When it comes to destination charges and other components of freight forwarding and shipping invoices we understand that many questions arise. Why does the setup of invoices vary so drastically between different Australian freight forwarding companies? Why are there different charges and costs with different freight forwarders? Are destination charges negotiable? And how much are actual destination charges?
These are only some of the questions we hear from customers and prospects which is why I decided to pick up this topic again. I have previously written about destination charges and this will be an update of the last blog.
Read on to learn about destination charges in the freight forwarding industry, what they mean and why they seem to vary between different freight forwarders in Australia.
What are destination charges?
To start with the fundamentals, here is a definition of destination charges: In the freight forwarding and shipping industry destination charges, or sometimes referred to as local charges or destination terminal charges, are fees that are levied by the destination port of your cargo. When speaking of a port, this can mean a seaport or an airport.
Since they are not an actual fee that occurs on the freight side they are not directly considered as freight charges. The fees cover all actions taken at the port of destination including movement, unpacking, inspection and further administrative tasks. It ensures that your cargo smoothly comes off the vessel, is processed and prepared for the final transport to the last destination.
Why are destination charges different between companies?
Destination charges vary between shipping lines, airlines, and ports and depend on the origin of the goods. For example, there can be great differences between the charges when comparing European with North American or Asian destination ports. In detail the mode of transport dictates the charge – may it be sea freight FCL (Full Container Load) or LCL (Less than a Container Load), air freight, break bulk or any other mode.
Each port splits up the costs in even more detail and may include more or less single actions. To give you an example, only recently an additional infrastructure charge had been introduced to all major ports in Australia. Prior to that Sydney did not charge an infrastructure charge. Further, the kind of goods may have an impact on the destination terminal charge, in particular, dangerous goods.
As destination charges differ from port to port, changing the shipping line may save significant costs, since they are the ones that actually invoice the destination charges to your freight forwarder.
Apart from that, some freight forwarders do use these charges as a form of revenue and slightly increase destination charges. This is common practice in order to cover shipping line cost increases and fluctuations in costs. Nonetheless, some freight forwarders play on these fees and increase them immensely which is what many buyers fear.
How much are destination charges?
There is no specific cost one can tell you for all ports, as it depends on the mentioned influences; it varies from port to port, nationally and internationally, as well as the origin of goods. At the end of the day, it is important to look at your entire quote. A low sea freight or air freight charge may mean higher destination port charges and vice versa.
For you to get a better understanding of destination terminal charges, it is important to compare these amounts when looking at different quotes and invoices from freight forwarders. Discuss these charges with your freight forwarder and ask for optional ports or trade lanes to save costs.
As destination charges are charged per shipment, by planning and scheduling your shipments ahead wisely and consolidating various small shipments you can decrease your total of this cost. Speak to your freight forwarder about freight consolidation and offshore consolidation to reduce them. For more information read our free ebook on national and offshore buyer’s consolidation.
Are destination charges included in the invoice?
Destination charges are generally included in the invoice. But within the invoice, they may appear grouped or ungrouped. Also in a quote, charges may be added up in one lump sum or broken down in single fees. If you would like to better understand your invoice or quote, seek the assistance of your freight forwarder. They should answer all your questions so you can plan your logistics solutions schedule and costs.
Are destination charges negotiable?
To be realistic, since these charges are not actual freight charges raised from the freight forwarder but from the port of destination, it is highly unlikely that destination charges are negotiable. Every freight forwarder has their cost and if someone were to decrease this charge you can expect this to be included in another item. Again, pay attention to the total cost of your freight.
Are destination charges legitimate?
Since they are raised by every port, destination charges are legitimate. If they don’t appear in your invoice they may be grouped with other fees. But since every freight forwarder is charged by the shipping line or airline they will be part of the overall costs.
Some people may not even be aware but destination charges can make up a considerable amount of your freight costs. Knowing and factoring them in can give you an advantage for the planning of your logistics schedule and save you from surprises. Understanding each part of your freight invoice gives you more control over your costs and room to optimise for the enhancement of the bottom line of your business.
For more than a century, BCR has continued to help small, medium and large businesses achieve an optimum logistics solution with warehousing and transportation, including air freight and sea freight services to and from the major ports including Brisbane, Sydney, Melbourne, Adelaide and Fremantle (Perth).