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Freight Rates Fluctuation Effects The Cargo Business

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Sea Cargo
Posted on 9 Aug 17

Many factors are involved in this fluctuation

Ocean freight rates effect Cargo business generally

Ocean cargo business is the most solid and considerable way of transportation of things in between continents. Water is the main source to move this transportation and we have oceans, seas and canals to move this business on throughout the year. Sometimes freight rates fluctuate a little bit that directly influence the cargo business or transportation via sea vessels.

There are many factors due to which cargo freight rates go up and down today we discuss here these factors in detail.

Distance covered by the vessels with time ratio

Destinations that are in reach within eight days voyage is less expensive than the destinations reached with in 22 and 23 days. Cargo vessels travel on preplanned schedule and there are no hidden things between two parties, the sender and the receiver. Destinations do matter in freight rates as far the destination as cost will be increased automatically.

Sea cargo vessels have specific stays and specific speed so each party can calculate the expense and then decide the freight rates for cargo booking. Normally these rates are fixed with the help of destination and distances have to cover by the sea cargo vessel.

Time and season is crucial one

This is the most important factor in freight rates rise. Some seasons are expensive and some are cheaper in this cargo business so time and seasons do affect this sea cargo freight rates.

We know in summer season all ports are open for work then sea cargo freight rates are down but when the winter comes, the ports and sea routes are blocked by weather conditions then the cargo companies restrict their vessels so cargo freight rates go up due to the shortage of vessels. Time of year is also crucial such as Christmas or Eid month, cargo business is up to its maximum then rates go down.

International currency rates affect the freight rates

International currency that is used in all business sectors is American Dollar. Fluctuation in the rates of the Dollar does affect the whole economy of the world so sea cargo freight rates are also affected by this wave. Dollar rates fluctuation has its own influence on all trades. Dollar rate is directly interlinked with the trade of gold.

Availability of warehouses is also a common factor in ups and downs of cargo freight rates

As you use as you pay is the simple formula of trade business, so in cargo business there are big warehouses where luggage and cargo or goods have to wait for the right vessel for the right destinations.

Time does matter, as much time your cargo goods will spend in the warehouses you have to bear the expense, anyways all these matters are pre-decided in terms and conditions.

Fuel price is the most important factor in rates fluctuation

The most important factor in fluctuation of freight rates is the fuel prices. It has direct influence on freight rates because cargo business is a very vast business and plenty of parties are involved in it so freight forwarders raise the freight rates to meet their own expenditures if the fuel prices go up. Cargo vessels consume fuel a lot so the fluctuation in fuel rates of each Cent is important.

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