Freight Rates Explained: How Ship Freight Is Quoted
A freight rate is the price for carrying a cargo by sea. It can be quoted in several ways, and it depends on many things. This guide explains the units and the main drivers.
How freight is quoted
In a voyage charter the freight is often quoted in US dollars per metric tonne of cargo, for example "USD per MT". It can also be a lump sum for the whole voyage, or per cubic metre for gas cargoes. In a time charter the price is a hire per day, in US dollars per day, and the charterer also pays fuel and port costs. Some tanker rates are quoted on a published scale.
What is included
Always ask what the freight covers. In a voyage charter the freight normally includes the ship, the crew and the fuel, but the terms for loading, stowing and discharging differ. The abbreviation FIO means that the charterer pays for loading and discharging; FIOS adds stowing. Port costs, canal fees and the cost of delays under demurrage can also be for the charterer. Compare offers on the same basis.
What moves freight rates
Distance and route: a longer voyage costs more, and a canal or a cheaper route changes the cost. Cargo and quantity: bigger and easier cargoes get a lower rate per tonne. Ship size and type: see our guides on Handysize to Capesize. Port conditions: waiting time, port costs, loading rates and draft limits. Fuel cost: bunkers are a large part of the voyage cost. Supply and demand: the number of ships free in a region against the cargoes waiting to load. Season: for example harvest seasons for grain, and weather such as monsoon or ice.
Market indicators
Many people follow the Baltic Dry Index as a general sign of the dry bulk market. It is an indicator, not a price for your cargo: your own rate depends on your route, your cargo and your dates. Be careful with rates you see in news or on websites, as they apply to a specific ship and route at a specific time.
How to get good offers
A clear request brings better offers: give the cargo and the exact quantity range, the ports, the laycan and the loading and discharging rates. A wide laycan and a flexible quantity make it easier for ship operators to offer. Ask for the total cost and the terms of delays, and compare the offers on the same basis. The guide how to charter a ship shows the whole process.
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