We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Finance

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What Is a Freight Rate?

Mary McMahon
By
Updated: May 17, 2024
Views: 11,123
Share

The term “freight rate” can refer to two different rates, one for carrying cargo a set distance and the other for chartering a whole ship for a voyage. Shipping industry regulators require clear quotes on freight rates, and carriers follow standards and conventions when determining the rate they need to charge. A carrier can also selectively offer a promotional freight rate at a lesser cost in some settings.

In the case of carrying cargo, the carrier charges a freight rate based on the type and format of the cargo, the distance, and the amount of cargo. The rate per unit of weight tends to go down with large cargoes and long distances, as the carrier can make more money on these transactions than carrying small cargoes for short distances. Format can also be important, as some cargoes are easier to handle than others. Containerized and bulk packaging, for example, may have different freight rates.

A promotional freight rate may be available for certain routes, times of the year, or customers. The shipper may offer a special rate to a new customer to encourage loyalty, or can provide a promotional rate when a ship is not fully laden and it wants to get the most profit out of the voyage. Information about standard and promotional rates is available through shipping offices and trade publications.

In the case of a charter, the freight rate is known more commonly as just “freight.” Companies can charter entire ships for large loads or sensitive cargoes. They pay for the use of the ship between ports, and the owner covers port fees and provides staffing to handle the ship and cargo. The contract usually includes stipulations that the owner receives a bonus if the ship comes into port early, and the client will receive compensation if the ship fails to meet loading and unloading deadlines.

The freight rate for a charter may be a flat fee or a per unit of weight fee. The policies at shipping companies vary, and it can be advisable to ask around for quotes. Time of year and nature of the load may make a different in some cases. For example, cheap rates may be available when a shipper is trying to get boats out of a given port and into other ports for the purpose of picking up new loads, while the rate may be very high if there are few ships in a given port and a number of clients are competing for their services.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a WiseGeek researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Editors' Picks

Discussion Comments
Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
Share
https://www.wisegeek.net/what-is-a-freight-rate.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.