What is Freight? What Does Shipping Fee Mean?
Freight is one of the most frequently used terms in the transportation industry and refers to the fee paid for moving goods or cargo from one point to another. This fee indicates the monetary payment made to the carrier or transport service provider for carrying out the shipment. The freight cost varies depending on the type, volume, weight of the cargo, the distance to be covered, and the preferred mode of transportation.
Shipping fees are an important component of logistics costs in international trade and should be carefully evaluated by businesses for accurate product pricing. Factors such as the transport route, type of transportation (sea, road, air, or rail), fuel prices, and market conditions play a significant role in calculating the freight cost. Although the term freight is commonly used in maritime transport, it is also generally used to refer to the cost of carriage in other transportation modes.
The freight payment is requested by the party performing the transportation and may differ depending on the agreement between the sender and the receiver. For instance, in some cases, the sender covers the freight, while in other commercial agreements, the buyer pays this cost. In addition, insurance, port charges, customs duties, and other extra items may not be included in the freight price; these are calculated separately.
Determining the correct freight cost directly affects the competitiveness of businesses. Excessively high freight charges may increase the total cost of products, making price competition difficult, while very low freight charges can bring the risk of low-quality transportation services. Therefore, careful calculation of freight costs is of great importance for efficient logistics processes.
In conclusion, freight is the fundamental charge paid to ensure the safe and economical delivery of cargo to its destination in the transportation sector and is one of the building blocks of logistics in commercial activities. Understanding and managing freight accurately is critical for businesses to control costs and achieve sustainable competitive advantage in global markets.
Important Note
Other costs not included in the freight fee are insurance, customs procedures, and port services. Therefore, all these items should be evaluated separately when planning the total logistics cost.
How is a Freight Contract Prepared?
A freight contract is an official agreement between the party providing the transport service and the cargo owner, which specifies the freight cost, transport conditions, delivery processes, and responsibilities. The stages of preparing this contract are as follows:
Determining the Parties' Information
The full names, contact details, and addresses of the carrier and the cargo owner must be completely included in the contract.
Determining the Freight Fee and Payment Terms
The freight fee should be clearly stated; payment method, maturity, late payment situations, and any extra charges must be specified in the contract.
Defining Cargo Details
The type, quantity, packaging, weight, and any special transport conditions of the cargo must be clearly defined.
Specifying Delivery Time and Route
The date, place, and transport route for the delivery must be clearly indicated in the contract.
Determining Responsibilities and Insurance Conditions
Responsibilities for loss, damage, or delay of cargo, insurance conditions, and force majeure events must be detailed.
Signing and Formalizing the Contract
Having the contract signed by the parties and notarized provides legal validity and assurance.
Important Note
It is highly important to seek professional legal support when preparing a freight contract, to protect the rights of both parties and to ensure a smooth process.
Freight Cost Calculation Methods
Correct calculation of the freight cost is of great importance for cost control and effective planning in the transportation process. The freight cost can be calculated using different methods according to the transport distance, mode, cargo characteristics, and market conditions. This section details the most common methods used in freight cost calculation.
Weight-Based Calculation
The most common freight calculation method is based on the weight of the cargo. In this method, freight is calculated by multiplying the cargo's weight (in kilograms or tons) by the unit freight rate. This method, especially preferred for heavy cargo, ensures transport costs are determined by weight.
Volume-Based Calculation
Especially for light but large-volume cargo, freight is calculated based on volume. The cargo volume measured in cubic meters (m³) is multiplied by the unit volume rate to determine the freight cost. This method is commonly used in air transport.
Weight and Volume Comparison Method
Both weight and volume play a significant role in freight calculation. In this method, the freight calculated by weight and volume are compared, and the higher amount applies. This ensures balance between space and weight in transportation.
Distance-Based Calculation
The transport distance directly affects the freight cost. In distance-based calculation, the determined unit distance rate is multiplied by the total kilometers to be traveled. This method is especially common in road transport.
Time-Based Calculation
In some cases, freight can be calculated based on the transportation time. Especially for rented vehicles or project-based transportation, a daily or hourly fee is charged considering the time factor.
Important Note
The methods and pricing criteria used in freight calculation may vary depending on the type of transportation, cargo characteristics, and market conditions. Therefore, all criteria must be carefully evaluated to determine the correct freight.
How to Use a Freight Calculator?
Freight calculators are digital tools developed to quickly and accurately estimate shipping costs. With these tools, users can enter various parameters that affect their freight costs and instantly calculate the shipping fee. Using a freight calculator provides great convenience for both logistics companies and cargo owners in cost planning.
To use the freight calculator, you first need to accurately enter the information about your cargo in the relevant fields of the tool's interface. This information generally includes:
- Weight of Cargo: The weight of the cargo to be transported, in kilograms or tons.
- Volume of Cargo: The area occupied by the cargo in cubic meters.
- Transport Distance: The distance from the departure point to the destination.
- Mode of Transport: The preferred method such as sea, road, air, or rail transport.
- Type of Cargo: Special classifications such as standard, dangerous, or fragile goods.
After entering all the necessary information, you can click the “Calculate” or similar button to quickly get the freight cost. Some tools also display the prices of optional items like additional services or insurance, providing a more detailed cost analysis.
Freight calculators use price lists and shipping tariffs updated according to market conditions. This allows users to get up-to-date and realistic cost information. In addition, these tools enable users to compare different shipping options and choose the most suitable freight cost.
Important Note
When using a freight calculator, the accuracy of the entered information is very important. Entering incorrect or incomplete data may lead to wrong cost calculations. Therefore, it is recommended to carefully check all parameters.
What are Freight Incentives?
Freight incentives are supports provided by the government in Turkey to increase foreign trade and reduce logistics costs. These incentives are especially aimed at alleviating the transport expenses of exporting companies. Freight incentives are updated every year in line with the state’s economic policies and the dynamics of international trade.
Ministry of Trade Freight Support
The Ministry of Trade provides freight support to cover the transport and cargo costs of exporters. The support rates vary according to the type of transport and the target country. For example, in maritime transport, a certain support amount per ton may be provided for exports to African countries, while in air transport, different support rates may apply for exports to the USA. The support amounts and rates are updated and announced every year.
KOSGEB Sample Freight Support
KOSGEB supports the shipping costs of sample products sent abroad by small and medium-sized enterprises (SMEs). In order to benefit from this support, a business plan and project must be prepared in accordance with the KOSGEB format. Support rates and application requirements are determined and announced by KOSGEB.
Application and Documents
Required documents to benefit from freight support include freight invoice, customs declaration, bill of lading, and payment documents. These documents include official records of the transport and payment processes and must be submitted for support applications. Applications are generally made via the e-Government portal or systems designated by the relevant ministries.
Important Note
Application requirements and documents for freight incentives are updated every year. Therefore, it is important to consult the official websites of the Ministry of Trade and KOSGEB for the most up-to-date information.
What You Need to Know About Freight Invoices
A freight invoice is an official document issued for transport services rendered and legally certifies the freight cost. A freight invoice, which is an important legal document for both the carrier and the cargo owner, plays a fundamental role in conducting transport operations transparently and orderly.
There are certain mandatory details that must be included when issuing a freight invoice. These details clearly reveal the scope and amount of the transport service. The basic elements that must be included on the invoice are as follows:
- Invoice Date and Number: The date the document was issued and a unique number, necessary for invoice tracking.
- Parties’ Information: Includes full name, address, and tax ID of both the carrier and the cargo owner.
- Transport Service Details: The type, quantity, distance transported, and method of transport must be stated on the invoice.
- Freight Cost: The total amount to be paid for the transport service must be clearly written.
- VAT and Other Taxes: VAT rates and amounts should be shown on the invoice if applicable.
- Payment Terms: Payment period, method, and any terms for late payment, if any, must be specified.
The freight invoice is used in commercial records to track transport costs and perform financial analyses. It is also a required document for customs procedures and for companies wishing to benefit from freight incentives.
Freight invoices can also be issued electronically; nowadays, they are quickly and securely created and shared between parties via e-invoice systems. This accelerates the process and increases record security.
Important Note
When issuing a freight invoice, care must be taken to ensure all information is accurate and complete. Incorrect or missing information can lead to commercial and legal problems.
