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Freight is a concept well known by international shipping and logistics companies. It is also a term that individuals who want to send international cargo must be familiar with. This is because freight determines the cost of the cargo to be transported.
When calculating freight, factors such as the weight of the cargo, the distance of the destination, and the mode of transportation are taken into consideration. Freight is the shipping fee required for the international transport of your cargo. In order to benefit from the services while delivering your shipment, you must pay the determined freight amount.
What Does Freight Mean?
Before moving on to the details about freight, it is necessary to know the answer to the question "What is freight?". According to the TDK, freight is defined as the fee received by cargo-carrying ships per load. Since the transportation sectors and fields have developed over time, the term freight has also started to be used in road, air, and rail transport. In response to the question of what freight means, it can be briefly described as "the cost of shipping in international transportation."
What is Freight Cost?
The freight cost can be paid at the destination port or prepaid. Some prominent factors that determine the freight cost are as follows:
• The weight, space occupied, and transportation method of the cargo
• Relationships or special agreements between the company shipping the cargo and the carrier company
• Transportation time
• The distance between the origin and destination of the cargo
• Whether the vehicle is empty or full when returning from the destination
Since it has multiple variables, it is not possible to state an exact figure for the freight cost.
What is a Freight Invoice?
A freight invoice is a document showing the fee charged for the freight payment made in transportations. It is one of the important elements required for the taxation processes of cargo or goods going to other countries. The authority to issue a freight invoice is granted to international transport companies. This invoice proves that there are no outstanding debts.
There are two types of freight invoices: certified and domestic. A certified invoice can also be called a consular invoice. The reason for this is that in import cases, the original invoices presented to customs must be certified by the consulates of the relevant country. Some of the information that must be fully included in a domestic invoice is as follows:
• The phrase indicating Turkish origin of the goods
• Total weight of the cargo
• Method of payment
• Delivery terms
• Contact information of the exporter, such as name and address
• Names of intermediary banks
What is a Freight Contract?
A freight contract is a transport contract that defines the obligations of the carrier and the counterparty. The responsibilities of both parties are stated in the contract. For a freight contract to be valid, the characteristics it must possess are as follows:
• The determined freight cost must be paid in return for the transport.
• The party transporting the cargo must not take ownership of the cargo or goods being transported.
• There must be a party to transport the cargo.
The information that must be included in a freight contract can be listed as follows:
• Type of goods to be transported
• Number of items of cargo
• Method of payment
• Contact information of the shipper
• Points of origin and destination of the transporting vehicle
• Date of the contract
• Mode of transport
• It must include information such as the type of delivery to be made.
Cancellation of freight contracts can occur in cases of war and when the state confiscates the transporting vehicle. In addition, freight contracts are divided into two: Charter Freight Contract and Bill of Lading (Kırkambar) Freight Contract:
Charter Freight Contract: What matters for this contract is not the cargo to be transported, but the vehicle carrying the cargo. Whether the rental of the vehicle will be fully or partially leased is documented by the contracts made. If it is fully leased, it is called a full charter, and if it is partially leased, it is called a partial charter.
Bill of Lading (Kırkambar) Freight Contract: Leasing is not involved in these contracts. It is a contract made directly for the carriage of cargo from one place to another.
What is the Freight Market?
The freight market is shaped by the distance between the origin and destination of the cargo, the space to be leased on the vehicle transporting the cargo, the responsibilities of the transport companies in the contract clauses, and the demands of the customer.
What is Freight Insurance?
Freight insurance is a type of contract covering the transport company's liability in case customers' goods are damaged during transport. When calculating the insurance, the packaging, type of goods, mode of transport, scope of coverage, and transport vehicle are effective.
In order for the damage to the goods to be considered within the scope of insurance, negligence on the part of the transport company carrying out the carriage must be present. Freight insurance is calculated and determined as a percentage of shipping broker fees. The shipping company can pay the determined or to-be-determined insurance expenses. In doing so, it adds it to the service fee charged to the customer.
What is Freight Tax?
In Turkey, freight tax is a tax levied on import and export transport operations carried out within the Turkish Customs Territory. Freight tax can be collected during domestic or international shipping operations and is usually determined based on the weight, distance, and transportation method of the cargo.
Freight tax is collected according to tariffs determined by the Turkish Ministry of Customs and Trade. These tariffs are renewed every year and used to calculate freight fees. Freight tax is a fee collected by the carrier from the cargo owner and must be paid for the successful completion of the transport operation.
How is Freight Calculated?
There are some aspects that are effective and vary according to the cargo when calculating freight. Some of these aspects are as follows:
• If the provided cargo does not fill the inside of the container, the weight and volume calculation is important. A comparison of weight and volume is made, and the calculation is based on whichever value is higher.
• The type of container affects the calculation. For example, a 40-foot container costs more than a 20-foot container.
• The operation of lines is one of the important factors. Affordable prices are found on busy lines.
• The distance to the country where the goods will be sent is an important determinant when calculating freight.
At Which Stages of Cargo Transportation Processes Do We Encounter Freight?
Freight is encountered in several stages of cargo transportation processes:
• Cargo Pricing
• Freight Payment
• Collection of Cargo
• Transportation of Cargo
• Delivery of Cargo
These stages are the basic steps in which freight appears in the cargo transportation process. However, because each cargo transportation operation is different, there may be additional stages in some cases.
What Are the Types of Freight?
Types of freight can be gathered under 3 headings:
• Lump-sum Freight: This is the fixed fee paid to lease the cargo area of the ship. Whether the leased space is filled or not, the freight is paid to the transport company as agreed.
• Ad Valorem Freight: This refers to freight charged based on the sales value of the cargo. It has a specific percentage. This type is generally used for high-value cargo.
• Dead Freight: This refers to the loss of freight resulting from the under-loading of the cargo declared by the shipper. The party causing this pays the freight loss to the company as compensation.
Although freight first emerged for sea transport, transportation activities developing over time have caused the usage of freight to expand as well. Depending on characteristics such as the features of the product to be sent and the mode of transport, different freight options are available to take the goods to the destination they need to reach. The types of freight you will benefit from to deliver your shipments are as follows:
• Air Freight
• Road Freight
• Sea Freight
• Rail Freight
• LTL (Less Than Truckload) Road Freight
• LCL (Less Than Container Load) Sea Freight
How to Get a Freight Quote?
The freight rate is determined at different prices depending on ship equipment and carrying capacity. For this reason, ships may have a different freight price for cargo of the same size. While much more affordable prices are obtained for light cargoes of the same volume, this situation may vary.
Sea Freight Calculation
Sea freight prices are highly affordable. The widespread adoption of shipping is the most significant reason for price drops. Prices vary depending on the vessel, the product to be carried, and customer demand. The customs process is as important in sea transport as it is in air and road transport. Meticulousness is at the forefront in sea transport, as transport is carried out in high tonnages and quantities.
Air Freight Calculation
Companies must first calculate the volumetric weight. Weight and volumetric weight (desi) play an important role in determining and most accurately calculating the freight price. After the volumetric weight is determined and it is researched whether the product to be transported is suitable for air transport, companies offer suitable price quotes.
Road Freight Calculation
Due to its flexibility and wide coverage areas, road transport is a frequently preferred type of transport. While calculating freight, full truckload and partial truckload transport are analyzed independently. Full truckload is calculated based on distance and market conditions. In partial load transport, after the volumetric weight of the cargo is determined, the weight to be applied in freight pricing is calculated.
Which Factors Affect Freight in Transportation Costs?
• Different modes of transport, such as sea, air, road, and rail, are important factors affecting freight costs.
• The quantity and weight of the transported cargo is a factor that directly affects freight costs. Generally, as the quantity and weight of the cargo increase, the freight cost also increases.
• The size of the cargo can also affect freight costs. Large and bulky cargoes can lead to higher freight costs as they occupy more space in transport vehicles.
• Transportation distance is an important factor in determining freight costs.
• Urgent shipments and fast deliveries are associated with higher freight costs. Costs may increase when priority services are requested.
• Different delivery points, such as door-to-door, port-to-port, and terminal-to-terminal, can affect freight costs.
• Fuel costs used in transportation are an important factor affecting freight costs. Changes in fuel prices are also reflected in freight costs.
• Customs procedures and taxation processes of the cargo can affect freight costs.
• Depending on the risks in the transport process, insurance costs can also affect freight costs.
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