Ocean Freight Cost Breakdown: What Importers Should Know
Understanding the hidden fees in your ocean freight quote, from BAF to THC and local port charges.
Quick Summary
An ocean freight invoice typically includes the Base Ocean Freight (O/F), Bunker Adjustment Factor (BAF) for fuel, Terminal Handling Charges (THC) at both origin and destination, and documentation fees (BL fee).
Understanding the Update
When reviewing an ocean freight quote, the base freight is only part of the story... (Full content placeholder)
Key Takeaways
- Base freight rarely covers the total cost of shipping.
- Incoterms dictate whether the buyer or seller pays origin/destination local charges.
- Always ask your forwarder if the quote is 'All-In' or subject to local surcharges.
Practical Implications
Importers can negotiate better terms when they understand exactly which surcharges are fixed vs variable.
Who is this for: Procurement managers and supply chain directors managing freight budgets.
Problem Solved: Eliminating surprise invoices and budget overruns caused by misunderstood freight surcharges.
Frequently Asked Questions
What is BAF?
BAF stands for Bunker Adjustment Factor, a floating surcharge to account for fuel price volatility.
Who pays THC?
Depending on your Incoterms, THC can be paid by the shipper (e.g., CFR/CIF terms at origin) or the consignee (at destination).
Source: General market standard definitions.
