The differences in freight rates among different sea transportation routes are mainly influenced by the following factors:
Goods factor
The type and nature of goods: The freight rate for general goods is relatively stable. However, for special types of goods such as dangerous goods, perishable goods, and valuable goods, due to the need for special equipment, protective measures, operation norms, or regulatory requirements during transportation, the freight rate will increase significantly. For instance, when transporting flammable and explosive chemicals such as nitric acid, special explosion-proof containers must be used, and there are dedicated storage areas on board. The increase in costs has led to higher freight rates.
Weight and volume of goods: Heavy goods are charged by weight, while light and bulky goods are charged by volume. Generally, goods weighing more than 1 cubic meter are considered heavy goods, while those weighing less than 1 ton are classified as light and bulky goods. For large foam plastic products (light foam goods), the freight is calculated by volume, while for steel products (heavy goods), it is calculated by weight.
Transportation distance and route
Port of departure and destination: The transportation distance is a fundamental factor affecting the freight rate. Generally, the longer the distance, the higher the freight rate. Meanwhile, the busyness of the port will also affect the freight rate. Busy ports have a large cargo throughput, and the efficiency of ships berthing and loading/unloading is relatively high, but port charges may be higher. Small ports or those that are not too busy may have lower port charges, but they have fewer vessel schedules and lower loading and unloading efficiency, both of which can affect freight rates.
Route characteristics: Direct routes usually have higher freight charges than connecting routes, but the transportation time is shorter. Furthermore, for certain special routes, such as those passing through areas where pirates frequently appear or where weather conditions are harsh, shipping companies may charge additional risk surcharges because these areas increase the operational risks of ships.
Market factors
Supply and demand relationship: When the capacity of the maritime market exceeds the demand for goods transportation, the freight rate decreases. When the demand for goods transportation exceeds the transportation capacity, the freight rate rises. The demand for the maritime shipping market varies in different seasons. During peak shopping seasons such as Christmas in the West and the Spring Festival in China, the demand for transporting goods surges, and freight rates rise accordingly.
Fuel price: Fuel is one of the main costs for ship operation. When international fuel prices rise, the operating costs of shipping companies increase, which will be passed on to freight rates, leading to an increase in freight rates. When the price of fuel drops, freight charges may decrease.
Factors of shipping companies
Operating costs: The operating costs of shipping companies, such as the purchase cost of ships, crew salaries, and ship maintenance and upkeep expenses, all affect freight charges. Large modern ships have a high purchase cost, but they have strong transportation capacity and high fuel efficiency. Their unit cost may be more advantageous, and the transportation cost per ton of goods may be lower than that of old ships.
Service quality: Well-known shipping companies offer high-quality services, including punctual schedules, good cargo tracking systems, and excellent customer service, etc. However, the freight charges may be relatively high. Small shipping companies may attract customers by offering lower freight rates, but their service quality may be slightly inferior.