How to Calculate Sea Freight Rates

If your cargo needs to be shipped by sea, you’ll want to know how to calculate sea freight rates. When it comes to sea freight, there are two key methods to choose from and a few factors that will influence your decision. Below, our experts explain the difference between Full Container Load and Less-Than Container Load shipping and help you calculate your sea freight rate. 

Table of Contents

What Is A Sea Freight Rate?
What Is FCL Shipping?
- Cost of FCL Shipping
What Is LCL Shipping?
- Cost of LCL Shipping
- How To Calculate the CBM For Sea Freight
Which Is Better? FCL vs LCL
- When To Choose FCL
- When To Choose LCL
How Many Pallets Fit In A Shipping Container?
How To Calculate Sea Freight Rates
- Get A Quote

What Is A Sea Freight Rate?

A freight rate refers to the cost of sending cargo from point A to point B. So, how are freight costs calculated? The price will depend on the type of transportation required to ship the goods - road, air, or sea - as well as what kind of cargo is being shipped, the weight and volume of the goods, the origin of the goods, and their distance from the required destination. In this article, we’re focusing on all things sea freight.

A sea freight rate tells us how much it will cost to send cargo from point A to point B via the ocean. Couriers & Freight ship the following items by sea:

• Beer, wine, and spirits.
• Chemicals, fuel, fertilisers, gases, and oil.
• Clothing, furniture, household goods.
• Telecommunications technology.
• Computers, computer parts, servers, and electronic equipment.
• Cars, motorbikes, and boats.
• Food and pharmaceuticals.
• Face masks, gloves, protective clothing.
• Large, heavy, high-value, or critical pieces of equipment.
• Cars, car parts, tractors, and trucks.

The total sea freight rate will include the below costs:

• Sea Freight - This is your per container cost (for Full Container Load ‘FCL’ shipments) or your per cubic meter cost (for Less-Than Container Load ‘LCL’ shipments)
• FCL/LCL - The cost of the container you select
• On-Road Transit - Cost of driving goods to and from the port/dock
• Documentation - For the clearing process
• Terminal - Cost for the handling of your goods at the port
• Customs - The cost of customs clearing processes
• Security - The cost of protecting your goods
• Insurance - The sea freight insurance charge to cover your goods
• Duties/Taxes - Country taxes and duties to be paid in accordance with the distribution of duties
• Bunker Adjustment Factor - Fuel costs
• Currency Adjustment Factor - Currency and exchange rate charges
• Delivery Cost

So, as you can see from point one in the list above, you’ll need to decide which form of shipping will be required for your goods. There are two options: Full Container Load (FCL) and Less-Than Container Load (LCL). 

What Is FCL Shipping?

FCL shipping means the container will be exclusive to your shipment. In other words, your goods will be the only ones sent on that container, so you won’t share the space with other shipments. This also means you will bear the cost of shipping the entire container, even if you don’t have enough goods to fill it. 

Cost of FCL Shipping

For FCL shipments, you’ll be charged a flat-rate fee per container. The main container sizes are 20-foot shipping containers, 40-foot shipping containers, and 40-foot high cube containers.

The cost will be decided based on various factors, such as the volume of goods, point of origin, destination, and time of shipment. If you don’t have a set contract with the shipping line, your best bet is to go with a freight forwarder who will have access to certain volume agreements and may be able to offer you discounted rates.

What Is LCL Shipping?

Now that we’ve covered FCL shipping, what is LCL in shipping terms? LCL shipping is used when your cargo won’t take up an entire container. This approach is generally better for companies with smaller shipments. There are specialised LCL partners at docks and ports worldwide who will purchase a full container and load it with your cargo and other shipments, and charge you accordingly. 

Cost of LCL Shipping

For FCL shipments, the cost is set at a flat rate. When it comes to LCL shipping, the cost is calculated based on the space your goods take up in the container. Usually, the minimum space cargo can take up is 1 cubic meter (CBM). Even if it takes up less space than that, you’ll still be required to pay this minimum fee.

Note that the total weight should not exceed 1 ton. If the cargo weight exceeds 1000kgs (1 ton), then the cargo will be assessed based on weight. In other words, the freight forwarder will charge you based either per CBM or per 1000kgs, whichever is higher.

Visit this link for more on How to Calculate Your Volumetric Weight.

There are often other charges involved with LCL shipping, including chassis fees (from trucks that carry the shipment in and out of the ports), warehouse charges, and handling fees.

How To Calculate CBM For Sea Freight

CBM is calculated by multiplying the length, width, and height of the package.

To make the calculation as easy as possible, ensure the units of measurement are converted to meters. 

Which Is Better? FCL Vs LCL

When To Choose FCL

FCL will generally be a better option when you have enough goods to fill the entire container. As your rate will be determined per container, you’ll want to use this method when shipping large items.

However, FCL is also a cost-effective method if you’re shipping an array of smaller items that can be sent at once. Rather than worrying about organising several LCL shipments, putting it all together in one shipment will be more efficient. This way, you’ll cut costs because you’ll only need to pay one set of handling and delivery charges.

FLC shipping can help to protect your cargo from damage as your goods won’t be mixed in with other items. You’ll also avoid having your goods handled excessively. As the container will contain only your shipment, it will likely be sealed at the warehouse and only opened when it arrives at its destination. This therefore also cuts transit time, as you won’t be waiting for other goods to be sorted and unloaded. 

When To Choose LCL

If you need to ship smaller volumes more regularly, LCL shipping might be the best option for you. LCL offers weekly shipments, meaning you can ship in-demand goods quickly and frequently.

You’ll also cut warehouse costs by using LCL shipping. Shipping out small collections of goods frequently means you won’t be storing stock in a warehouse while you wait to fill an FCL shipment.

However, it’s important to note that LCL costs are generally higher, due to the additional charges mentioned earlier, as well as insurance costs. 

How Many Pallets Fit In A Shipping Container?

To give some context for where your goods will fit best, it’s helpful to understand the cubic capacity and weight limit of shipping containers. You may also be wondering, how many cubic meters in a 20-foot shipping container? And how many cubic meters in a 40-foot shipping container? The below table breaks it all down. Note that we look at the two most commonly used pallet variations here.

How To Calculate Sea Freight Rates

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