In this guide, you will find all information you’re looking for about origin charge.
So, keep reading to learn more about this freight term.
- What Is An Origin Charge In Shipping?
- Is Origin Charge The Same As Origin Receiving Charge?
- What Constitutes Of Origin Charges In Shipping?
- Who Pays The Origin Charge?
- How Do Origin Charges Affect International Shipping?
- Do Origin Charges Apply To All Forms Of Shipping?
- Do Origin Charges Change?
- How Do Shipping Companies Calculate Origin Charges?
- Are Origin Charges Included In The Shipping Quote?
- When Do You Have To Pay For Origin Charges?
- Which Is Better Between FOB And CIF With Regards To Origin Charges In Shipping?
- What Factors Influence Origin Charges?
- Do ‘Free Time’ And ‘Free Days’ In Container Shipping Affect Origin Charges?
- Are Origin Charges In Ocean Shipping FMC (Federal Maritime Commission) Regulated?
- Do Origin Charges Include Goods Liability Costs?
- How Do Origin Charges Influence The Overall Cost Of Shipping Goods?
- Can You Avoid An Origin Charge In International Shipping?
- Are Origin Charges Negotiable?
- What Are The Benefits Of Hiring A Capable Freight Forwarder In Relation To Origin Charges?
What Is An Origin Charge In Shipping?
It refers to fees charged on the services and facilities provided at the port before a shipment leaves its port of origin.
In as much as origin charges are imposed on every shipment.
The incoterm being used will determine the person responsible for paying an origin charge.
Origin charge in shipping
Is Origin Charge The Same As Origin Receiving Charge?
Origin charge and Origin Receiving Charge are two different types of charges in shipping.
Origin receiving charge (ORC) is the fee that caters to container handling of your shipment at the port of origin.
This happens from the moment your container is received at the container freight station to when loading is carried out.
On the other hand, origin charge refers to fees charged on services provided before your shipment leaves the port of origin.
What Constitutes Of Origin Charges In Shipping?
Origin charges include all the fees on services and facilities that will be applied to your shipment before shipping.
Let’s have a look at them below;
- AMS fee – Automated Manifest System is an electronic system used in the transmission of data.
Its main purpose is to ensure the safety of the cargo of air and sea shipments.
To facilitate this, you will be required to pay an AMS fee which is mostly imposed per BOL/AWB.
The supplier or the client will be held responsible for paying the fee.
- CFS fee – Container freight station fee caters to the operations surrounding the deconsolidation of the shipment.
- Loading and Unloading fee -Once your shipment is received at the port, the truck transporting it has to be unloaded.
- After completion of all the required processes, your shipment will be loaded to the ship.
- Handling fee– There has to be labor involved when handling your shipment, and thus the origin charge is also meant to cover these services.
- Customs inspection – All commercial shipments must pass through customs when being exported.
While this is mostly the most challenging part of any shipping process, working with a freight forwarder should reduce your hassle.
During this procedure, your shipments will be inspected and cleared by export custom clearance officials, and some fees will be charged.
Not much needs to be said. This fee falls under origin charges.
- Origin document fee – the origin document fee caters to the fees you will pay when obtaining and sending bills of lading.
- Storage services – Shipping of goods doesn’t happen in one day.
It might take up to a week or more for your goods to be cleared for shipping.
Within this period, you will need storage space for your shipment, adding up to the origin charges.
Other services include; additional transportation charges (ATC), stairs, elevators, and excessive distance carriers, to mention some.
Who Pays The Origin Charge?
The main determinant of who will be responsible for paying the origin charges is the type of incoterm used on the shipment.
Different incoterms will have divergent rules in regards to the person responsible for making the payments.
For instance, when using EXW incoterms, the importer will be responsible for settling the costs involved.
It’s important to select your incoterm to avoid some shipping frustrations wisely.
How Do Origin Charges Affect International Shipping?
Origin charges can result in delays of the shipment, which happens due to late payment of fees.
Aside from that, delays can also be caused by;
- Wrong documentation
- Misplacement or loss of documents
- Custom clearance
- Lack of proper communication
- Late receipt of documents
Delay of shipments affects other sectors along the supply chain, posing a great challenge to importers.
The longer the shipment stays at the port, the higher the costs accrued.
Thus adding up to the total origin charges and in turn making international shipping expensive.
Remember, the storage space needs to be paid for, not forgetting the deadline for container submission.
These are just some among a couple of other costs that will shoot up.
In case a delay is experienced at the port, thus affecting international shipping.
Do Origin Charges Apply To All Forms Of Shipping?
Origin charges apply to all forms of shipping.
When shipping goods, the shipment must go through some processes at the port of origin before loading them into the ship.
For this to be fast and successful, you need to pay for the services and facilities offered at the port.
Different incoterms will determine who is responsible for paying the origin charges.
Do Origin Charges Change?
Yes, they do.
Sometimes, there might be a General Rate Increase (GRI) which causes an increase in the costs.
Lack of awareness of your carrier’s GRI will have you incurring extra costs during the surcharge period.
You must enquire about this before shipping your cargo.
It’s also important to understand that the origin charges will be different for different types, dimensions, and sizes of the shipment.
Fluctuations of currency in international trade can also cause the origin charges to change.
How Do Shipping Companies Calculate Origin Charges?
Origin charges vary depending on various factors, which are not limited to;
- Shipment dimensions – The dimensional weight of a shipment uses the size of the shipment to find out its shipping costs.
The DIM weight, the length, width, and height of the shipment are multiplied then divided by the DIM divisor.
Between the DIM weight and actual shipment weight, the higher value is what shall be charged.
- The Volume of shipment – Large shipments will incur more charges as opposed to smaller ones.
- Weight of shipment – The heavier the shipment, the higher the charges.
- Value of shipment – It is always advisable to have your high-value goods insured. This offers protection when loss, theft, or damage happens.
Note that the costs will go up as a result of the extra insurance fees required.
In most cases, major shipping companies use the dimensional weight to calculate the origin price using a price calculator.
If you are using sea freight, the origin charge will be presented in a freight quotation.
Are Origin Charges Included In The Shipping Quote?
Yes, a shipping quotation will include a breakdown of all costs, inclusive of the origin charges.
Besides the origin charge, other components you should expect to find in a quotation include;
Terms and conditions of payment, total costs, shipment details, point of pickup and delivery, and transportation methods, to mention some.
When Do You Have To Pay For Origin Charges?
Origin charges are paid before your shipment leaves the port of origin, whether a seaport or an airport.
Which Is Better Between FOB And CIF With Regards To Origin Charges In Shipping?
In regards to origin charges in shipping, FOB is better as compared to CIF.
Not only does the importer have fewer responsibilities during shipping, but also it is cheaper.
With CIF, the costs are higher as a result of the seller using their freight forwarder.
Who often charges more to gain more profits.
Additionally, extra fees such as docking and custom clearance fees might be charged at the port when using CIF.
With FOB, the buyer is free to negotiate prices with a freight forwarder of their choice.
What Factors Influence Origin Charges?
Some of the factors that affect origin charges are not limited to;
- The type and Volume of shipment – High-value shipments will have a higher origin charge due to their extra care when handling.
- Currency and Exchange rate – Currency fluctuations in international trade might raise or lower the origin charges.
US dollar is the main currency recognized in international trade.
- Port congestion -Port conditions such as bad weather, strike, and typhoon, among other factors, affect normal port operations.
This, in turn, forces shipping companies to charge extra costs on the services and facilities offered.
- The shipment’s size and weight – The bigger the shipment, the more costs you will incur and vice versa.
The same applies to the weight.
Heavy shipment tends to attract more costs as they also require additional labor or facilities.
Do ‘Free Time’ And ‘Free Days’ In Container Shipping Affect Origin Charges?
Yes, they do. Free time refers to when the container is allowed to be stored at the port for free.
You need to keep in mind that once the free time lapses.
Additional costs referred to as demurrage begin to accrue until you return the container.
These extra charges are normally updated every day, and, in some instances, they can exceed $100 per day.
Such costs affect the overall origin charges as they increase the charges.
Are Origin Charges In Ocean Shipping FMC (Federal Maritime Commission) Regulated?
Yes, they are.
The Federal Maritime Commission regulates the origin charges by keeping track of the charges.
To ensure that they are fair but also reasonable.
In addition to that, FMC ensures that the charges are automatically published using automated tariff systems and are accessible to the public.
Do Origin Charges Include Goods Liability Costs?
Yes, goods liability costs are included in the origin charges, and this includes insurance fees. Remember, it’s always advisable to secure insurance for your shipment, and such are some of the services offered at the port.
Since most if not all incoterms exempt insurance costs, the seller always becomes the one to get the insurance for the importer.
The insurance costs are part of the origin charges imposed on your shipment before it leaves the port of origin.
How Do Origin Charges Influence The Overall Cost Of Shipping Goods?
Origin charges might lower or increase the cost of shipping goods in international trade.
For instance, if the cost of any services or facilities offered at the port is raised.
The effect is felt all along the supply chain to the final buyer.
As much as the importer had budgeted to spend X amount of money for shipping, they will have to pay extra when shipping goods.
Can You Avoid An Origin Charge In International Shipping?
You cannot avoid origin charges in international shipping, but you can avoid extra costs and reduce the origin charges.
Are Origin Charges Negotiable?
Yes, origin charges are negotiable.
You can negotiate fees with your carrier or freight forwarder when shipping.
What Are The Benefits Of Hiring A Capable Freight Forwarder In Relation To Origin Charges?
If you are looking to have a smooth shipping process, hiring a capable freight forwarder is essential.
Working with a freight forwarder allows you to concentrate on other areas of your business as you await your shipment to arrive.
Here are some of the reasons why most importers prefer using freight forwarders;
- Cost-effectiveness -Cost-effectiveness is one of the top benefits of working with freight forwarders.
Capable freight forwarders are experienced in their line of duty and can effectively negotiate prices with the different networks they have established.
This way, your overall origin charges are greatly reduced as compared to handling this solely.
- Security -No matter how valuable your shipment is; you are assured of the security of your shipment without having to pay additional charges for such services.
This lets you be at peace knowing that your shipment is being handled carefully by people you can rely on.
Such all-inclusive services reduce the origin charges that could otherwise be higher if taken with different people.
- Warehousing – Once you hire a freight forwarder, several services come all-inclusive of the price and storage, part of origin charges.
- That way, you won’t need to hire additional people to handle storage services, which will save more on your shipping.
- Efficient inventory management – Owing to their vast networks, freight forwarders provide an all-inclusive package, thus saving you from hiring different people for different services.
Having different people take care of different services of your shipping process costs more and thus increases the origin charges.
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