1. Use with Export Practice & Management Fifth Edition by Alan Branch ISBN 1–84480–081–4 © 2006 Alan Branch Chapter 7 Freight rates

2. Use with Export Practice & Management Fifth Edition by Alan Branch ISBN 1–84480–081–4 © 2006 Alan Branch Topics covered in this chapter Theory of freight rates Constituents of the freight rate Factors influencing formulation of freight rates Air freight rates and charges Air freight consolidation Canal and inland waterway freight rates International road haulage freight rates

3. Use with Export Practice & Management Fifth Edition by Alan Branch ISBN 1–84480–081–4 © 2006 Alan Branch International rail services rates Maritime container rates Sea freight rates Calculation of freight rates Royal Mail International

4. Use with Export Practice & Management Fifth Edition by Alan Branch ISBN 1–84480–081–4 © 2006 Alan Branch Theory of freight rates The cost of freight represents a significant factor in the final price of the product to the consumer/buyer. It is a diverse area with individual transport modes having a differing structure. Hence the need for the exporter to comprehend the factors determining the freight rate to conduct effective negotiations with the carrier. Constituents of the freight rate and its formulation An important part of the chapter and the need to focus on each element of the tariff structure totalling 17 and the eleven factors. Shippers should probe into their rates strategy of cost/value added benefit. The situation will vary by country and the overall efficiency of the transport system and cost structure.

5. Use with Export Practice & Management Fifth Edition by Alan Branch ISBN 1–84480–081–4 © 2006 Alan Branch Air freight rates and charges The air freight rate is much higher than sea and embraces rates for particular commodities. The IATA agent originates much of the cargo under groupage both for regular and spasmodic shipments. Air freight consolidation A growth market and particularly focus on the 21 factors listed in which the business operates under agent sponsorship.

6. Use with Export Practice & Management Fifth Edition by Alan Branch ISBN 1–84480–081–4 © 2006 Alan Branch Canal and inland waterways freight rates The simple tariff examined is based on spasmodic consignment and is counter balanced by a range of special rates based on cost plus profits for containers palletised and indivisible loads. International road haulage rates Undoubtably the largest market is the Trans European. Many are operated by freight forwarders. Overall it is a global market with rates based on weight/measurement criteria.

7. Use with Export Practice & Management Fifth Edition by Alan Branch ISBN 1–84480–081–4 © 2006 Alan Branch International rail services rates Rail traffic is a growth market especially in single commodity and container volume cargoes. Note the 6 points raised. Maritime container rates Note the 3 factors listed: service cost, value added and market environment opportunity. Comprehend the NVOCC consolidator rates strategy case study. Sea freight rates Comprehend the range of rates especially the difference between liner and tramp.

8. Use with Export Practice & Management Fifth Edition by Alan Branch ISBN 1–84480–081–4 © 2006 Alan Branch Calculation of freight rates Most important to comprehend the range of freight rates calculation and types of rates. Essential in the shippers costing rates analysis and strategy and to understand the 24 types of rates listed. Royal Mail International A growth market/note the rate of 5 services offered and the benefits to the user.

9. Use with Export Practice & Management Fifth Edition by Alan Branch ISBN 1–84480–081–4 © 2006 Alan Branch Key concepts Ensure you understand the following: Theory of freight rates especially salient points. Constituents of the freight rate and its formulation – very important to understand all the areas in rate negotiations. Air freight rates and charges – a basic understanding in rates evaluation. Air freight consolidation – a growth market which must be fully understood. Canal and inland waterway freight rates especially the rate structure option.

10. Use with Export Practice & Management Fifth Edition by Alan Branch ISBN 1–84480–081–4 © 2006 Alan Branch International road haulage freight rates in particular the structure and the role of the freight forwarder. Maritime container rates in particular the case study. Sea freight rates especially difference between liner and tramps. Calculation of freight rates – important to understand the 24 types and their calculation. Royal Mail International and their increasing role.

11. Use with Export Practice & Management Fifth Edition by Alan Branch ISBN 1–84480–081–4 © 2006 Alan Branch Conclusion Freight rates represents a complex area of types which must be understood by the rates analyst in any costing exercise of a range of options available for a consignment.