Logistics guides · Freight
Ocean Freight Rates and Surcharges: How to Read and Compare Quotes
Base rate, BAF, LSS, CAF, PSS, GRI, THC, CIC, EBS, D/O, demurrage and detention explained, plus Vietnam port local charges and how to compare quotes.
An ocean freight quote is rarely a single number. On top of the base rate, carriers and forwarders add a long list of surcharges at origin, on the sea leg and at destination. If you do not understand each item, it is easy to pick a cheap-looking quote that ends up costing more. This guide explains how ocean freight is structured, what the common surcharges mean, which local charges apply at Vietnamese ports and how to compare quotes on a like-for-like basis.
How the total cost is built
The total cost of a container shipment usually falls into four groups: (1) the base ocean freight from port of loading to port of discharge; (2) variable surcharges linked to the freight, such as fuel, currency and peak season; (3) local charges collected at origin and destination ports; and (4) time-based charges such as demurrage, detention and storage. Inland haulage, customs clearance and insurance come on top. The Incoterms® rule in your sales contract decides which party pays which group. Incoterms® is a trademark of the International Chamber of Commerce.
Base rates are quoted per container (USD per 20ft or 40ft) for full container loads (FCL), or per revenue ton on a weight-or-measure basis (one cubic metre or one tonne, whichever is greater) for less than container loads (LCL). Rates may be spot rates with short validity, often half a month or a month, or contract rates for a quarter or a year for customers who commit volume.
Surcharges linked to the sea freight
| Code | Full name | What it covers |
|---|---|---|
| BAF | Bunker Adjustment Factor | Adjusts for fuel price movements and is usually revised monthly or quarterly. |
| LSS | Low Sulphur Surcharge | Covers the cost of low-sulphur fuel since the IMO 0.5 percent sulphur cap (IMO 2020); some carriers fold it into BAF. |
| EBS | Emergency Bunker Surcharge | A temporary fuel surcharge when oil prices spike, common on intra-Asia trades. |
| CAF | Currency Adjustment Factor | Compensates for exchange rate movements between the freight currency and the carrier’s cost currencies. |
| PSS | Peak Season Surcharge | Applied before major retail seasons or when space is tight. |
| GRI | General Rate Increase | A rate increase announced by the carrier for a trade lane from a specific date. |
| CIC | Container Imbalance Charge | Covers repositioning empty containers to areas with equipment shortages. |
| ENS / AMS / AFR | Advance security filings | Fees for advance cargo declarations to the EU (ENS), United States (AMS), Japan (AFR) and similar regimes. |
Some carriers quote all-in rates that already include BAF, LSS and other sea-leg surcharges; others quote a base rate plus separate surcharges. Always ask what is included, and which date sets the applicable surcharge level: booking date, sailing date or gate-in date.
Local charges at Vietnamese ports
Local charges are collected by the carrier or forwarder at the port of loading for exports and at the port of discharge for imports. At major gateways such as Cat Lai in Ho Chi Minh City, the Cai Mep – Thi Vai port cluster and Hai Phong, including the Lach Huyen area, typical items include:
- THC (Terminal Handling Charge): collected by the carrier per container to recover what it pays the terminal for handling.
- Documentation or B/L fee for exports and delivery order (D/O) fee for imports.
- Seal fee for export containers.
- Telex release or surrender fee when no original bill of lading is used.
- Container cleaning fee on return, higher if the box is dirty, smells or needs chemical washing.
- CFS charge for LCL cargo, per cubic metre or tonne, covering handling at the consolidation warehouse.
- Lift-on/lift-off charges at the terminal or depot when collecting and returning containers.
- Port infrastructure fees levied by some local authorities, such as Ho Chi Minh City and Hai Phong, by type of cargo and container.
- Amendment fees, late filing fees and container deposits for some carriers or cargo types.
Local charge levels differ between carriers and forwarders and change over time, each publishing its own tariff. That is why this guide does not quote amounts: request a written local charge schedule with every freight quote so there are no surprises at delivery.
Demurrage, detention and storage
These charges cause the most disputes because they accrue daily and can exceed the freight itself when cargo is held up by missing documents or specialised inspections.
| Charge | Collected by | Triggered when |
|---|---|---|
| Demurrage (DEM) | Carrier | A laden container stays in the terminal beyond the free time. |
| Detention (DET) | Carrier | A container taken out of the terminal is returned empty after the free time. |
| Storage | Terminal or warehouse operator | A container or cargo stays in the terminal yard beyond the terminal’s free period. |
| Combined DEM/DET | Carrier | Some carriers merge demurrage and detention into a single pool of free days. |
Free time depends on the carrier, trade lane, equipment type and your agreement. Special equipment such as reefers, open tops and flat racks usually gets fewer free days at higher daily rates. For imports that may clear slowly, negotiate extra free time at booking or in your rate contract; asking after the vessel arrives is harder and more expensive.
How to compare ocean freight quotes
- Normalise the scope: same port pair, equipment, terms of delivery and validity period.
- Compare total landed logistics cost rather than base rate: freight, sea-leg surcharges, local charges at both ends, inland haulage and customs.
- Check validity: is the rate tied to sailing date or gate-in date, and are GRIs or PSS about to apply?
- Compare service: transit time, direct call or transhipment, sailing frequency and schedule reliability.
- Review DEM/DET terms: free days, tiered daily rates and extension options.
- Confirm the billing currency and the exchange rate used for charges invoiced in VND.
- Ask whether space and equipment are guaranteed in peak season.
Who pays what under common Incoterms® rules
Under EXW the buyer pays everything from the seller’s premises, including export local charges. Under FCA and FOB the seller pays origin charges up to delivery and the buyer pays the sea freight, surcharges and destination charges. Under CFR and CIF the seller pays the sea freight and its surcharges; whether destination THC is included depends on the carrier’s terms, and the buyer normally pays destination local charges unless the contract says otherwise. Under DAP, DPU and DDP the seller carries the freight to the named destination, and only under DDP does the seller also pay import duties and taxes.
Disputes often arise when a CIF seller’s carrier collects destination THC from the buyer, or when a buyer on FOB terms appoints a forwarder whose origin charges the seller did not expect. Agreeing in writing which local charges sit with which party avoids most of these surprises.
Example: why the cheaper quote can cost more
Imagine two quotes for a 40HC from Cat Lai to Rotterdam. Quote A has a lower base rate but excludes LSS, is priced at sailing date with a GRI about to take effect, tranships twice and offers only five free DEM/DET days at destination. Quote B is slightly higher but includes fuel surcharges, sails direct and gives fourteen combined free days. If the shipment is selected for inspection in the EU and clearance takes a few extra days, the demurrage under Quote A can wipe out the entire freight saving. Compare total cost under a realistic scenario, not the headline number.
Tips to keep ocean freight costs under control
- Book early in peak season and avoid delivering close to the cut-off to prevent rollovers.
- Use quarterly or annual contracts when volumes are stable to reduce rate volatility.
- Prepare documents and permits before arrival to avoid demurrage and detention.
- Optimise loading to reduce container count, or switch from LCL to FCL when volume justifies it.
- Ask for itemised invoices and reconcile them against the quote.
GLG can build a total-cost comparison across carriers and routings, including pre-negotiated DEM/DET terms, so that decisions are based on landed cost rather than the base rate.
Frequently asked questions
Who pays THC?
It depends on the Incoterms® rule and the contract of carriage: usually the exporter pays origin THC and the importer pays destination THC, but under terms such as CIF or DAP check whether destination THC is already included in the freight.
What is the difference between demurrage and detention?
Demurrage applies when a laden container stays in the terminal beyond free time; detention applies when a container that has left the terminal is returned late. Both are carrier charges, while storage is charged by the terminal.
Does an all-in rate include local charges?
Usually not. All-in normally bundles the base rate and sea-leg surcharges, while THC, D/O and documentation fees are charged separately, so always confirm.
Can I get more free days?
Yes, ideally negotiated at booking or in the rate contract; requests made after the vessel arrives are less likely to be approved.
This content is for general guidance and does not replace legal or banking advice for a specific transaction.