Why Your Freight Costs Are Higher Than Quoted
The rate you're quoted is rarely the rate you pay. After analyzing over 2,400 freight contracts across our customer base, we found that the average importer pays 23% more than their quoted rate due to contract clauses they either missed or didn't fully understand.
This isn't carrier deception—it's contractual complexity that favors experienced negotiators. Here are the seven clauses that consistently cost importers the most, and exactly how to address each one.
1. Peak Season Surcharges with Vague Triggers
Most contracts include peak season surcharges (PSS), but the devil is in the definition. Common contract language like "during periods of high demand" or "when capacity is constrained" gives carriers unilateral authority to apply surcharges whenever they choose.
What to negotiate:
- Specific date ranges for PSS applicability (e.g., "September 1 - October 31 only")
- Cap on PSS amount (e.g., "not to exceed $400/FEU")
- 30-day advance notice requirement before PSS activation
Typical savings: $200-600 per container during Q4
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2. Non-Proportional Fuel Adjustment Factors
Bunker Adjustment Factors (BAF) should move proportionally with fuel prices. In practice, they often don't. We've seen BAF increases of 40% when fuel prices rose only 15%, and BAF decreases of 5% when fuel dropped 20%.
What to negotiate:
- Tie BAF to a specific published index (e.g., Singapore 380cst)
- Define the exact formula for calculating adjustments
- Include both ceiling and floor provisions
- Require quarterly (not monthly) adjustments to reduce volatility
Typical savings: $150-400 per container annually
3. Shortened Demurrage Free Time
Standard industry free time is 7 days for import containers. Many contracts quietly reduce this to 4-5 days in fine print, or define "free time" as starting when the vessel berths rather than when cargo is available.
What to negotiate:
- Minimum 7 calendar days free time, starting from cargo availability
- Weekend and holiday exclusions from free time calculation
- Graduated demurrage rates rather than flat daily charges
- Force majeure provisions for port delays beyond your control
Typical savings: $300-800 per delayed container
4. Currency Adjustment Clauses That Compound
Currency Adjustment Factors (CAF) are applied to base rates, but some contracts apply them to already-adjusted rates (after BAF, PSS, etc.), effectively compounding the currency exposure across multiple line items.
What to negotiate:
- CAF applies only to base freight rate, not surcharges
- Fix the exchange rate for the contract term, or
- Define a tolerance band (e.g., "CAF applies only if USD/CNY moves >5%")
Typical savings: $50-200 per container in volatile currency periods
5. Duplicated Terminal Handling Charges
Terminal Handling Charges (THC) should be paid once at origin and once at destination. Some contracts include THC in the base rate AND charge it separately, or apply "destination terminal fees" that overlap with THC.
What to negotiate:
- Explicit list of all terminal-related charges with no overlap
- All-inclusive base rate that clearly states what's included
- Cap on destination charges as a percentage of base rate
Typical savings: $75-250 per container
6. Ambiguous Documentation Fees
Documentation fees (Bill of Lading fees, telex release, manifest fees) are often listed vaguely as "as applicable" or "per carrier schedule." This allows fees to increase without notice or negotiation.
What to negotiate:
- Fixed documentation fee schedule as a contract exhibit
- All-inclusive documentation package at a set rate
- No new documentation fees without 90-day written notice
Typical savings: $30-100 per shipment
7. Unrestricted General Rate Increase Rights
Most contracts allow carriers to implement General Rate Increases (GRI) with 30 days notice. Without proper protection, you could see multiple GRIs during your contract term, effectively negating your negotiated rate.
What to negotiate:
- Maximum number of GRIs per contract year (e.g., 2 max)
- Cap on GRI amount per instance (e.g., "$200/FEU maximum")
- Annual cap on total rate increases (e.g., "10% maximum annual increase")
- Right to terminate if GRIs exceed agreed thresholds
Typical savings: $400-1,200 per container annually
Your Negotiation Checklist
Before signing your next freight contract, verify these items are explicitly addressed:
- Peak season surcharge dates and caps defined
- BAF tied to published index with formula
- 7-day minimum free time from cargo availability
- CAF applies to base rate only
- No overlapping terminal charges
- Fixed documentation fee schedule attached
- GRI caps and frequency limits in writing
Addressing all seven clauses typically saves $500-2,000 per container depending on trade lane and volume.