How is freight calculated? The line items that determine price

What freight is, and what it covers

Freight is the amount paid to the carrier for moving cargo from its point of origin to its point of destination. Its scope is narrow: it covers the vehicle (vessel, aircraft, truck) taking the cargo from point A to point B. Many of the line items that make up the total cost of carriage fall outside freight and are invoiced separately.

Items generally not included in freight:

• THC (Terminal Handling Charge): the fee paid to the terminal for loading the container onto, or discharging it from, the vessel. It arises separately at origin and at destination.
• Port and documentation costs: ISPS security fee, bill of lading fee, the fee for the container weighing (VGM) declaration. The VGM declaration itself is a statutory obligation of the shipper under SOLAS Chapter VI, Regulation 2; a container without it is not loaded onto the vessel.
• Delivery order and destination agent costs: the charges paid to take delivery of the goods.
• The customs side: the declaration, brokerage fee, and duties.
• Discharge, unloading, inland transport, and storage.
• Demurrage and detention: charges paid to the carrier when a container exceeds free time inside the terminal (demurrage) or outside it at the consignee’s premises (detention). The terminal’s own storage fee is a separate item paid to the terminal.

A significant portion of the price differences between quotes comes from here. A freight figure that looks low is not meaningful until it is clear who bears these items.

Sea freight: the FCL and LCL difference

There are two separate pricing logics at sea.

FCL (Full Container Load) means a full container, and freight is quoted per container. Whether the container is half full or packed to the ceiling, the price does not change. That’s why the real issue in FCL is maximizing fill. Rough internal volumes: a 20’ standard container is about 33 m³, a 40’ standard about 67 m³, and a 40’ High Cube about 76 m³. On the weight side, the container’s maximum gross weight and the road tonnage limits in the origin and destination countries are decisive.

LCL (Less than Container Load) is part-container. The price is calculated on a W/M (weight or measurement) basis: the cargo’s volume (m³) is compared with its weight (tons), and whichever is greater sets the charge. 1 m³ is treated as equal to 1 ton.

Example: for cargo with a volume of 3 m³ and a weight of 800 kg, volume is 3 and weight is 0.8, so the charge is based on 3 units. For cargo of the same volume weighing 4,200 kg, 4.2 units is the basis. A minimum unit charge is common under LCL; for very small shipments, the total amount is capped by this floor.

Air freight: chargeable weight

In air freight, price is based on chargeable weight. Two values are compared:

• Actual (gross) weight, in kg.
• Volumetric weight: length × width × height (cm) ÷ 6,000.

Whichever is greater is what the tariff is applied to. The divisor of 6,000 is the common convention in air cargo, and corresponds to roughly 167 kg per cubic meter. Express courier shipments mostly use a divisor of 5,000, which gives a higher volumetric weight for the same box.

Example: a carton measuring 100 × 80 × 90 cm, weighing 90 kg. Volumetric weight is 720,000 ÷ 6,000 = 120 kg, and the charge is based on 120 kg.

Air tariffs are tiered: the unit price per kilo drops as weight increases. Chargeable weight is usually rounded up to the next 0.5 kg, and tariffs apply a minimum charge, so small shipments may be billed at that floor. On top of this, airport handling, security screening, and fuel surcharges are added.

Road transport: full truckload and ldm

In road transport, full truckload (FTL) pricing is per vehicle; the cost of one vehicle on a given route is agreed. The cargo’s volume or weight does not change the price as long as it does not exceed the vehicle’s capacity.

For part-load (LTL) transport, the unit of measure is mostly the ldm (loading meter). 1 ldm means 1 meter of space across the full width of the vehicle’s loading floor. A standard tautliner semi-trailer’s loading length is 13.60 meters, so the vehicle is roughly 13.6 ldm.

The calculation runs on floor space. A Euro pallet measuring 120 × 80 cm, placed two abreast across the vehicle’s width, takes up 0.4 ldm. If cargo cannot be placed on top of it, that space is charged on its own.

Part-load transport also applies a weight-to-ldm conversion: each ldm has an agreed weight equivalent in the contract, and if the cargo exceeds it, the charge is based on weight instead. In European groupage, the common equivalence is 1 ldm = 1,750 kg (13.6 ldm × 1,750 kg ≈ 24 tonnes of loading capacity). This ratio can vary by carrier and line (typically within a 1,500–2,000 kg band) and should be confirmed in the contract.

Factors that determine price

• Route and direction: between the same two points, the outbound and return price is often not the same. Freight drops in the direction where empty equipment accumulates.
• Number of transshipments: a direct service generally offers a shorter and more predictable transit time. A transshipment service is often cheaper, but this does not hold on every route, and on busy main lanes a direct service can also be price-competitive. Transit time lengthens with each transshipment.
• Season: in periods of concentrated demand, a peak season surcharge (PSS) and a general rate increase (GRI) come into play.
• Equipment type: refrigerated, open top, flat rack, and tank containers are more expensive than a standard dry container, and their availability is also limited.
• Nature of the cargo: dangerous goods classification, temperature control, heavy tonnage, or out-of-gauge dimensions move the tariff into a separate band.
• Supply and demand: vessel capacity, equipment shortages, route changes, and transit restrictions can move the price within weeks.
• Validity: spot rates in sea freight are short-lived; an expired quote is not binding.

Common surcharge items

Abbreviation	Full name	Covers
BAF	Bunker Adjustment Factor	Fuel price fluctuation
LSS	Low Sulphur Surcharge	Use of low-sulphur fuel
CAF	Currency Adjustment Factor	Exchange rate difference
PSS	Peak Season Surcharge	High-season demand
GRI	General Rate Increase	General tariff increase
PCS	Port Congestion Surcharge	Port congestion
War Risk	War risk surcharge	Passage through high-risk areas

In sea transport, the sulphur content of vessel fuel is limited by the IMO’s MARPOL Annex VI (a global cap of 0.50% m/m since 1 January 2020, and 0.10% m/m within emission control areas such as the Baltic Sea, the North Sea, North America and the US Caribbean; the Mediterranean has also been among them since 1 May 2025). LSS is the line item that reflects this fuel cost difference.

What to check when comparing quotes

1. Scope: is the quote port-to-port or door-to-door? The difference lies in who bears the inland transport and terminal items.
2. Delivery term: which Incoterms 2020 rule applies? Under FOB, origin costs sit with the seller and freight with the buyer. Under CIF, freight and minimum cargo insurance (ICC C) belong to the seller, but destination terminal costs usually remain with the buyer. FOB and CIF are for sea and inland waterway transport only; for container, air and multimodal carriage, FCA/CIP are recommended.
3. Included items: is THC included at origin, at destination, or both; is there a delivery order and documentation fee; are surcharges fixed or subject to “the tariff in effect”?
4. Free time: how many days of demurrage and detention exemption are granted at destination. A difference of a few days can, on some lines, exceed the difference in freight itself.
5. Transit time and transshipments: the estimated duration and the number of transshipments.
6. Currency: which exchange rate, and as of which date, will be used for invoicing.

Common mistakes

• Looking only at the freight figure. A comparison is only meaningful once all door-to-door line items are set out side by side.
• Not accounting for volumetric weight. For light but bulky cargo, air freight can end up far above what the scale weight would suggest.
• Giving dimensions without packaging. The charge is calculated on the palletized, packaged outer dimensions; pallet height also counts toward volume.
• Not stating stackability. A part-load shipment that cannot be stacked on is charged for the full floor space it occupies, in ldm.
• Requesting special equipment too late. For refrigerated or open-top equipment, the real problem is often availability rather than price.
• Not planning free time before the cargo arrives. If customs paperwork is not ready, demurrage and detention accumulate quickly.
• Forgetting freight’s effect on the tax base. Under Article 27 of Customs Law No. 4458, customs value on imports is found by adding to the value of the goods the transport and insurance costs incurred up to the port or place of entry into Türkiye, together with the loading and handling costs related to that carriage (items such as THC may fall within this); higher freight also raises the duty payable.
• Assuming insurance is included in freight. The carrier’s liability is limited by the relevant conventions; cargo insurance must be arranged separately.