Understanding Your Ocean Freight Invoice: A Comprehensive Guide

Freight invoice analysis reveals the charges connected to processes overseen by other parties helping to manage the goods. Automated ocean freight invoice management is preferable for higher efficiency and accuracy.

Automation in invoice management is gaining popularity because manually prepared invoices can have the risk of human error. It also takes more time and keeps your employees occupied with a single task all day. Going digital for your freight invoice system ensures that your human resources are involved in tasks that make the best use of their abilities. While creating invoices for all modes of transport can be challenging, there are charges you can easily miss in an ocean freight invoice if you’re not careful. Choosing freight management software for invoices related to ocean freight increases your operational productivity and saves time spent on making corrections. There are several charges included in such invoices that are limited to certain scenarios or countries. When you’re instructing a trainee on handling invoices, a proper guide to freight invoice analysis may come in handy.  

What are the charges added to an ocean freight invoice?

Once you start learning invoice management, you realize that visualizing the journey of the goods is helpful. When you consider the various processes that goods go through from their shipping point to their destination, understanding the charges becomes easier. Besides the main part of the goods journey onboard the ocean carrier, there are two smaller parts. Your freight invoice mentions the charges for the goods being transported via road to the ocean carrier and from the ocean carrier to the final stop when they reach the recipient.  

Inland movement

Think about the inland transport of the goods at the start and end of the route. You pay a trucking service that’s added to your freight invoice analysis. The trucker takes the goods to the ocean carrier and then another trucker may take them to their delivery location. Remember that delivery order charges are also applicable in case of EXW. The delivery order fee is for releasing the goods from the ocean carrier to the trucker.  

Demurrage fee

The ocean carrier gives you some free days during which you can remove your containers from the terminal. Failing to shift your containers from the terminal within the free days makes you liable to pay demurrage charges to the shipping lines. Demurrage charges are common in ocean freight invoice management and differ from port storage charges, which are collected by the terminal.

Fuel surcharge

Since fuel prices are bound to fluctuate and it takes days for goods to be delivered in the ocean freight sector, a fuel surcharge is an expected cost. The fuel surcharge accounts for fuel fluctuations, but you may see it twice in your freight invoice when you’re transporting goods to other countries. Fuel costs and fluctuations vary for different countries, trucking companies, and the amount of distance covered.

Loading or unloading

Depending on the port the ocean carrier is docking at on the course of its journey, you may have to add an extra charge to your ocean freight invoice. You should be aware whether the ports within the route you’ve organized for your goods have additional charges for loading and unloading goods from the ocean carrier.

Importer security filing (ISF)

The documentation charges for importer security filing (ISF) are included in your freight invoice analysis whenever the goods are within the jurisdiction of US customs. As an importer you’re required to submit the importer security document about importing data at each transit point. Not complying with the US customs’ regulations can get you slapped with a $5000 fine.  

Cancellation or route change

Like other industries, the shipping industry is also vigilant towards cancellations and changes to the route. Every measure should be taken to avoid canceling a scheduled shipment because it disrupts the plans of all parties involved in handling it. Your freight invoice shows the charge for altering the route taken from point A to B for your goods.

Export clearance

Whenever someone wishes to send goods from one country to another, there’s an export clearance charge added to your ocean freight invoice. You have to be well-versed in the laws and regulations for exporting goods from the country you’re operating in. There’s no fixed fee that can be applied internationally for export clearance, so do your due diligence.

Early or late arrival

Stack dates are set by the port authorities in cooperation with the shipping line to ensure that there’s space and staff available to manage an ocean carrier docking at their port. The ocean carrier is supposed to reach the port at the expected time of arrival (ETA). If the vessel is early or late, it creates more work for the workers at the port and you have to pay a charge added to your freight invoice analysis for not following the schedule.

Cargo packing

The goods you’re transporting are required to be packed securely in their containers for safety, security, and organization. The more fragile the goods are the more careful you have to be about preventing any damage to them under your management. You can outsource the container packing services as recorded in your freight invoice and even consult warehouses who offer this service for a fee.

Port storage

When you haven’t moved the goods from the port’s space within the free days allotted to you by the port authorities, you have to pay port storage charges. The reason for demanding this fee is that the port has a limited amount of space. Leaving your containers in the port affects the port’s productivity, making you include port storage charges in your ocean freight invoice.

Terminal fee

The terminal handling fee (THC) is a common part of freight invoice analysis and is charged by the terminal that’s servicing your container on its route. There are different types of skilled workers taking care of the operations at the terminal. Workers at the terminal may operate heavy equipment like forklifts, cranes, and more.

Goods dues

You might be interested to learn that goods dues or wharfage is not just charged on goods that are loaded and unloaded from ocean carriers. Goods dues are also applicable to goods that are shifted from one ocean carrier to another. The wharfage added to your freight invoice depends on the weight, volume, and number of goods loaded or unloaded.

Ocean freight

Just like trucking companies charge you for the transport of goods on their trucks, shipping lines charge you for the same service on their ocean carriers. You can get quotes for ocean freight and select the most suitable one before adding it to your ocean freight invoice. The rates for ocean freight are usually based on the weight and volume of your goods.

Detention charge

There are a number of scenarios in which you may be asked to pay a detention charge. Holding onto the container of an ocean carrier outside the port when the allotted free days have passed makes you liable to pay this fee as does exporting containers. The reason the detention charge is necessary is decreasing the turnaround time of containers.  

 There are some charges that are necessary in your freight invoice analysis, but others can be avoided. For instance, staying on schedule saves you from charges that are imposed on you due to early or late arrival. Efficient route management using real-time tracking in freight software helps prevent unexpected route changes because of poor planning. Sometimes delays are caused by irresponsible management of shipment documentation. Try to insert automation wherever possible in your operations to improve the efficiency and productivity of your employees. You’ll have a smoother experience with your freight invoice preparation by shifting to digital processes.