Knowledge Base · Charges & Billing

What's Included in Ocean Freight? Origin, Surcharges and Destination Charges Fully Explained

One lane, two forwarders, USD 900 versus USD 2,400 — the gap is usually scope, not rate. This guide splits ocean freight cost into three layers (origin local charges, freight plus surcharges, destination charges), explains every line item with its unit, typical range, who pays and when it changes, and closes with an Incoterms allocation table, six quotation pitfalls and a worked 40HQ cost example — from 26 years of forwarding practice.

Updated 2026-09-11 ~15 min read Mighty ops team

The one-paragraph takeaway

An ocean export shipment costs money in three layers: origin local charges (trucking, export clearance, THC, documentation, seal, VGM, EDI) + ocean freight and surcharges (O/F plus BAF, LSS, ISPS, manifest filing, EU ETS, and periodic GRI/PSS increases) + destination charges (DTHC, delivery order fee, brokerage, duty and VAT, delivery). Quotes become unreadable — and invoices grow later — for exactly two reasons: one of those layers was left out, and the surcharge clause allowed the rate to move. The right way to compare quotes is not to compare totals, but to force every quote onto the same three-layer basis, then check validity dates and surcharge caps. Below: the framework, origin line by line, the surcharge catalogue, destination line by line, who pays under each Incoterm, quotation pitfalls, and a worked example.

1. The framework: three layers of ocean freight cost

“How much is a 40ft from Qingdao to Hamburg?” cannot be answered in one number — not because rates are secret, but because the answer depends on where you stop counting. Split the journey from factory gate to overseas consignee by where the cost arises and who collects it, and any quote becomes readable:

Layer What it covers Collected by Currency Volatility
① Origin local charges Trucking, export customs, inspection, THC/ORC, documentation, booking, seal, VGM, EDI filing, fumigation, certificate of origin Forwarder, trucker, terminal, customs broker RMB Low — adjusted annually
② Ocean freight & surcharges Base freight (O/F) + standing surcharges (BAF, LSS, ISPS, manifest fees, EU ETS) + periodic ones (GRI, PSS, EBS, congestion, war risk) Carrier, collected via the forwarder Mostly USD High — moves weekly
③ Destination charges DTHC, delivery order fee, brokerage, duty and import VAT, exam fees, inland delivery, demurrage & detention Destination agent, local customs, trucker Local currency Moderate — but least transparent
  • Why the three-layer habit matters: Incoterms decide who pays each layer, not whether the layer exists. Under FOB you do not pay layers ② and ③, yet they still occur — and they can find their way back to you through a nominated forwarder overcharging at origin, or a consignee who was hit with destination charges and now wants a discount.
  • Which layer runs out of control: layer ③. You can obtain an itemised list at origin, and ocean freight can be benchmarked against public indices (SCFI, Drewry WCI). Destination charges are priced by the local agent, invoiced in local currency, and effectively invisible from the shipper's side.
  • The counter-intuitive part on short sea lanes: on Japan/Korea and Southeast Asia routes, outside peak season base freight can be a couple of hundred dollars — occasionally zero or even negative, when carriers subsidise empty repositioning. In those cases layer ① in RMB often exceeds layer ② altogether, so comparing “the freight rate” alone is meaningless.

For how the three layers map onto trade terms, see Incoterms 2020 explained; for a full breakdown of layer ③, see destination clearance and DDU/DAP charges.

2. Origin local charges, line by line (Qingdao basis)

This layer is invoiced in RMB: many items, none of them large, but they add up enough to dominate short-sea lanes. The table is ordered by how often each item appears; ranges reflect what is commonly seen at Qingdao in 2026 and are given to help you recognise line items, not as a quotation:

Charge Abbreviation Unit Typical range Notes
Terminal handling THC per container 20GP approx. ¥700–900
40GP/40HQ approx. ¥1,100–1,400		 Terminal lift and yard cost, published by the carrier; South China ports charge the same thing as ORC — never both
Documentation fee DOC per bill of lading ¥300–600 Issuing the B/L and related documents; charged once per B/L, split bills extra
Trucking / haulage — per container × distance Qingdao city to Qianwan terminal, 40HQ approx. ¥900–1,600 Driven by distance, fuel and peak-season truck supply; overweight, DG and night pick-up cost more
Export customs clearance — per declaration ¥300–800 Priced by number of declarations and HS lines; statutory inspection, fumigation, C/O and exams are extra
Seal fee — per container ¥50–100 Carrier seal cost; unavoidable
VGM filing VGM per container or B/L ¥50–120 Verified gross mass filing required by SOLAS; missing the cut-off means the box is not loaded
EDI / manifest transmission EDI per B/L ¥100–200 Electronic transmission to customs and terminal systems
Booking fee — per B/L ¥100–300 Some forwarders fold this into the documentation fee — it should not appear twice
CFS / stuffing (LCL) CFS per CBM ¥60–120 / CBM LCL only — warehouse tally and container stuffing; never charged on FCL
Fumigation / heat treatment MB / HT per shipment or piece ¥300–800 One or the other is mandatory for wooden packaging; allow 1–2 days of lead time
Certificate of origin C/O, FORM E, RCEP per certificate ¥200–500 Earns the buyer preferential duty at import — a seller-side value add
Cargo insurance premium — CIF value × 110% × rate Rate approx. 0.05%–0.3% Seller's obligation under CIF/CIP, voluntary under other terms

One line item that no longer exists but still circulates: the Port Construction Fee. It was abolished nationwide in China from 1 January 2021 (Circular Caishui [2021] No. 27 on cancelling and adjusting certain government funds). If a quote still lists “port construction fee”, the party quoting is working from a template years out of date — ask for the line to be removed and check whether the rest of the quote is equally stale.

  • Three items worth comparing: THC, documentation fee and trucking. Together they are over 70% of the origin layer; the rest are small and broadly similar between forwarders.
  • Watch for double counting: THC alongside ORC, booking fee alongside documentation fee, EDI fee alongside manifest fee. When the same substance appears under two names, ask for the difference in writing.
  • The specific FOB risk: where the buyer nominates the forwarder, that forwarder invoices you at origin while answering commercially to the buyer. Capping origin local charges in the sales contract is the only defence that reliably works.

For cut-off, trucking and yard sequencing at Qingdao, see Qingdao port export operations; for LCL chargeable weight and warehouse requirements, see container sizes and load calculation.

3. The surcharge catalogue: 20+ items, four categories

Surcharges are where quotation disputes are won and lost. What they have in common: the carrier publishes them unilaterally, they carry an effective date, and a booking confirmation does not automatically freeze them. The useful skill is not memorising acronyms but knowing which category an item belongs to, and therefore whether it can move before your cargo sails.

3.1 Standing surcharges — present on almost every shipment, and they belong inside the headline price

Code Full name Why it exists Adjusted Typical size
BAF / FAF Bunker Adjustment Factor Bunker price movement Monthly or quarterly Tracks fuel; often 10%–20% of freight
LSS Low Sulphur Surcharge IMO 2020 global sulphur cap (0.5% sulphur, 0.1% inside emission control areas) Monthly USD 20–80 / container
ISPS / SPS International Ship & Port Facility Security charge Security costs under the ISPS Code Largely fixed USD 6–15 / container
ETS EU ETS Surcharge EU brought shipping into its Emissions Trading System from 2024; ships over 5,000 GT must surrender emission allowances With carbon price 100% of emissions counted from 2026 (40% in 2024, 70% in 2025)
AMS / ENS / AFR Advance manifest filing fees Mandatory pre-arrival filing: AMS/ACI for the US and Canada, ENS (ICS2) for the EU, AFR for Japan Largely fixed USD 25–40 / B/L
CAF Currency Adjustment Factor FX movement between billing and cost currencies Monthly A percentage of freight; common on Japan/Korea lanes
Destination DOC Delivery order fee Destination agent issuing the D/O Largely fixed See section 4

EU ETS is the single most overlooked line on 2026 Europe quotes. The phase-in has reached 100%, and the scope distinguishes between intra-EU voyages (all emissions counted) and voyages into or out of the EU (50% counted). For cargo to North Europe and the Mediterranean, insist that the charge is shown separately with its calculation basis — do not accept a vague “already included in the freight”. The EU's separate FuelEU Maritime regulation has applied since 2025, and some carriers pass that compliance cost on under its own heading.

3.2 Seasonal and market surcharges — dated, so your booking timing decides whether you pay

Code Full name Trigger What to watch
GRI General Rate Increase Carriers raise the whole lane when space tightens Usually announced 15–30 days ahead, effective at the start or middle of a month; whether it applies by booking date or sailing date must be stated in the booking confirmation
PSS Peak Season Surcharge Traditional peaks — Christmas stocking for Europe and the US, the run-up to Chinese public holidays Has start and end dates and should lapse after the peak; watch for extension notices
EBS / ESS Emergency Bunker / Emergency Surcharge Sharp fuel rises or sudden cost shifts on a lane Most common on Southeast Asia, South Asia and Middle East lanes; scales with voyage length
Winter surcharge Winter Surcharge Ice-breaking, snow clearance and cold-weather handling at high-latitude ports Russia, the Baltic and Eastern Canada in winter

3.3 Event-driven surcharges — sudden, and capable of being withdrawn mid-stream

Code Full name Trigger What to watch
WRS / WRF War Risk Surcharge Higher hull and crew war-risk premiums for transiting high-risk waters (Red Sea, Gulf of Aden, Strait of Hormuz) Comes down only after a lag when tensions ease; distinct from cargo war risk insurance, which the policyholder pays
Contingency / canal surcharge Diversion or canal surcharge Extra bunker and charter cost of routing around the Cape instead of Suez; Panama Canal draft restrictions in drought Withdrawn in stages as transits resume — have the booking confirmation state whether withdrawal is refunded or credited
PCS Port Congestion Surcharge Serious backlog at a destination or transhipment port Usually per container, lapses when congestion clears; not the same thing as demurrage and detention
Strike / disruption surcharge Strike or disruption surcharge Dock labour action or vessel casualty removing capacity Normally short-lived; check the effective window against your sailing date

What this looked like in 2026: Suez transits have been resuming and carriers have pulled capacity back from the Cape route, so Europe rates and diversion surcharges have eased together — yet Red Sea attacks have not stopped and war-risk claims remain elevated, so the war risk surcharge has come off noticeably later than the diversion surcharge. Over the same period transpacific rates hit new highs, leaving the two trades moving in opposite directions. The lesson is practical: surcharges do not rise and fall as a block — check the notices lane by lane. Background in Suez transits resume and US highs, Europe slide.

3.4 Cargo-driven surcharges — set by what you ship, not by the market

  • Overweight surcharge: charged in bands once a box exceeds the carrier's or lane's weight threshold — commonly in the 17–21 tonne gross range for 40GP/40HQ — and overweight boxes may also be barred from certain feeders or inland legs.
  • Dangerous goods surcharge: banded by IMDG class and UN number, with classes 1 and 7 and parts of 5.2 and 6.1 attracting the steepest uplift; some carriers restrict acceptance or ports entirely. Filing requirements for class 9 goods such as lithium batteries are covered in the lithium battery and DG shipping guide.
  • Reefer surcharge and plug-in fees: reefer freight already exceeds dry freight, and destination ports charge daily plug-in and monitoring on top — which makes reefer overstay far more expensive than dry overstay.
  • Out-of-gauge (OOG): for over-height or over-width cargo on flat racks and open tops, charged by the number of adjacent slots blocked, plus lashing and securing.
  • Exception handling: B/L amendment fees, change-of-destination fees, shut-out fees, exam and devanning fees. These arise only when something goes wrong and should not sit in a routine quote — but ask for the tariff in advance.

4. Destination charges: the layer that goes missing from quotes

What makes this layer different: it is priced by the destination agent, and nothing in the origin quote constrains it. A headline USD 50 LCL rate can sit in front of USD 250 of destination charges — the consignee pays, and then comes back to you for a discount.

Charge Abbreviation Unit Who actually pays Notes
Destination terminal handling DTHC per container Usually consignee The mirror of origin THC; materially higher at European and US ports than in China
Delivery order fee D/O per B/L Consignee Exchanged against the original B/L or telex release; the line where nominated agents mark up most
Devanning (LCL) CFS per CBM or per shipment Consignee LCL only; on small volumes this routinely exceeds the ocean freight itself
Customs brokerage — per entry Importer (seller under DDP) A service fee, separate from duty and tax
Duty and import VAT/GST — on value and tariff code Importer of record Determined by HS code and origin; a certificate of origin can reduce it — see HS code lookup and classification
Exam / inspection — per occurrence Importer Triggered by customs selection; X-ray and full devanning exams on US lanes are costly
Inland delivery Drayage per container × distance Per Incoterm Seller's cost under DAP/DDP; inland points add a rail or truck leg
Demurrage & detention D&D per container × day, escalating Parties to the B/L Accrues daily beyond free time and can exceed cargo value on abandonment — see demurrage vs detention
  • CIF does not mean delivered: under CIF/CFR the seller pays to discharge at the destination port, and DTHC, delivery order fee, clearance and delivery are all billed separately to the buyer. This is the most common misunderstanding in export sales, and a reliable source of post-arrival argument.
  • Disclose layer ③ before you quote: mature practice is to attach an estimate of destination charges to every CIF offer, noting that they are for the buyer's account and subject to the local agent's published tariff. It removes most downstream disputes and reads as professionalism.
  • DDP absorbs all three layers into the seller's cost: before quoting DDP, work out destination duty, the importer-of-record arrangement and delivery — otherwise layer ③ consumes the margin. Method in the DDP delivered duty paid guide.

5. Which Incoterm pays which layer

Mapping the charges from sections 2 to 4 onto Incoterms 2020 gives the allocation table below. S = seller's cost, B = buyer's cost:

Cost item EXW FOB CFR CIF DAP DDP
Domestic trucking to port B S S S S S
Export clearance and inspection B* S S S S S
Origin local charges (THC, DOC, seal, VGM) B S S S S S
Ocean freight and surcharges B B S S S S
Cargo insurance B B B S† B‡ B‡
Destination DTHC and delivery order fee B B B B S S
Import customs brokerage B B B B B S
Duty and import VAT B B B B B S
Delivery to the buyer's premises B B B B S S
  • * EXW export clearance is a trap: the rule assigns it to the buyer, but an overseas buyer has no standing to file an export declaration in China. In practice the seller still files, in its own name or through an agent — which affects export VAT refund eligibility and foreign exchange settlement. If you accept EXW, settle whose name goes on the declaration first.
  • † The minimum cover under CIF: Incoterms 2020 requires the CIF seller to hold only Institute Cargo Clauses (C) — the narrowest cover — while CIP now requires ICC(A), the widest. This is the most frequently missed change in the 2020 revision. A buyer who needs broader cover must contract for it separately.
  • ‡ Insurance is not compulsory under DAP/DDP, but risk stays with the seller until arrival, so sellers normally insure their own exposure. See marine cargo insurance.
  • Where the rules stop: Incoterms bind buyer and seller — they do not bind the carrier. Where freight is collect and the consignee refuses to pay, the carrier can pursue the shipper under the bill of lading. An FOB exporter can still be chased for destination demurrage.

For a side-by-side risk and cost comparison of the three most used terms, see FOB vs CIF vs DDP; for all eleven terms, see Incoterms 2020 explained.

6. Reading a quote: six pitfalls and a checklist

6.1 Base freight only, local charges “at cost”

The classic low-headline quote: USD 850 / 40HQ, with a footnote reading “local charges at cost”. On short-sea lanes the RMB origin charges can approach or exceed the freight itself. How to handle it: require every origin item to be listed with an RMB total, and refuse open-ended “at cost” wording.

6.2 “All-in” that stops at the ship's rail

“All-in” has no legal meaning. In most cases it means everything up to loading on board at origin, with destination charges excluded entirely. How to handle it: ask one question — “which Incoterm does this price run to?” — and require an answer of FOB, CFR, CIF, DAP or DDP rather than “all-in”.

6.3 Validity dates and “subject to change” clauses

Quotes carry Valid till, Subject to GRI/PSS, Rate subject to change without notice. These are normal industry practice — rates genuinely move weekly — but they must be matched against your shipping plan: a quote valid to the 15th is already void if you load on the 20th. How to handle it: have the confirmation state either “rate locked at booking date” or “rate applies by sailing date”, and put it in writing.

6.4 Nominated forwarders and runaway destination charges

The real exposure on FOB exports: the buyer nominates the forwarder, which bills you at origin and the buyer at destination, and you can negotiate neither. When the buyer is angered by high destination charges, the party they push back on is you, not the forwarder. How to handle it: cap origin local charges in the sales contract and obtain the nominated forwarder's full local charge list before booking.

6.5 Currency, exchange rate and settlement date

Freight and surcharges are quoted in USD and usually settled in RMB. Which date's rate, and whose rate, changes the final figure. How to handle it: specify something like “converted at the Bank of China middle rate on the sailing date” on the quote, rather than discovering a forwarder's house rate at settlement.

6.6 Measurement basis: container type, weight and volume

FCL is priced by box type with overweight bands on top; LCL is priced on chargeable weight (W/M: the greater of 1 CBM or 1,000 kg) and usually rounds up in 0.5 or 1 CBM steps. The same shipment can gain a full chargeable tonne depending on how it was measured — with or without pallets, at maximum external dimensions or not. How to handle it: confirm rounding and measurement convention on LCL, and the weight bands on FCL, before accepting a rate.

6.7 Quotation checklist

  • Which Incoterm the price runs to, and where it stops
  • Whether origin charges are itemised with an RMB total, with no open “at cost” items
  • Whether freight already includes BAF, LSS, ISPS and manifest fees, and whether EU ETS is shown separately on Europe lanes
  • Whether a GRI or PSS notice is in force, and whether it applies by booking or sailing date
  • Whether event-driven surcharges (war risk, diversion, congestion) are listed, and whether withdrawal is credited
  • Whether an estimate of destination charges is provided, even though the buyer pays them
  • How many days of free time apply at destination, and whether combined free time is available
  • Whether cargo-driven surcharges (overweight, DG, reefer, OOG) reflect your actual cargo
  • Whether the validity period matches your expected sailing date
  • Whether the FX basis and settlement date are stated
  • For LCL, whether the rounding rule and measurement convention are confirmed
  • Whether exception tariffs (amendment, change of destination, shut-out, exam) were disclosed up front

7. Worked example: Qingdao to Hamburg, one 40HQ, CIF

The figures below illustrate cost structure. They are indicative magnitudes for understanding, not a quotation. Actual ocean freight moves with the market — use the formal quote at time of booking. Assumptions: cargo value USD 50,000, one 40HQ, stuffed at Qingdao, CIF Hamburg.

Layer Item Amount (example) Borne by
① Origin
(RMB)		 Trucking, city to Qianwan terminal ¥1,200 Seller
Export customs clearance ¥500 Seller
THC ¥1,250 Seller
Documentation fee ¥400 Seller
Seal + VGM + EDI ¥290 Seller
① Subtotal approx. ¥3,640 Seller
② Ocean
(USD)		 Base ocean freight (O/F) USD 1,800 Seller (CIF)
LSS low sulphur surcharge USD 45 Seller
ISPS security charge USD 12 Seller
ENS manifest filing USD 30 Seller
EU ETS surcharge USD 60 Seller
② Subtotal approx. USD 1,947 Seller
③ Insurance CIF value × 110% × 0.08% approx. USD 46 Seller (ICC C)
④ Destination
(EUR)		 DTHC at Hamburg EUR 260 Buyer
Delivery order fee EUR 60 Buyer
Customs brokerage EUR 90 Buyer
④ Subtotal (duty and VAT additional) approx. EUR 410 Buyer
  • The seller's actual cost is ① ¥3,640 + ② USD 1,947 + ③ USD 46 — the amount a CIF price has to cover.
  • Layer ④, that EUR 410, is where disputes start: it is not in your CIF price, but the consignee will certainly be invoiced for it. Attach the estimate when you quote and you remove half the post-arrival argument.
  • Surcharge share: LSS + ISPS + ENS + ETS come to USD 147 here, about 7.5% of the ocean layer. Add GRI and PSS in peak season and that share can double.
  • Now run it on a short-sea lane: the same structure Qingdao to Busan might carry base freight of USD 150, while layer ① in RMB does not change — origin charges then exceed 60% of total cost, and comparing “the freight rate” tells you nothing.

8. How Mighty International can help

  • Three-layer itemised quotes: origin, ocean and destination listed line by line, RMB and USD shown separately, with validity and surcharge rules stated — and no open “at cost” items.
  • Surcharge alerts: advance notice of GRI, PSS and ETS adjustments, help deciding whether to lock by booking or sailing date, and early space protection before peaks.
  • Destination cost estimates: a destination charge list supplied with the quote, so you can disclose it to your buyer during contract talks and avoid arguments after arrival.
  • Nominated forwarder support: we review the nominated forwarder's local charge list, flag items above market and help you draft a cap into the sales contract.
  • Invoice audit: carrier and agent invoices checked line by line against days, tariffs and effective dates, with disputed items taken up on your behalf.
  • Landed cost modelling: a full landed cost calculation for your commodity, box type, lane and trade term, comparing FOB, CIF, DAP and DDP on the same basis.

Want a quote with every line shown and nothing hidden?

Send us origin, destination port, commodity, box type, weight and trade term. Our operations team will come back with a three-layer itemised quote, the surcharges currently in force and an estimate of destination charges — so you know your landed cost before you quote your own customer.

Get Advice

Frequently asked questions

What is included in ocean freight?

Colloquially “ocean freight” means only the carrier's base freight (O/F). The full cost has three layers: origin local charges (trucking, export clearance, THC, documentation, seal, VGM, EDI), freight plus surcharges (BAF, LSS, ISPS, manifest fees, EU ETS, plus periodic GRI and PSS), and destination charges (DTHC, delivery order fee, brokerage, duty, delivery). Any layer left unstated becomes a dispute later.

What is the difference between THC and ORC — can I be charged both?

Same substance, different regional naming: terminal handling and yard operations, shown as THC at North and East China ports (including Qingdao) and as ORC at South China ports. A shipment is charged once, under one heading; the two should never appear side by side. If they do, ask the forwarder to explain the difference.

Why do quotes for the same lane differ by 2x?

Usually scope, not rate: base freight only with local charges billed separately; surcharges kept outside the headline; an “all-in” that stops at loading on board; or a low booking rate followed by a re-quote citing a rate adjustment. Require all three layers on one basis, with validity stated, before comparing.

Under FOB, who pays origin THC and the documentation fee?

Under Incoterms 2020 FOB divides on board at the port of shipment: the seller bears export clearance and origin local charges, the buyer bears freight and everything after. Disputes concentrate around buyer-nominated forwarders — cap origin local charges in the sales contract and get the full local charge list before booking.

Can GRI and PSS be negotiated away?

They can be pushed back, rarely waived. Both are published per lane with an effective date; contract shippers can seek deferral or partial exemption. Practical levers: book before the effective date with “applies by booking date” written into the confirmation, sign a period agreement capping surcharges, or move to a carrier on a different adjustment cycle.

What is the EU ETS surcharge, and what applies in 2026?

The EU brought shipping into its Emissions Trading System on 1 January 2024; ships over 5,000 GT must surrender allowances, and carriers pass the cost on as an ETS or emission surcharge. Phase-in: 40% of emissions in 2024, 70% in 2025, 100% from 2026. Scope: all emissions on intra-EU voyages, 50% on voyages into or out of the EU. For Europe shipments, ask for the charge separately with its basis.

References and further reading

Disclaimer: This article is a general introduction to ocean freight cost structure and surcharges. The ranges given are common industry magnitudes intended to help readers recognise line items, and do not constitute a quotation. Ocean freight and surcharges are published per lane by carriers and adjusted frequently; actual amounts, effective dates and application rules follow the carrier's current publication and your booking confirmation. Regulations and carbon policies change often — please base important business decisions on the latest official documents and professional advice.

Get a Free Quote