The essence in maximizing the use of a container capacity is to stuff the most cubes (i.e., largest cubic measurement) into a container that would give the lowest freight cost. If the capacity of a container is 1,170 cu. ft., it does not mean that the exporter must (or can) fully stuff it up to 1,170 cu. ft.. This can seldom be done due to the restrictions imposed by the kind of cargo and the type and size of the export pack.
The freight cost per cubic unit generally is lower when more cubes are stuffed into a container. However, when the total cube is too close to the container capacity, unloading and reloading of container may happen. The cost of extra time and labor spent on unloading and reloading usually is much more than the unit cost of freight saved for stuffing in more cubes. It would be fortunate if there is no cargo overflow---a situation where some export packs cannot fit into the container because the remaining space does not accommodate the size of the packs. The recommended load volume provides a guide in calculating a full container load (FCL), which helps in avoiding cargo overflow.
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Case Sample:
Container Selection (2)
In cases where the importer uses his/her own consolidator in handling the delivery in an FOB sales term, the exporter may not worry about maximizing the use of a container capacity. For example, assuming that in the Case Sample: Container Selection (1) the importer orders 665 cartons of product DX at FOB price and will let his/her own consolidator, which is located in the importer's country and has an office in the exporter's country, handle the forwarding. The consolidator, knowing that the cargo is product DX but not knowing the total weight and cube of the proposed consignment, may quote the importer as follows:
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Quotation - Ocean Freight |
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FROM |
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FOB Port of Origin |
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TO |
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Importer's Warehouse |
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WEIGHT |
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Per 1000 Kgs |
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MEASURE |
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Per Cubic Meter |
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COMMODITY |
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Product DX |
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FREIGHT RATES |
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20' Std. Container |
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CY/CY |
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US$2,145 |
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LCL |
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US$65 W/M |
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Minimum |
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US$125 |
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The Std. Container refers to the
8.5' high standard container. |
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The CY/CY is explained in
Modes of CY and CFS Container Services |
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The LCL is explained in
FCL versus LCL |
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The W/M is explained in
Weight or Measure |
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The Minimum is the minimum billing or
minimum charge in the freight service. |
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The above quote includes the ocean freight and the inland freight and handling charge in the importing country. The brokerage fee and customs duty in the importing country are on the importer's account.
The cube of 665 cartons is 997.5 cu. ft. (i.e., 665 cartons x 1.5 cu. ft.) or 28.25 CBM. The total freight in the LCL (less container load) is US$1,836.25 (i.e., 28.25 CBM x US$65; please see the explanations in the Case Sample: Weight or Measure), while in a 20' container is US$2,145.
In such a case, the exporter does not have to worry about maximizing the use of a container capacity.
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