How to Price a Freight Shipment (Step by Step)

The Seven Layers of a Freight Quote

Every accurate freight quote is built from the same seven layers, stacked in order. You start with the cargo itself and finish with the price your customer sees. Skip a layer and the quote is wrong — usually in the customer's favour, which costs you margin.

1. Chargeable weight: what the carrier actually bills on, not always the same as the real weight
2. Base freight: the port-to-port or airport-to-airport rate
3. Origin charges: covers pickup, export clearance and terminal handling
4. Destination charges: covers terminal handling, delivery order and last mile
5. Customs duty & taxes: statutory charges applied at the destination
6. Insurance: your marine cargo cover
7. Your margin: the markup that pays you

Work through them in this order and you will never forget a charge. Not sure about any of these terms? Our shipping glossary has plain-English definitions for W/M ton, THC, B/L, Incoterm and every other abbreviation in this guide. Let's price each layer.

Step 1: Find the Chargeable Weight

The carrier does not bill on what your cargo weighs. It bills on the chargeable weight — the higher of actual weight or volume-derived weight. Light, bulky cargo is charged on its volume; dense cargo is charged on its mass. This single step decides whether your quote is competitive or wildly off.

First measure your cargo and get the total CBM. If you only have carton dimensions, the CBM Calculator does this in one click. Then convert to chargeable weight using the rule for your mode:

Use the Chargeable Weight Calculator to do this comparison automatically, and the Air Freight Calculator if you are quoting by air. The number these produce is the figure every cost line below is multiplied against.

Step 2: Calculate the Base Freight

Base freight is the headline rate to move the cargo from origin port to destination port. The model depends entirely on how the cargo travels.

LCL ocean: priced per W/M ton

Less-than-container-load freight is quoted per W/M ton (the chargeable figure from Step 1). Multiply your chargeable W/M by the per-ton rate. Most lanes carry a minimum charge of 1 W/M, so a tiny shipment still pays for one ton. Typical LCL rates sit in the range of roughly $30–70 per W/M ton depending on lane and season.

FCL ocean: priced per container

Full-container-load freight is a flat box rate regardless of how full the container is. You pay the same whether a 20ft box is half empty or cubed out. Once your cargo climbs past roughly 15 CBM, a 20ft FCL often beats LCL per cubic metre — run your numbers through the LCL vs FCL Calculator to find the crossover for your lane.

Air freight: priced per chargeable kilogram

Air is billed on the chargeable kg from Step 1, times the per-kg rate, with break points (e.g. +45 kg, +100 kg, +300 kg) where the rate drops. Light, bulky cargo almost always pays on volumetric weight by air.

Step 3: Add the Origin Charges

Base freight only covers the ocean or air leg. Before the cargo even reaches the ship, a stack of local charges apply at origin. These are the line items importers most often forget when they try to price a shipment themselves:

• Pickup / inland haulage: gets cargo from the supplier to the origin port or CFS
• Export customs clearance: filing the export declaration
• Origin THC (terminal handling charge): the port's fee to load your cargo
• Documentation / B/L fee: issuing the bill of lading or air waybill
• CFS / handling: the consolidation warehouse charge for LCL shipments

Origin charges are mostly fixed per shipment or per container, not per CBM — so on small shipments they can dwarf the base freight itself. Always quote them as discrete lines.

Step 4: Add the Destination Charges

The mirror image of origin charges waits at the other end. Whether you or your customer pays them depends on the Incoterm, but they must appear in the full landed picture either way:

• Destination THC: the arrival port's handling fee
• Delivery order (D/O) fee: releasing the cargo from the line or agent
• Import customs clearance: filing the import entry
• Last-mile delivery: trucking from port to the final door
• Demurrage / detention risk: applies if the cargo isn't cleared in free time

For a true door-to-door price, origin and destination charges together often add up to as much as the base freight on short or low-volume lanes. This is exactly why a customer's "but the ocean rate is only $40" expectation collapses the moment the full quote lands.

Step 5: Estimate Customs Duty and Taxes

Import duty and VAT/GST are statutory — set by the destination country, not by you. They are calculated on the customs value, which under the common CIF basis is the goods value plus freight plus insurance. Duty rates vary by HS code and trade agreement, and import tax (VAT or GST) is then charged on top of the duty-inclusive value.

To roll duty, taxes and all the charges above into one delivered figure, use the Landed Cost Calculator — it is the fastest way to show a customer the true cost of getting goods to their door, not just the freight.

Step 6: Add Cargo Insurance

Marine cargo insurance protects the goods in transit and is priced as a small percentage of the insured value. The insured value is conventionally the goods value plus freight plus a markup of around 10% (to cover lost profit on a claim). Premiums are typically a fraction of a percent, often in the region of 0.1% to 0.5%, depending on commodity, route and the level of cover.

Even when the customer self-insures, quote insurance as an optional line. It signals you are pricing the whole risk picture, not just the cheapest leg.

Step 7: Add Your Margin and Quote

Now sum every line above — that's your buy cost. Your sell price is the buy cost plus margin. Forwarders commonly add a markup in the region of 10–25% on the freight buy rate, plus fixed handling and documentation fees that carry their own margin. Thin-margin spot bookings sit at the low end; door-to-door and value-added services at the high end.

Present the result as a single all-in number with the Incoterm stated plainly, then a breakdown beneath it. Customers trust a quote they can read line by line. If you don't have a clean format yet, start from the free freight quote template and fill in each layer from this guide.

Worked Example: A Real LCL Quote

You are pricing an LCL shipment from Shanghai to Rotterdam. The cargo is 10 cartons at 60 × 40 × 30 cm, total gross weight 600 kg, goods value $8,000.

1. Chargeable weight: CBM = 0.60 × 0.40 × 0.30 × 10 = 0.72 CBM. Weight in tons = 600 ÷ 1,000 = 0.60. Higher figure = 0.72 W/M, but the 1 W/M minimum applies, so you bill 1 W/M ton.
2. Base freight: 1 W/M × $45 = $45.
3. Origin charges: export clearance $40 + origin THC $35 + CFS $25 + docs $30 = $130.
4. Destination charges: destination THC $40 + D/O $35 + import clearance $50 + delivery $90 = $215.
5. Customs & tax (illustrative): CIF ≈ $8,000 + $390 + $40 ≈ $8,430. At 5% duty = $422; at 21% VAT on $8,852 = $1,859. These are passed through to the importer, shown separately.
6. Insurance: insured value ($8,000 + $390) × 1.10 ≈ $9,229 × 0.3% = $28.
7. Margin: freight + charges buy = $45 + $130 + $215 + $28 = $418. Add 18% margin = $493 all-in freight & services, with duty and VAT quoted separately as a pass-through.

Notice the base freight ($45) is barely 9% of the total freight bill. That is the lesson of pricing a shipment properly: the rate is the smallest part, and the layers around it are where quotes are won or lost.

Frequently Asked Questions