How to Price your Project Cargo
October 28, 2022 Air Freight, Sea Freight, Uncategorized
Unsure of the pricing of your project cargo shipping cost? When undertaking an international shipment, you may find yourself shipping project cargo. This refers to transporting large and complicated pieces of high-valued equipment, sometimes known as break bulk shipments or out-of-gauge cargo.
When pricing your project cargo, the importance of detailed planning and scoping cannot be underestimated. Complete and accurate information must be provided – at a bare minimum, this includes the unit dimensions and weight.
Below, we’ll look at some of the most important aspects of pricing for your project cargo. We’ll look at the different timescales and challenges that come with pricing your cargo and offer some guidance as to what impacts the cost of your project cargo.
Understand where your responsibility starts and ends
The first step is to define your scope of work. The more detail you can provide, the better – country of origin, country of destination, the commodity to be shipped and the relevant Incoterm are all necessary details to include.
You may also decide to include some additional aspects as part of your work scope, such as:
- Technical diagrams showing the shipment load;
- Timelines for moving your cargo;
- The operational skill required for the shipment; and
- The personnel required for the shipment.
If you have any special requirements at the ports of origin or destination, such as supplier site restrictions or the need for cranes, make this clear from the outset.
Be clear on timescales
Time management is everything when it comes to international shipping.
This is especially true for ships carrying project cargo. In 2019, the United Nations Conference on Trade and Development concluded in their 2019 Review of Maritime Transport that the “widest range of times spent in port has been observed for break bulk general cargo ships” despite “not accounting for a large share of seaborne trade”.
Cargo moving via shipping containers is tried and tested – there are often numerous service options, including direct shipping and transshipment with often weekly sailings. Find out more about the different shipping options here.
But no matter which option you choose, be well aware of the expected timeframes and take possible delays into account. Breakbulk or Roll-on/roll-off (RORO) cargo movements often take longer to arrive in Australia – with services often calling numerous ports prior to discharge.
If imported items are out of gauge, it’s also very likely that permits will be required to effect delivery to the eventual consignee. This may need to be actioned prior to arrival with the appropriate government department. You can read more about import permits here.
Challenges to pricing your cargo
Some of the largest challenges when pricing your cargo will include:
- Having limited information. This may include lack of information regarding the contents of your cargo, its size, dimensions or country of origin. If information is limited, it means the accuracy of any costing you are provided will be limited.
- Inaccurate technical diagrams. Having diagrams that are not sufficiently detailed, or are just plain inaccurate, may lead to an incorrect costing. Technical diagrams, when done properly are highly detailed and are very useful when costing project cargo. Beyond the dimensions and weights, it will show lifting and lashing points – these are critical when considering loading the units via crane and securing the units, either for sea carriage or road carriage.
- Unskilled operators. Inadequately trained or qualified operators pose a considerable risk where moving project cargo. Whilst competitive rate structures are paramount, nominating poor transport suppliers is exposing the consignment to undue risk. Ensure all stakeholders are well vetted, compliant and credentialed.
What impacts on the price of your project cargo?
Be on the lookout for the following, which could very well impact the price of your project cargo:
- Peak periods. Like container vessels, breakbulk and RORO movements are subject to peak periods. Shipping peak season generally lasts from mid-August to October, and many delays can occur if your project cargo is not booked early.
- Hidden costs. Stay alert for hidden or unquoted charges – if a clear work scope has been provided, it is the responsibility for the freight forwarder to understand all the cost inputs and ensure these are clear. Please read our article on the hidden costs of shipping that every importer and exporter should know.
- Port and Terminal charges. Application of port and terminal charges can be a little tricky. If cargo can be driven or is loaded on a mafi (a special type of mobile platform for loading large items – images below), this will usually attract a lower port charge, whereas static cargo will attract a higher charge. Read our blog on port terminal infrastructure fees for more information.
- Volumetric charges. Understand how volumetric charges (also known as chargeable weights) are calculated. This is because cargo is priced not on the actual weight of cargo, but its chargeable weight. For example, cargo looking to be imported is heavy but relatively small (think cable wheels), and so will be charged differently to light but quite large cargo (think of large boilers). It is critical you understand the basis on which volumetric charges are calculated. Often the term revenue tonne (or RT) will be used, which refers to the larger or the cargo weight (tonnes) or volume (cubic metres).
Take out marine insurance
Make sure you consider and take out appropriate marine insurance.
Often breakbulk cargo will need to be crane lifted on and off transport, placed and removed from stow, moved into storage yards – so there are lots of opportunities where high-value and sensitive cargo can be mishandled.
Read more about the importance of marine insurance, and the different types of policies you can take out, here. In some cases, marine insurance may even be mandatory. We here at ICE offer a variety of marine insurance solutions you can purchase.
Seek guidance from a Freight Forwarder
Finding your project cargo shipping cost is complicated, requiring considerable planning.
If the project and breakbulk cargo form part of your supply chain function is regular business for your firm, then you will likely have an established process and expertise.
But if your cargo movements shift away from existing processes, it’s critical that you seek professional guidance from a freight forwarder who can support and provide advice on the planned movement.
It is important to keep your freight forwarder accountable. It is the obligation of your nominated forwarder to meet your stated expectations and report back on key milestones.
Here at ICE, we’ve established reporting KPIs ensuring you remain informed through each milestone of the shipping journey.
If you’ve got further questions about your project cargo shipping cost, don’t hesitate to contact our expert freight forwarders here at ICE today.
We can provide tailored advice on your project cargo shipment, including any breakbulk and RORO cargo movements you’ve got planned. We can also discuss what marine insurance options are best for you.
Please call us today or request a quote.Request A Quote
or call us on 1300 227 461
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