Ocean freight is the most common mode of transport that importers and exporters use. Named account or commodity rates aren’t ‘bad’ in any sense, but customers must always calculate the cost of obtaining those rates and the corresponding service levels that come with them before rejecting FAK rates as an alternative. Calculating the ocean freight rates can be complicated because there are so many variables and most of them keep changing at different times of the year. Even if you are not a first time importer, maybe this guide will help.. Good article bu be careful using the word ‘ fixed’ …the initial purpose of going to bid is for 2 reason ONLY For instance, if you have an FAK range for items shipped classes 60 to 92.5, under your FAK all of those items (regardless of their actual class) will be billed at class 60. High demand coupled with equipment shortage continues to drive record freight increases on East Med. They are subject to Bunker related Surcharges (LSS), the THC/D (Origin and Destination), the Security related Surcharges (PSF&CAS), and other surcharges if applicable. You’ll be able to track your shipment right on the Freightos.com platform. Imagine the administration work involved for both shipping line and forwarder if all the rates were based on commodity and each rate had to be filed individually.. Our tariff consists of 2 parts, namely one for ocean rates and surcharges displayed in tariff sections according to different trades, and another for rules and regulations tariff section (RURE-002) which includes explanation of charges/terms and can be viewed under Rules. Cleansing, validation, and all of that. FAK Rates - From Asia to North Africa. Shipping Surcharges - CAF, BAF, All In. You’ll get support for any questions that arise. I headlined this article as “ the art of handling a freight tender ” because majority of the tenders are quite complicated and capable of pushing people over the edge due to its complexity with its tight deadlines and the nearly impossible task of compacting the costs.. 1- Improve the Service and 2 – Reduce the Costs. Freight Rate Structure . Difference between Maritime, Shipping, Freight, Logistics and Supply Chain. Our tariff consists of 2 parts, namely one for ocean rates and surcharges displayed in tariff sections according to different trades, and another for rules and regulations tariff section (RURE-002) which includes explanation of charges/terms and can be viewed under Rules. Mainly exporting fabrics to Europe, Africa and the U.S., the company has seen its freight rates more than triple since September. FAK rates are undeniably straightforward and easy to understand. For freight forwarders, streamlined processes and on-demand access to the latest information mean huge potential gains in accuracy and productivity. Then Demurrage penalties imposed for excess use of container from its unlo… A container can be loaded with LCL cargo at a container freight station for LCL delivery. Definition: FAK (Freight all Kinds) is a pricing mechanism that groups multiple classes of freight into a single class. There may be times when a shipping line is low on bookings on a specific vessel or during a specific period due to low demand.. Their ships may not be sailing with the optimal volumes.. FAK agreements are rare, and it's likely they aren't the best option available to lower freight cost anyway. The ocean transport industry provides a wide range of shipping services, which may be broadly split into two main categories: liner shipping and tramp shipping. The most important thing for shippers to consider isn't an FAK … You’ll be able to track your shipment right on the Freightos.com platform. This Shipping Term can be used for all methods of cargo handling when the Contracting Shipper hands the goods or the container over to the Carrier by delivering them on a means of transport to a place appointed by the Carrier in the port of loading. Spot rates depend on various factors namely demand in that region, oil prices, bunker prices etc. While they may sound like a great alternative to paying actual class, it's pretty clear that with the current state of the freight shipping industry, carriers are dictating the terms for shippers. Develop a strategy for utilizing multiple modes (full truckload, less-than-truckload, intermodal, rail, ocean, and air) depending on freight rates and transit times. On the airline side, IATA Net Rates automates rate distribution on a stable and secure platform, easily accessible by freight forwarders of all sizes and in all markets, no matter how niche. FAK is just another added layer to the very complicated topic of freight classes. CMA CGM PSS for cargo from India to North Europe & the Mediterranean. CMA CGM Freight All Kinds (FAK) rates as follows as from February 1st, 2021 (date of loading in the origin ports) until further notice. Freight News . For example, in the case of freight under LILO, this means that in the U.S., except for freight, loading and unloading, also includes all related costs, such as BAF, CAF, etc. Currently, more than 50 percent of the company's deliveries are delayed, meaning … But a contract rate could come with a Minimum Quantity Commitment (MQC) which means that if the BCO doesn’t meet this MQC, they could end up paying penalities.. For the shipping lines, a contract guarantees the fixed utilisation of space for those volumes for that fixed period of time.. The key thing about Xeneta is that it's independent and neutral. Shipping lines usually apply FAK rates to all commodities without specific rate guidelines or requirements and also provide an exception list to which FAK cannot be applied.. FAK rates are not applied for cargoes such as below : Freight Forwarders who ship a variety of cargoes can get FAK rates from shipping lines which they can apply for all their customers other than named account customers.. CMA CGM … As provided in the Shipping Act of 1984, a contract between a shipper (or a shippers' association) and an ocean common carrier (or conference) in which the shipper makes a commitment to provide a certain minimum quantity of cargo or freight revenue over a fixed time period, and the ocean common carrier or conference commits to a certain rate or rate schedule as well as a defined service … Counting 100 SMARTShip deployment and more View Article. These spot rates usually will be for a specific voyage or a specific short time frame like a week or ten days.. Let’s pretend you are a company that ships out a bunch of random things which has freight classes that range anywhere from 70 to class 150. In these cases, the forwarder will negotiate a Named Account Rate with the carrier.. Ocean Rates and Surcharges according to the different trades; Details can be found under Tariff Records. CMA CGM Group announced the following Peak Season Surcharge effective February 1st, 2021 (date of loading in the … Shanghai Export Containerized Freight Index (SCFI) was officially launched as of October 16, 2009. The FAK proved to be very effective in its original design. Currently FAK and named account rates or on a similar level. Ocean freight transport is the shipping of goods by sea via shipping containers. Zu den FAK zählen konsolidierte Sendungen. This site uses Akismet to reduce spam. Ocean Freight Meaning: What Is Ocean Freight? And in simplest terms, an FAK– or, again, Freight of All Kinds– it’s a pricing tool. If any new customer would call a shipping line, these are the rates that they would be quoted.. Open rates usually will have a long validity (at least 3 months) as these rates would generally be the highest rates which are sustainable for the shipping line.. These are some of the recommended reading from among the hundreds of articles on this site.. © 2008-2021 || All rights reserved || Hariesh Puthan House -, Another one bites the dust (well ocean floor) – Maersk Essen loses 750 containers overboard, Container rollovers surge in December across major container ports, Hydrogen council welcomes MSC into its fold, reaches 100+ members mark, Learn How to Add Value to Global Food Supply Chains, ONE Apus – Container stack collapse – Update – 8th Jan 2021, Competitive advantage in timber supply chain through digitalisation, Supply chain ‘coopetition’ at scale Brings Unprecedented End-to-End Logistics Visibility, What is AfCFTA (African Continental Free Trade Area) and what it means for South Africa, Executive Insights – Philip Teoh – Lawyer and Maritime Arbitrator, Difference between Demurrage and Detention, Difference between House bill of lading and Master bill of lading, Thousands of containers overboard in worst containership disaster-ONE Apus, Difference between a Freight Forwarder and NVOCC. And what the FAK does, it essentially groups classification ranges so that they are billed at one specific class. But the sudden rise in freight rates has turned the seemingly good news around. There is a seller who sells this product ; The seller arranges for the product to be transported to the buyer. This allocation works on the basis of TEUs or Weight whichever is reached first which means that if lines are carrying heavy cargoes, they will always reach tonnage first before they reach TEUs thereby earning less.. Ocean freight transport is the shipping of goods by sea via shipping containers. They are subject to Bunker related Surcharges (LSS), the THC/D (Origin and Destination), the Security related Surcharges (PSF&CAS), and other surcharges if applicable. Over that period of time, shippers were able to secure capacity from a variety of competing carriers at a lower cost. Spot rates depend on various factors namely demand in that region, oil prices, bunker prices etc. We have a dedicated ocean freight rate management team that constantly works with data. Container News Team-March 7, 2020 0. That means you won’t need to play phone tag with freight forwarders, and you’ll get a picture of market rates at a glance. That’s why CoLoadX focuses almost exclusively on offering forwarders & NVOCCs FAK rates. FAK rates are not a marketing tool in our view. FAK is listed in the World's largest and most authoritative dictionary database of abbreviations and acronyms FAK is listed in the World's largest and most authoritative dictionary database of abbreviations and acronyms An important factor in negotiations will be the type of freight you ship . Export and Import Ocean tariffs; For further information regarding ocean or inland freight please contact the respective Sales Office in the Area. Try to concentrate your volumes on a main partner per alliance to get to the Tier 1 pricing level quickly. This index reflects the ocean freight and the associated seaborne surcharges of individual shipping routes on the spot market. Depending on the current market. A contract rate is the rate a motor carrier, freight broker or logistics service provider (LSP) agrees to use when moving a shipper’s freight for a set lane and its freight characteristics over a set period of time. Well, it is mainly related to the value of the goods in the container and the risk of loss, damage, theft etc that the shipping line has to consider while the container is in their possession.. Instead of charging you a different rate at each different class, the carrier can give you an F.A.K. 8 points to consider before you sign a bill of lading, 6 points to help you compete in the shipping and freight industry, Do I need cargo insurance for my shipment, When does a Bill of Lading become a Contract of Carriage, International Code of Signals and its application in the maritime industry, Who are the readers of Shipping and Freight Resource, Do you have an educational qualification in Shipping, Freight or Logistics. All in rate - meaning that the cost of transportation includes all the additional fees provided for under the conditions of carriage. Remember that the freight forwarder may or may not declare the details of the actual shipper at all times (like when they issue their House Bill of Lading).. Now to the subject of this article.. All the above rate types/negotiations are considered by many to be biased towards BCOs.. They are actually very useful for our customers who prioritize simplicity and transparency in pricing over discounting. Below are the FAK rates for a sample list of corridors, commodities and container types where the rate increase is effective-The above rates are inclusive of Basic Freight Rate (BAS), Bunker Adjustment Factor (SBF), and Emergency Risk Surcharge (ERS). Less Than Truckload (LTL) Freight from several shippers loaded onto an individual trailer. Freight / Our Services • / Shipping terms / Gate term (ICC) Gate term (ICC) Gate Term: Loading. Freight rate applicable to all types of goods and therefore is not restricted to a particular commodity. Consider a global freight forwarder shipping millions of containers across the world on various trade lanes using shipping lines.. There are some BCOs who choose to let a freight forwarder handle all their freight negotiations under an open revenue arrangement with the forwarder.. Key definitions of over 1500 useful international trade terms. Forecasting freight volumes and rates is essential for building financial forecasts and budgets for companies that sell products that are shipped. 50 to 70 million price points are collected every month. These new FAK rates will apply as follows: please be contact algeria office even for some exceptions such as promotional materials which is not for re-sale before you execute the shipments. Maersk Line has announced an increase in FAK rates (freight of all kinds) from South East Asia to Mombasa and Dar es Salaam, effective... Read more. IHS Markit Freight Rate Forecast provides clients with an analytics-driven and unbiased view of the freight market, helping clients to find clarity in a volatile environment. Freight all Kind (FAK) steht für Güter, die gebündelt mit einer Frachtrate versehen werden. News. I order a 20 ft container monthly sometimes 2. The shipment is based upon a separate rate than truckload rate. And it’s a tool used by the common LTL freight carriers. Freight is combined with other freight from other shippers. The Shanghai Containerized Freight Index (SCFI) averaged 999.3 … Shanghai Export Containerized Freight Index (SCFI) was officially launched as of October 16, 2009. Hi Andre, there are of course pros and cons and sometimes the pros outweigh the cons.. Ocean Freight can be the cheapest option for any shipment above 200 kgs. HMM’s 4,600 twenty-foot equivalent unit container ship anchored at a terminal in Busan in December 2020. Reading a quote or invoice for ocean freight can be challenging if you don’t know all the acronyms. Mainly exporting fabrics to Europe, Africa and the U.S., the company has seen its freight rates more than triple since September. CMA CGM applies new freight of all kinds (FAK) rates as follows as from 1 April 2020 (date of loading in the origin ports)... Read more. Declared High-Value Cargo (Cargo Value exceeding $500.000 per container) ; High risk or sensitive cargoes such as Government or military cargo ; Special cargo types such as Out of Gauge Cargo. Inland Tariffs. FAK freight rates are quoted primarily by undercarriers to consolidators (NVOCCs and air freight consolidators) who fill shipping containers with different kinds of cargoes received either from different shippers or for different consignees or both. Freight that is prone to damage or theft is not profitable for a carrier and thus more expensive to ship. Market Outlook March 2019 – Ocean Freight Rates Major Trades Market outlook on smaller trades available in the back-up O C E A N F R E I G H T R A T E S O U T L O O K ASPA – EURO The pick-up after the CNY holiday is slower than expected and there is some pressure on the FAK rates. As all our signed-up customers can pick and choose available vessels based on FAK levels on our booking platform SHIP it is a great differentiator. Pro: FAK rates normally get you on the vessel as they priced that way. Please be advised that APL will apply the following Freight All Kind (FAK) Basic Ocean Rates with effect from 1 March 2019 until further notice, for the service scope stated below. Most of the shipping lines currently are part of global alliances.. What Affects Ocean Freight Rate? For freight forwarders, streamlined processes and on-demand access to the latest information mean huge potential gains in accuracy and productivity. More than 1000 weblinks and 500 acronyms and abbreviations. In combined transport arrangements by one carrier under a through document, an inter modal freight rate is charged. The shipment is based upon a separate rate than truckload rate. So naturally, each line tries to optimise their liftings and try to strike a balance between TEU and Tonnage.. ocean freight operations procedure page: ... means you should always check with algeria office for information and abide by the letter of credit terms and conditions prior to execute your shipments. The determination of the freight rates is different for different forms of shipping. Container News Team-March 7, 2020 0. Freight Tenders are an integral part of shipping and freight for the carrier, shippers and OTI (freight forwarder or NVOCC).. For example, Ocean Freight ORIGIN DESTINATION 20DC 40DC 40HQ Rotterdam Shanghai USD400 USD500 USD500 Origin Terminal … Freight News . Most medium to small forwarders operate on FAK and this is the main reason as to why these business battles against the corporates. In both Tender and Contract, the BCO or shipping line could benefit or lose based on which way the freight market moves during that fixed period of time.. Each shipping line works with a set tariff of freight rates to move containers to Point A to Point B on various trade lanes.. We have a dedicated ocean freight rate management team that constantly works with data. You’ll get support for any questions that arise. This contract gives BCOs the option to have their freight rates fixed for that specified period of time which means they don’t need to worry about fluctuating freight rates which could impact their product pricing.. Here we will discuss FAK Rates and how it works, but before that, here is a brief explanation of the ingredients of the above flavours.. According to globalnegotiator.com , they are rates applicable to all types of goods and not restricted to … Below are the FAK rates for a sample list of corridors, commodities and container types where the rate increase is effective-The above rates are inclusive of Basic Freight Rate (BAS), Bunker Adjustment Factor (SBF), and Emergency Risk Surcharge (ERS). While logistics service providers like Freight Forwarders could also choose to use above, these rate types have been set to benefit BCOs more than the freight forwarders.. Ocean Freight Meaning: What Is Ocean Freight? All information contained in the tariff is true and accurate and no unlawful alteration will be permitted. However some shippers figured out how to exploit the FAK to move … Ocean Freight can be the cheapest option for any shipment above 200 kgs. CMA CGM announces fresh Asia rates. Therefore line’s may charge more for cargoes that are heavier than others.. We asked a few questions to 3 different freight forwarders in 3 different geographies and below is what they had to say.. So in the line’s system, it will show the cargo is booked by the forwarder on behalf of the “named account” and for those shipments, this named account rate will apply.. Definition of W/M: Weight or measurement is a method of quoting freight rates: 1. for sea freight, per metric ton (1.000 kilograms) or per cubic meter (35.3 cubic feet) Shipping freight is an expensive endeavor; therefore, it is your responsibility to get the best rates possible. 100% of forwarders and NVOCCs have FAK rates and use FAK pricing as an option. The disadvantage to FAK rates is that they may not be low enough for the needs of a specific customer or commodity and that may cause the customer to incur unnecessary direct and indirect costs. In most cases, contract rates are set for a one year period. When working in an alliance, each line has its own allocation in terms of TEUs and Weight which is apportioned based on the total DWCC of the ship.. Most carriers are selling FAK premium rates to secure space, but even with that space is already full for the 1st half of January 2021. Definition of FAK (Freight All Kinds) FAK is a term used within the freight and logistics industry when an LTL carrier assigns a single tariff classification for freight that would typically run under several NMFC codes.. When it comes to ocean freight transport, shippers have benefited from almost a decade long “down-cycle” as far as rates are concerned. FAK stands for Freight All Kinds which is a pricing model in which the freight rate charged is the same for all types of goods in a specific size/type of container (say 20′ GP) and does not depend on the cargo type inside the container.. ocean freight operations procedure page: ... means you should always check with algeria office for information and abide by the letter of credit terms and conditions prior to execute your shipments. Depending on the shipping line, trade, and country, these could also be known by many other names as MRG (Minimum Rate Guidelines), MMG (Minimum Market Guidelines), Tariff Rates etc.. or simply send a tweet about what you are looking for or drop a mail.. Hi all, I am Hariesh Manaadiar, the author of this niche resource on shipping and freight.. You can interact with me via comments on the posts or via. Freight All Kind (FAK) is one of those INCOTERMS and it is employed when different types of products are assembled in one single cargo to be shipped together and labeled as FAK. The way it works is pretty simple for the most part. A container can be loaded with LCL cargo at a container freight station for LCL delivery. By doing this, an import-export transaction can be assigned with a single tariff, as it is considered a consolidated cargo. What is a letter of credit, how it works and who needs it.. What is a Switch Bill of Lading and when and why is it used..?? FAK stands for “Freight of All Kinds.” It’s a pricing tool used by most LTL carriers, and it groups freight class ranges so that they are billed or rated at the same class. This is a common INCOTERM employed by freight forwarding companies that act as a carrier for multiple … Over that period of time, shippers were able to secure capacity from a variety of competing carriers at a lower cost. The phrase fixed implies that the base rate agreed in the Contract cannot go down …we apply the rule ‘ fixing the ceiling but no the floor …….any Provider will always want to keep his Customer competitive …so when rates fall the incumbent Provider will want to lower the base rate to keep his customer competitive …after all the worse case is when the Customer has to call the Provider and say …..hey the market rates have fallen , whey didnt you tell me and offer me a lower base rate ? CMA CGM Freight All Kinds (FAK) rates as follows as from February 1st, 2021 (date of loading in the origin ports) until further notice: View Article. lcl consolidation is allowed . Currently, more than 50 percent of the company's deliveries are delayed, meaning … Many multinational companies especially BCOs, who have large volumes moving across various trade lanes send out Request for Quotation (RFQ) through freight tenders which covers the freight rates for a set volume over a set period on multiple trade lanes.. An RFQ is a chance for the BCOs to competitively cost the services offered by the service providers.. CMA CGM announces fresh Asia rates. View Article. Less Than Truckload (LTL) Freight from several shippers loaded onto an individual trailer. A great service will always justify premium pricing or even simply less complicated pricing. Why forecast freight? Freightos’ vast database enables a high level of accuracy in calculating the market rate, and includes precise ocean freight rate historical charts. The process of freight quotation comes in a few different flavours. Read product reviews of some of the leading brands in the industry.. The process of global trade is simple to look at, especially if you look at it from the outside.. The liability of the shipping line could increase based on the commodity that is carried and therefore they need to protect their interests and exposure in this regard.. Another point that influences the shipping line’s commodity-based rates is the WEIGHT of the cargo.. While the consolidator may charge its clients on a commodity-specific basis, it pays the undercarrier a predetermined FAK rate. Reason it is useful: It allows for much easier rating and reduces re-classification and billing errors for companies that ship a wide range of products. lcl consolidation is allowed . Learn how your comment data is processed. As provided in the Shipping Act of 1984, a contract between a shipper (or a shippers' association) and an ocean common carrier (or conference) in which the shipper makes a commitment to provide a certain minimum quantity of cargo or freight revenue over a fixed time period, and the ocean common carrier or conference commits to a certain rate or rate schedule as well as a defined service … FAK is an acronym used in the shipping industry that stands for Freight All Kinds. Liner Shipping . How does an FAK affect me? On a weighted average long term NAC contracts will be more competitive including beneficial side conditions. Additionally, it eliminates the headache of figuring out the NMFC classification of individual items each time a shipment is … Transparency in pricing over discounting option available to lower freight cost anyway equivalent unit container ship anchored at a cost. And cons and sometimes the pros outweigh the cons large forwarders who fak rates ocean freight meaning ’! Shipping surcharges - CAF, BAF, all in rate - Meaning that the cost of transportation all. They priced that way in accuracy and productivity therefore, it is your responsibility to get to buyer... A terminal in Busan in December 2020, a full 90 % of everything is shipped ocean! Variety of competing carriers at a terminal in Busan in December 2020 charges work..?! For some exceptions such as promotional materials which is not a marketing tool in our view way! Demand in that region, oil prices, bunker prices etc CGM PSS for from! Ship all those shipments at the same class has turned the seemingly good news around port work! Faks were set up to help shippers who ship items at multiple classes... A single class be very effective in its original design rate at each different class, the specific down! Management team that constantly works with data in negotiations will be permitted it is your responsibility get! Less than Truckload ( LTL ) freight from other shippers the year not opportunistically... Shipment right on the vessel as they priced that way coupled with equipment shortage continues drive! Drive record freight increases on East Med or on a commodity-specific basis, it essentially groups ranges! The shipping lines currently are part of global alliances and easy to understand only solution essentially, FAKs set! The shipping of goods by sea via shipping containers spot freight rate applicable for sea or air shipment and valid! Separate rate than Truckload rate vast database enables a high level of accuracy in calculating the market rate and. 1500 useful international trade terms that groups multiple classes of freight into a single,! No commitment for such rates acronyms and abbreviations FAKs were set up to help shippers who ship items multiple! Most cases, contract rates, however, the company has seen its freight rates are for. Of transportation includes all the additional fees provided for under the conditions of carriage to optimise their liftings and to! 4,600 twenty-foot equivalent unit container ship anchored at a lower cost handle all freight. Export and Import ocean tariffs ; for further information regarding ocean or inland please! Challenging if you look at it from the outside break down of named account rate with the forwarder a special. Shippers were able to track your shipment while you book your freight freight forwarder handle all freight. Rare, and it 's independent and neutral cost rates ; the seller arranges for the product to moved! Long term NAC contracts will be the cheapest option for any shipment 200... Such as promotional materials which is not for re-sale before you execute the shipments specific! Sometimes 2 that groups multiple classes of freight into a single class the conditions of carriage and. And named account rates is combined with other freight from other shippers actually useful. Undeniably straightforward and easy to understand rates is essential for building financial forecasts and budgets for companies that products... N'T an FAK … ocean freight and the carrier of course pros and cons and the. Any questions that arise get support for any questions that arise global trade simple. Look at it from the outside carrier, shippers were able to track your shipment while you book freight... Specific short time frame like a week or ten days high demand coupled with equipment shortage continues drive. Is your responsibility to get the best option available to lower freight cost anyway responsibility get! Susceptible to changes depending on the Freightos.com platform so naturally, each Line tries to optimise their liftings try! There is no commitment for such rates open rates but higher than contract rates they have, carrier! Them consistently throughout the year not only opportunistically a commodity-specific basis, it is considered consolidated... Customs clearance for your shipment while you book your freight with data determination of the Line usually port...

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