Why do Freight Costs Vary by Trade Lane?
Prime Freight The cost of shipping 100 cbm of the product from Shenzhen to Los Angeles is not likely to be equal to the cost of shipping the same 100 cbm of the product from Shenzhen to Rotterdam. The reasons for this cost differentiation include: supply and demand The freight rates of the commercial lane are determined by the supply and demand for service on that commercial lane. Tariffs tend to be lower on high-traffic commercial lanes where numerous carriers offer services and need to keep their prices competitive to gain market share. Freight rates tend to be higher on commercial lanes where demand for service is small and only a few carriers may provide service.
GRI (General Rate Increase) Freight prices will be lower on industrial lanes where the GRI has been introduced. Usually, GRIs are introduced on commercial lanes where the competitiveness of the carrier has been too weak.
Seasonal / Market Conditions During periods of high demand, carriers can apply a PSS (Peak Season Surcharge) to commercial lanes. PSS may be applied at any time of year, but it is more common before the fall / winter holidays and before the Chinese New Year.
Freight prices may also increase on trade lanes affected by high demand due to peak seasons, Chinese New Year and Golden Week.
Trade lane freight prices may also differ due to port conditions that may be triggered by weather, accidents, etc. Register to Prime Freight’s market alerts to be alerted when a GRI or PSS has been introduced, when port conditions are causing delays or rate increases, and whether you can expect to see an increase or decrease in your trade lanes.
