Czapp Explains: The Secret to Cheaper & More Flexible Freight

Bulk freight is where a ‘dry’ commodity (grain, sand, coal, iron ore) is carried ‘in bulk’ (i.e. loose and in a big pile) in a ship’s holds.

Raw Sugar Being Loaded into the Hold of a Breakbulk Vessel

Ocean freight is a critical part of the supply chain, and can constitute a large part of the overall cost of getting a product from A to B.

The main way the freight cost can fluctuate is if the cost of the fuel or the daily hire rate of the vessel changes.

Marine fuel (or bunkers) is derived from the crude oil extraction process, albeit the very bottom of the barrel, so the prices are very closely correlated.

The daily hire rate a shipowner can charge for their vessel is dependent on the anticipated demand for and supply of vessels at the time of the voyage.

If you’d like Czarnikow to help you lock in both prices separately when they’re at their respective lows, please contact RHowes@czarnikow.com. 

This Czapp Explainer was Published on the 15th April 2021.

For information on our consultancy offering and other projects, please contact SGeldart@czarnikow.com.