The two biggest questions that come to your mind when you are considering shipping from China to US are the freight rate and transit time. The import and the export trade market are no longer obscure as dealings have been made transparent in subsequent years. The sea freight rates between the two nations are also becoming pellucid. Although, there are times when sea freight increases greatly and times when it reduces drastically. Using a freight forwarder from China to the US will help you avoid likely problems faced by many importers and they take proactive steps where necessary. In this article, we are going to be discussing the top factors affecting the increase and the decline of the sea freight rate.
The nature and quantity of the goods
The freight rate corresponds to the type of goods in transits; it varies according to the type of goods. Freight rates are usually high for goods such as foodstuffs, livestock, dangerous goods, and other valuable goods. When dangerous goods are shipped with other general goods from China to the USA, the freight rate of dangerous goods will twice the price of normal goods. Shipping of large-scale equipment, often times the machine is out of size and when this is so, we say oversize cargo or OOG. Shipping of this equipments occupies a lot of space in the cargo because it has extra length width and height. This equipment will be placed on top of the vessel which automatically results in expensive sea freight. When an importer is ordering more than one container on a single voyage, it affects the sea freight rate. It is best for an importer to allow his Chinese freight forwarder and the local shipping company to negotiate shipping cost with the career when has more than five 49-foot containers on a voyage.
Location and port condition
The port depth, the condition of loading and unloading, tariff level of the port, the port’s billing distance, voyage operation time and length, is there need to pass the canal, the route, availability of fuel port, and prices of local oil are the difference between the origin of the goods and the destination port. There are many factors affecting route costs and operational economics. The ship operator can get better benefits at a lower price if the port and the route conditions were better, the freight rate will equally be lower. The chances of re-shipment and the level of freight rate may also be affected by the difference in the destination of the goods. When the distance of the original port is far from the destination port, the freight rate is higher, but when the distance is relatively short the price is not expensive.
The government protects and intervenes in the shipping industry especially the international shipping industry. The various measure taken by the government will affect the sea freight rate. Some countries’ government operate subsidies which reduce freight rate which births healthy competition among rivals. The sea freight rate of countries in the Black Sea and China to countries like Turkey, North America, and a few parts of South America to a certain degree receives government protection and intervention.
Exchange rate and currency
When there is fluctuation in the exchange rate, to avoid economic losses shipping companies bring into consideration. the exchange rate and currency when formulating freight rate. The most common currency used in today’s international trade is the US dollar. The sea freight rate is dependent on the exchange rate. The freight rate is charged according to the value of the currency and exchange rate.
If there is trade friction between the two countries it will directly affect the cargo volume and the sea freight rate will either increase or reduce. When there was a trade war between China and the US, many importers wanted their goods to arrive at the US before the tariff agreement takes effect so they could avoid high tariffs and use advance shipment which is also a fast schedule. During this period the sea freight rate rose rapidly.
In a perfect market, a competitor is present. The number of competitors in a market and their strength has a huge impact on the freight rate. If the market economy is operating as a monopoly, there is stability in the freight rate. In a market, the strong defeat the weak by manipulating the freight rate and using a competitive means for a price reduction.