Though almost garment orders are
placed by buyers on FOB (Free On
Board) basis, the buyers to pay freight at the shipping destination, it is
still necessary for the agent to know how to calculate sea freight and air
freight the merchandise costs per Doz. If you are required to sell on CIF (Cost Insurance & Freight) basis,
(the shipper or agency to prepay freight at the shipping port) you will need to
calculate the freight accurately for your own costing. There are two systems use for calculating freight cost. They are-
- Sea Freight
- Air Freight
Sea freight is generally varied
based on volume how much per CBM
(Cubic meter) very rarely by weight as “density cargo”. In fact, ANRRA (Asia
North American Eastbound Rate Agreement) has designed the freight tariff based
on the usual value of the type of goods, then the usual weight of them, taking
into consideration that for low value merchandise they should give a low
freight rate in order to make it possible for the importers to buy goods
overseas. However, for high value merchandise, they should charge a high
freight rate as it is believed that the buyer can afford to pay more on
freight. They have designed the freight tariff in such a way that everybody can
do business and there is sufficient profit for the shipping lines. The
following is an example to show you the idea:
XYZ Furniture: (Low value goods)
USD 2975.00 for a 40 feet
container to East Coast (USA)
Garments (not silk) (Medium value
goods)
USD 5295.00 for a 40 feet
container to East coast (USA)
Silk Garments (High value goods)
USD 9355.00 for a 40 feet
container to East coast (USA)
From the above you will see that
for the same 40 feet container the shipping line change very different rates.
Nowadays, it is very common to
ship goods by containers and pay the freight for the whole container, even if
you sometime do not have the exact volume of merchandise to fill up the whole
container. The reason of this is:
Suppose, the shipping line charges US 160 per CBM if you ship goods
by the CBM as loose cargo. But, if you ship goods by the container, they charge
you about US 350 per 40 feet container (these are approximate rate for shipment
from the South East to USA port, but they vary from each of the South East
countries and East of West coasts of the United States). However, the above
example can give you the general relationship between the rates of loose cargo,
20 feet and 40 feet containers, the following will show this point more
clearly:
Note: Figures used in example are
not the exact freight rates as they change from time to time, but this is the
concept commonly used.
- A 20
feet container has the following inside measurement:
Length: 228” x Width: 84” x
Height: 94”
228” x 84” x 94” by multiplying
2.54 (as we know 1” = 2.54 cm)
579.12 cm X 213.36 cm X 238.76 cm
by dividing 100 (we know 1m = 100 cm)
5.7912 m X 2.1336 m X 2.3876 m =
29.50 CBMS
If you want to more about CBM calculation,
then check the below article;
However, a 20 feet container has a capacity of 29.5 CBM, but when you ship goods packed in cartons or wooden crates, it can only hold about 27 CBM as there will be gaps or spaces wasted. If the rate of a 20 feet container is $3700, then your average rate per CBM is about $137 (Total container cost / Maximum hold CBM in container = $3700 / 27). A 20 feet container which means 20’ x 7’ x 8’ but above is the inside dimension.
- A 40
feet container has the following inside measurements:
Length: 474” x Width: 84” x
Height: 94”
474” x 84” x 94” by multiplying 2.54
(as we know 1” = 2.54 cm)
1203.96cm X 213.36cm X 238.76cm
by dividing 100 (we know 1m = 100 cm)
12.0396m X 2.1336m X 2.3876m =
61.33 CBMS
40 feet container which means 40’
x 7’ x 8’, but above is the inside dimension
Therefore, a 40 feet container
cartons or wooden creates, it will hold only about 54 CBM. If the rate of the
40 feet container is $5500 then the average rate per CBM is about $102 (Total
container cost / Maximum hold CBM in container = $5500 / 54).
It is noted that there is a
bigger container than the 40 feet high cube. The inside measurements are:
Length: 474” x Width: 84” x
Height: 106” (12” higher)
474” x 84” x 106” by multiplying
2.54 (as we know 1” = 2.54cm)
1203.96cm X 213.36cm X 269.24cm
by dividing 100 (1m = 100cm)
12.0396m X 2.1336m X 2.6924m =
69.16 CBMS
40 feet Hi-cube container which
means 40’ x 7’ x 9,’ but above is inside dimension.
A 40 feet Hi-cube container is
about 12% higher than a 40 feet regular container, and the cost of a 40 feet
Hi-cube is about 10 to 12% higher, so the rate per CBM is about the same. There
is very little advantage in using a 40 feet Hi-cube as the rate per CBM is
concerned. However, there is great advantage when you have the amount of cargo
which exceeds the capacity of a 40 feet container only by 5 to 8 CBM.
- If you
ship goods as loose cargo, the rate is about $160 / CBM:
From the above you will see that
it is most convenient to use 40 feet containers if at all possible. However, it
is not always possible for the buyers to buy goods with the quantity adjusted
to fill the containers. But if the quantity ordered is so big that it take a
few 40 feet containers to ship at different time, then the shipper should plan
the shipments carefully so that the right amount of goods is shipped each time
to fill a 40 feet container, because the saving in using 40 feet container is
so big that it is worth your time and effort to work to achieve it for your
buyer.
Example: one Doz. of Men’s stand
up collar shirt is about 0.037 CBM.
- If you
ship this shirt as loose cargo,
0.037 x 160 = $ 5.92/Doz. sea
freight
2. If you ship
this shirt in a 20 feet container (full)
0.037 x 137 = $ 5.069 / Doz. sea
freight
3. if you ship
this shirt in a 40 feet container, or a 40 feet Hi-cubic container (full)
0.037 x 102 = $ 3.774 / Doz. sea
freight
It is very clear to the above,
the good pain of shipping can save your customer a great deal of money.
As most shippers are shipping
goods by the container, we may form an opinion that as long as we pay for the
whole container we may fill up the container regardless of the weight of the merchandise.
However, this is not true, the usual weight limits of the containers are as
follows:
- 20 feet container weight limit: 16,300 kg
- 40 feet container weight limit: 19,500 kg
- 20 feet container 18148 kg including the weight of the container
- 40 or 45 feet container 25400 kg including the weight of the container
- 20 feet steel: 1960 to 2350 kg
- 40 feet steel: 3390 to 4190 kg
- 40 feet aluminum: 2450 to 3050 kg
- 45 feet aluminum / steel: 3925 to 4500 kg