The sea freight market has experienced turbulent waters throughout the past year, and many supply chain challenges are expected to continue in the new year. Although rates in certain areas have decreased slightly, ocean freight rates remain significantly higher than last year. High rates and pricing pressures are expected to remain in 2025 due to capacity constraints, regulatory changes, geopolitical tensions, shifting patterns, and strong e-commerce demand. Capacity growth, however, is projected to increase at a slightly higher rate than demand and could ease some of the market’s volatility. As we look ahead to 2025, it is essential to understand and plan for base rate changes, standard fees, and surcharges in the market.
Base Rates in Ocean Freight
In addition to supply and demand trends, many factors affect contract-based and non-contract-based ocean freight rates. Shippers are looking ahead at ongoing geopolitical factors that may affect trade routes and costs, as well as at port congestion issues, labor shortages, and the continued threat of labor strikes. For instance, the pending deadline of January 15th between the ILA and USMX is just around the corner. If they are unable to come to an agreement, the market could face a second port lockdown in the U.S. East Coast and Gulf Coast ports. The potential disruption is now compounded by the uncertainties of new prospective tariffs under the Trump administration.
Factors that will continue to impact ocean freight rates and likely keep rates elevated in 2025 include:
- Geopolitical factors leading to the need for alternative routes
- New alliance configurations and restructuring
- Inflation
- Rising insurance rates
- Costs associated with Environmental Compliance
- Regulatory changes and potential tariffs
- Ongoing demand for China-Mexico routes as an alternative point of entry to the U.S. market
Common Fees and Surcharges
Multiple shippers have announced general rate increases (GRIs), adjusting their base freight rates to meet market conditions and realign spot rate fluctuations. Additionally, companies must consider several standard fees and surcharges to manage their logistics costs better and avoid unexpected expenses. Common surcharges include:
- Bunker Adjustment Factor (BAF) – a surcharge that adjusts for fluctuations in fuel prices, which can significantly impact shipping costs
- Currency Adjustment Factor (CAF) – a fee to offset changes in exchange rates that may affect shipping costs, particularly for international shipments and especially when the contract price is in a different currency than the operational costs
- Terminal Handling Charges (THC) – fees for the handling of cargo at port terminals, including loading and unloading operations and import versus export charges, that can vary based on the terminal, type of cargo, and region
- Documentation fees – charges for preparing and processing shipping documents, such as bills of lading, expedited processing, and customs paperwork, that can vary based on the shipping line, the complexity of the shipment, and any specific services provided
- Container Cleaning Fee – a fee for cleaning containers that are returned to the shipping line in substandard condition
- Detention and Demurrage Fees – charges incurred when containers are held beyond the allowed time at the port or during transit
- Insurance fees – costs associated with insuring the cargo during transit against loss or damage, mostly frequently impacted by the value of the cargo, the type of insurance chosen, the shipping route, historical loss trends, and delays or congestion at ports.
- Security fees – charges imposed for security measures taken at ports or during transit, often related to customs regulations, as well as any advanced security protocols required, such as enhanced screening and monitoring
- Peak Season Surcharge (PSS) – additional fees applied by shipping lines during peak shipping seasons when demand for shipping spaced exceeds available capacity
- Emergency Fees – charges that may be applied under specific circumstances that require immediate or unforeseen action by the carrier or shipping line, such as the need for rerouting in situations of adverse weather, natural disasters, port congestion, and political unrest
These fees and surcharges can vary based on the shipping line, route, and specific circumstances of the shipment. The structure of fees can also vary significantly as some shippers determine fees as a percentage of the base freight rate or a flat rate fee by container, and others utilize a tiered structure based on cost ranges. Variations may also be affected by region or frequency. While many fees and surcharges can be anticipated, shippers should discuss all potential charges with their freight forwarder to ensure a comprehensive understanding of costs before shipment.
At TOC Logistics, we strive to work in partnership with our customers and provide transparency in all expected surcharges to optimize our customers’ supply chains. Contact our team today to discuss your upcoming shipping needs and strategies for developing cost-effective solutions.