Which Factors Affect Shipping Costs?

While shipping cargo by sea is more economical than other forms of transport, it is nevertheless susceptible to the same price pressures. There is, of course, inflation, but the cost of commodities can also have a direct impact, such as the rise and fall of the cost of crude oil.

It isn’t the only factor, however, and other less obvious circumstances, which are mostly out of the shipping industry’s control, can also make a significant difference to the end price to the customer.

As you would expect, being able to carry more goods on one ship results in economies of scale, as the fixed costs are spread over more customers, and this is where a new generation of ‘superships’, so called because of their gigantic dimensions, will lower shipping costs on the long run, although not all ports are currently able to accommodate them. They are also more fuel efficient by up to 35%, which can only be beneficial when it comes to pricing.

The ports of origin and destination of the shipment both affect costs, as port fees are not standardised but set by each authority. The Terminal Handling Charges for example, due at both the point of loading and unloading for handling the cargo, can vary considerably, even more so when it comes to international shipping, because of exchange rates.

Bad weather can also be the cause for increased fees as ships may be fined by busy ports if they don’t arrive on schedule.

However, those volatile prices can be mitigated with astute business deals: some shipping rates can be fixed or capped through contracts, and freight-forwarders can negotiate discounts as well as partner with other shipping companies to consolidate shipments and avoid under-utilised containers. This allows them to smooth out price peaks and remain competitive.

For further information on vehicle shipping, contact us, phone us on +64 9 303 0075, or get a free quote.

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