if the cargo insurance is not included in a transportation proposal, it does not get included in the quotation. While evaluating international freight shipping proposals, make sure that you verify that the insurance includes freight from the source door to the destination door
  • China VAT- Even since 2013, the Chinese authorities have been imposing transportation companies within the country with VAT (value-added tax). If the freight forwarders are charged VAT directly from the carrier, then the charge will be included as an extra line item. So, ensure to confirm with your freight forwarder when you do not see a China VAT on your proposal for freight but touches China. Otherwise, you may risk being imposed an additional 6% when you are invoiced
  • Container Management Fee- Certain carriers in some of the preferred routes have also begun implementing a CMS (container management fee) in order to cover any operational cost in handling container turn time
  • Courier and Documentation Fees- When looking at your freight quote, do check if any courier or documentation fees have been included as a separate line item. This is because many freight forwarders add this fee onto the invoice, in spite of it never being included as a line item in the original transportation proposal
  • Custom Duties- Though it may seem like common sense, however not all buyers factor the costs of duty rates into their overall shipping expenditure. To avoid making the same mistake, make sure you have done your homework and talk to your freight forwarder about the duties you can expect to pay for your products. It’s a good practice to plan for higher fees and keep some of your budgeted money once you have paid your final sum
  • Custom examinations fee- Customs, normally, conduct exams targeted at specific problems or distinct shipment types- particularly dangerous cargo. Nevertheless, even if you aren’t involved in anything illegal or your products aren’t subjected to such kinds of examinations, you may still be affected by arbitrary exams. At this point, you’d have to pay a fee, and possibly even deal with more charges incurred from delayed cargo if the examination goes longer than expected
  • Demurrage- This is a fee involved in cargo that stays for too long at a destination point. Generally, you should not worry about incurring demurrage in case you’re conscious about the amount of time that you’re permitted to keep your cargo at the port- which is usually 4-7 days- both in export and import situations
  • GRI (General Rate Increase)- GRI is a surcharge that carriers add on top of their regular base rates. A GRI may occur across all or just a few trade routes during a particular time frame.

Note: Some of the carriers allude to these surcharges as GRR (General Rate Restoration ), but they similar to a GRI

  • Inland Delivery Charges- If you do not specially request to be quoted door to door with the origin and destination zip codes, then the forwarder may charge you a port to port rate. Not all freights are shipped directly from one port to the other. At times goods need to be transported overland to a port or vice verse before they get delivered to the customer. So, you must pay attention to if your freight quote comprises of the inland delivery fees or not, and should not just cover the port to port transportation
  • Overweight Containers- While shipping an FCL (full container load) of any heavy commodity, it’s essential to confirm the maximum load amount with the carrier of your choice. Overweight cargoes are subjected to additional fees
  • Pallet Fee- While shipping any loose cargo, it is vital to give your own pallets, otherwise there is a risk of being imposed a fee to have the cargo packed on a forwarder-owned pallet. If you do not provide your own pallets, it is crucial to know all charges upfront

There are other services that get considered as add-ons and you may even be required to ask for them to be included in your freight quotes. This will ensure that the freight cost that you estimate using a sea freight calculator is the final amount that you are being charged.

Make sure you ask whoever ships your goods, to be ascertained that you don’t have to pay an additional price for anything that you have not been quoted. Once you are aware of all the hidden costs in a freight quote, you can easily input the necessary information in a sea freight calculator and find out accurate freight rates.

Henceforth, being aware of the hidden costs and also knowing how to use a sea freight calculator will definitely help you plan your budget in advance, which is beneficial for your business.

Note: Your forwarder will usually supervise you through all the foreseeable charges during the time of booking. The erudition in this guide will not only enable you to factor in the added costs that you may have to encounter, but also help you to best prepare yourself from additional, unforeseeable charges.

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About FinanceGAB

Ajeet Sharma is a financial blogger and I am blogging since 2017. Financegab is a personal blog dedicated to personal finance. The main aim of this blog to help people to make well-informed financial decisions.
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