Neu Marke Logistics Solutions

Sea-Freight

Information Insight into Container Prices for Sea Freight

Affordable container prices is possible with the right online container trading platform that is strategically positioned across the globe. In this blog, you will get an in-depth look at spot and contract prices.

Container prices for sea freight & other means of transport

An in-depth look at spot and contract prices

Container transport costs

If you want to calculate the costs of container transport, you have to be guided by many different factors. The market price can change daily for spot prices and monthly or quarterly for contract prices.

The price of shipping a container is often a determining factor for many importers and exporters. In the following we will deal in detail with the prices for container transport.

  • Difference between spot prices and contract prices (fixed prices)
  • Advantages and disadvantages of the respective price alternatives
  • What considerations to make regarding spot prices and contract prices
  • How a platform with the provision of spot prices can help to find adapted transport processes for your business
  • How logistics companies set their prices
  • How choosing FCL or LCL freight will affect price
  • How the choice of means of transport affects the price

What are spot prices?

A spot price is the price that is determined by supply and demand on the market, comparable to a variable interest rate or variable electricity prices. There are several indices that represent the freight market and thus reflect the valid prices for container transport at a certain point in time, depending on various factors.

Indexes that reflect the container freight market are, for example, SCFI (Shanghai Containerized Freight Index) and CCFI (China Containerized Freight Index).

Advantages of spot prices:

Freight buyers can use a price drop to their advantage and still ensure that they pay the correct price (market price) in the high season and thus have a greater chance of prioritized handling of their goods in order to avoid unnecessary delays.

Shipping companies sometimes put containers at a disadvantage if importers or exporters have paid a container price for ocean freight that does not correspond to the current market price, which can happen if you have negotiated a fixed price that is below the current market price.

Disadvantages of spot prices:

At first, working with spot prices can take a bit more time and planning, but if you have access to the right data and maybe even direct contact with the companies, many companies perceive a positive impact on delivery stability.

Spot pricing VS Contract pricing

Fixed prices

Fixed prices or contract prices are fixed costs that apply for a certain period, comparable to a fixed interest rate for real estate financing. In the world of logistics, this means that you agree a fixed price for freight containers with your freight forwarder (including the freight forwarder’s fees) or directly with a logistics company.

Advantages of fixed prices:

Many companies set up a budget for their transports and want to know roughly what the costs will be on an annual basis. That can give a certain security.

Disadvantages of fixed prices:

  • In 2020 we saw in several cases that the above security can be a false sense of certainty, because when the prices in the market skyrocketed and contracts were no longer valid, many companies’ budgets were exceeded.
  • You miss out on price drops in the market and run the risk of paying overpriced prices for longer periods.
  • Your goods can be disadvantaged if your agreed price is too far below the current market price. Can you book a freight container at a low price? The answer is yes! Read more about container insight here.

What considerations should you make about the various pricing options?

At Xchange helps with data insight in your pricing, we can see that the market is moving more and more towards the spot market. Fewer and fewer companies want to commit to contracts that are overpriced for certain periods or that lose their validity in certain cases if agreements are not adhered to. In extreme market conditions, such as in 2020 and still in 2021, it becomes clear that fixed prices do not apply despite the contract.

There is therefore much evidence that it can be advantageous to book the majority or at least some of your container orders with spot prices. Distribute your “logistics portfolio” between fixed and spot prices in order to minimize your risk.

Why middlemen: With Xchange you can avoid expensive middlemen with high fees. You work directly with global digital community in logistics companies, which means that you benefit from shorter communication channels and ultimately lower prices for your import and export.

How do logistics companies calculate container prices?

Companies use five different factors to calculate the price of shipping one or more containers.

Connect with our team to demonstrate for you on our platform.

The volume or weight of your goods

What is taken into account depends on which means of transport is used. With regard to the price of sea containers, the dimensions and size of your goods are the most important things, while with air freight, for example, weight is almost the only factor. The more load you have, the more it will cost to move the goods.

Containers stacked on each other

Mode of Transport

Should the goods be transported by plane, train, truck or ship? The choice of means of transport determines the price and duration of your transport. Air freight is usually faster, but it also costs accordingly more if you compare this with container prices for sea freight. So if you have the time, choose ocean freight as it’s generally about five times cheaper than air freight.

Distance of the transport

If you have to move goods to the other side of the world, it will of course cost more than if the container were only to be transported to the neighboring country. The choice of port-to-port or door-to-door transport will also affect your final price.

Destination port

Customs and service charges are unavoidable but vary from country to country. Taxes and duties are based on the destination to which your load is to be transported.

Port

Peak Season

International transport has high seasons, just like all other industries. These are generally in summer (in August and September) and right after the Chinese New Year (in January and February and right after).

During the high season, demand is higher, prices rise and capacity is limited. If you’re looking for a lower cost, it’s best to avoid booking transportation during these times. We are here to direct you accordingly by saving cost and increasing flexibility.

FCL vs. LCL

Sometimes you don’t need a whole container. Many freight companies offer the option of shipping goods from several companies together. This means that you share one and the same container. This is called LCL, “Less than Container Load”.

If you fill a whole container with your goods, you use the term FCL, “Full Container Load”. The difference between FCL and LCL can be compared to the difference between a private taxi and a bus.

FCL VS LCL - infografik

When is FCL suitable?

In terms of cost per cubic meter, FCL is the most cost effective alternative. The freight companies charge a fixed lump sum for the use of the containers, instead of you having to pay for the exact volume of your load.

FCL also means faster transportation. If you share a container with others (LCL), it usually takes longer because the goods have to be loaded and unloaded at different points in the transport chain. Advantageously, an FCL container does not have to be opened before it reaches your door.

Your goods are stored more securely. With all of the additional logistics required for LCL, there are numerous and greater risks. Loading and unloading at different points in the transport chain means that LCL cargoes are handled more frequently than FCL cargoes. This increases the risk of damage to your goods. If you have fragile goods, we definitely recommend choosing FCL.

FCL - inforgrafik

When is LCL suitable?

LCL is the cheapest way of shipping small volumes. Using a whole container is ineffective when transporting small volumes, mainly because you are not using all the space, which can result in the goods slipping and being damaged during transport.

However, there is a volume limit above which it is cheaper to ship with FCL instead of LCL, even if the container is not full. The use of FCL is often recommended when the volume of the load exceeds 15 cubic meters.

LCL - Infografik

Sea freight or air freight?

The choice of mode of transport is another important factor that affects freight costs. The point is to prioritize what is most important to you.

Should a fast transport with short lead times take place? Do you want to keep costs as low as possible? Does your company require a focus on sustainability?

Two of the most widely used and popular modes of transportation are freight by ship and air.

Why ocean freight?

Container prices for ocean freight are cheaper – roughly five times cheaper than air freight.

Ocean freight is more environmentally friendly: Compared to airplanes and trucks, a cargo ship has the lowest carbon dioxide emissions per ton of freight weight.

You can move almost anything with a ship. A ship can carry both heavy and bulky loads, which an airplane cannot handle.

Ship

Why Air Freight?

Air freight is faster – if you don’t have enough time, the plane is the best alternative. Regardless of which two places in the world you want to send something, it will take no longer than 1–3 days. If you compare this with sea freight between Great Britain and Australia, for example, it takes an average of 32 days. The sea is big and ships with thousands of steel containers have not yet been able to move faster.

Frakt med flyg

Truck or rail freight?

Land freight is possible by truck or train. What are the advantages and disadvantages of these two modes of transport and how do they ultimately affect the price of your container freight?

Why truck freight?

Trucks are more flexible. Transporting containers on the streets means that you can have your load delivered straight to your door without having to load or unload it while you are driving. The schedule for truck freight is often less limited than that of a railroad.

Land container transportation

Why rail freight?

Rail freight is much more economical and environmentally friendly. The train is the equivalent of the cargo ship in the country and is considered to be a cheaper and more environmentally friendly alternative compared to trucks. In addition, trains are more reliable when it comes to arriving on time, because trains are not affected by traffic problems and poor road conditions.

Frakt med tåg

About us

Neu Marke Container provides data-driven insights on how to buy, sell and rent shipping containers Germany, China, Rotterdam, and South America seaports. We help you secure a reliable and trustworthy container trading platform partner that reduces your container operations challenges.

Contact us to start simplifying your global trade logistics challenges like container shortages, prices of containers in different major seaport locations and automating your pickup to drop-off container processes.

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