How are ocean freight shipping rates determined?

Ocean freight rates are determined by supply and demand dynamics, with several layers of complexity:

Core rate-setting factors:

1. Carrier capacity vs demand: When vessel capacity is tight (e.g., post-COVID 2021), rates spike dramatically. When overcapacity exists, rates collapse.
2. Trade lane: Asia–North America and Asia–Europe are high-demand routes with more rate volatility than intra-regional routes.
3. Surcharges: BAF (Bunker Adjustment Factor for fuel), PSS (Peak Season Surcharge), GRI (General Rate Increase), and EQS (Equipment Surcharge for container availability) can add $200–800/TEU on top of base rates.
4. Carrier mix: Premium carriers (Hapag-Lloyd, MSC, Maersk) charge more for reliability. Discount carriers offer lower base rates but often with more schedule changes.

Why your quotes vary by $1,600:

• Different carriers with different reliability track records
• Some quotes include surcharges; others show base rate only
• Contract vs spot rates (contract rates negotiated annually may differ from spot market)
• Booking lead time (booking 4 weeks ahead vs 1 week ahead changes pricing)

Always ask: is this all-in (base + all surcharges + origin THC) or just base ocean freight? Request a detailed breakdown to compare properly.