Many companies see a low Ocean Freight rate and assume it represents the full sea-transport cost. Once the booking is confirmed or the cargo arrives, THC, documentation, delivery order, CFS, equipment and destination handling charges may appear, creating a material budget variance. The core issue is often not an “abnormal fee,” but two quotations covering different scopes. This article separates Ocean Freight from Local Charges and explains the collecting party, payment timing, charge basis, required data and a practical method for normalising scope before selecting a shipping option.

Operational reference for importers, exporters, procurement, finance and operations | Updated: 16 July 2026

QUICK FACTS

Ocean Freight

The core sea-leg transport price between the port of loading and port of discharge for a defined route, equipment and validity period.

Local Charges

Origin– or destination-side charges for terminal, documentation, release, CFS and other local services.

Not automatically included

A low OF line does not reveal total cost unless origin, destination, surcharges and exclusions are itemised.

Control point

Compare the same route, equipment, Incoterm, payer, currency, validity, free time and door/port scope.

Illustration for Ocean Freight vs. Local Charges: How to Read a Sea Freight Quotation — Illustration of the logistics topic, document or operation discussed in the article.

SCOPE OF APPLICATION

This article covers international containerised sea freight for FCL and LCL export or import shipments and is intended for reviewing quotations issued by carriers, NVOCCs or freight forwarders.

No specific tariff should be inferred from this article. Charges vary by ports, carrier, container type, general/dangerous/reefer cargo, Incoterms, service contract, currency, taxes and effective date.

KEY TERMS

Term	Meaning	Role in a quotation
Ocean Freight / Basic Ocean Freight (OF)	The main sea-leg transport price from POL to POD under a booking or carriage contract.	Usually the base freight line; local and contingency charges may be separate.
Local Charges	A commercial expression for charges billed at origin or destination. It is not a single statutory category and there is no closed list applied uniformly by all carriers.	Check the actual charge code, service, origin/destination, basis, invoicing party and ultimate cost bearer.
Origin Charges	Charges incurred at export origin before or during loading.	Examples include OHC/THC origin, export documentation, seal and export CFS.
Destination Charges	Charges incurred at import destination for handling, release and delivery processing.	Examples include DHC/THC destination, D/O, import documentation and import CFS.
Surcharge	An amount in addition to base freight for fuel, peak season, risk, equipment imbalance or trade conditions.	May be shown separately or incorporated into a rate; not every surcharge is a local charge.
All-in Rate	A rate bundling specified components.	Only meaningful with a clear included/excluded list; it does not automatically mean door-to-door.
W/M – Weight or Measurement	An LCL charging principle based on weight or volume, normally using the measure that produces the higher chargeable quantity under the quotation rules.	Used to determine the Revenue Ton/chargeable unit; verify the conversion rule and minimum.
Minimum Charge	The minimum amount billed for a shipment even when actual weight or volume is below the threshold.	May apply separately to ocean freight, CFS, handling or documents, depending on the tariff.

COMMERCIAL MECHANISM

1. Ocean Freight pays for capacity on the sea leg

Ocean Freight is driven by port pair, direction, schedule, equipment, cargo type, weight, supply–demand and validity. FCL is commonly priced per container; LCL sea freight commonly uses W/M or revenue-ton rules subject to the quotation.

2. Local Charges pay for activities at origin and destination

Local Charges relate to terminal/CFS handling, documentation, release, equipment administration and local operational services. Depending on the contract chain, the collecting entity may be a carrier, agent, NVOCC, forwarder, terminal or CFS operator.

3. The charge name alone does not determine who bears the cost

Cost responsibility must be read from the Incoterms rule incorporated into the sales contract, the exact named place/port, booking party, prepaid/collect term, quotation and service agreement. Incoterms allocate tasks, costs and risks between seller and buyer; they do not set carrier tariff levels.

COST ESTIMATION FORMULA

BUDGETED SEA-LOGISTICS COST = OCEAN FREIGHT + ORIGIN CHARGES + DESTINATION CHARGES + APPLICABLE SURCHARGES + INLAND/OTHER SERVICES − ITEMS EXPRESSLY CONFIRMED AS INCLUDED

Control note: Do not mechanically add lines from multiple tariff sheets. Confirm what is already bundled, what is pass-through, and what is triggered only by a special request or operational delay.

OCEAN FREIGHT AND LOCAL CHARGES: COMPARISON

Criterion	Ocean Freight	Local Charges	What to confirm
Nature	Main sea-leg transport price.	Local-service charges at origin/destination.	Charge code and service description.
Geographic scope	Between POL and POD.	At port, terminal, CFS, agent office or local handover point.	Origin or destination.
Typical collector	Carrier/NVOCC/forwarder under the contract.	Carrier, agent, NVOCC, forwarder, terminal or CFS.	Issuer of invoice/debit note.
Charge basis	FCL: container; LCL: W/M or revenue ton.	Container, B/L, shipment, document set, CBM/RT, day or service event.	Basis and minimum charge.
Quotation/payment timing	At RFQ, booking or contract stage.	Some are quoted upfront; others are finalised at documentation, arrival or service trigger.	Validity and trigger event.
Main variables	Trade lane, schedule, equipment, season, cargo and weight.	Port, local tariff, B/L structure, FCL/LCL, additional service and tax.	Effective date and currency.
Misreading risk	Treating OF as door-to-door or all-in.	Omitting destination charges, double-counting included items, or confusing surcharges with local charges.	Included/excluded schedule.

COLLECTING PARTY – DEBIT-NOTE PARTY – ULTIMATE COST BEARER

Concept	Meaning	Example	Control point
Collecting party	The service provider or its representative.	Carrier, NVOCC, forwarder, agent, terminal or CFS.	Verify the legal entity, charge code and tariff basis.
Invoice/debit-note party	The party requested to pay under the booking, B/L or service contract.	Shipper, consignee, booking party or forwarder.	This is not automatically the ultimate cost bearer.
Ultimate cost bearer	The seller or buyer who bears the cost under the sales contract and commercial agreement.	Depends on the Incoterms rule, named place/port and additional terms.	Reconcile the sales contract with the quotation, prepaid/collect status and actual invoice.
Trigger time	The event that creates the payment obligation.	Booking, B/L issue/amendment, arrival, D/O release, CFS handling or free-time expiry.	State the trigger, effective date and exemptions.

Common confusion: “Freight prepaid/collect” is a billing arrangement on the transport document; it does not by itself replace the seller–buyer cost allocation in the sales contract.

COMMON LOCAL CHARGES

Charge group	Common examples	Typical basis	Control point
Terminal/port handling	OHC, DHC, THC	Per container; may vary by size/type	Confirm origin or destination, the terminal service covered and whether it is included in the rate.
Documentation	ODF/DDF, B/L fee, amendment, telex release	Per B/L, shipment or amendment	Distinguish HBL/MBL and amendment timing before/after manifest or cutoff.
Import release	D/O, release fee	Per B/L or shipment	Names and scope vary by carrier/agent; verify release conditions.
LCL handling	CFS, handling, devanning	CBM, Revenue Ton, shipment or minimum	LCL may be subject to both a minimum and multiple charge bases.
Local equipment services	Seal, cleaning, inspection/repair if applicable	Per seal, container or actual cost	Charge only when triggered by the tariff, contract or equipment condition.
Trade/equipment surcharges often billed locally	CIC/EIS, LSS, PSS or other surcharges	Per container, TEU or shipment	These may be carrier surcharges rather than Local Charges in the carrier’s classification; do not merge them mechanically.
Time-related conditional charges	DEM, DET, Storage	Per container/per day in tiers	Conditional charges after free time or an operational milestone; separate them from certain costs.

Do not standardise by label alone: the same service may use different codes, and the same code may have a different scope by carrier, country or tariff. The final reference is the service description, basis, effective date and conditions in the quotation/tariff.

DOCUMENTS AND DATA TO CHECK

Document/data	Issuer	Fields to verify	Use
Freight quotation	Carrier/NVOCC/forwarder	POL, POD, equipment, commodity, rate, currency, validity, included/excluded	Budget approval and comparison.
Local-charge tariff	Carrier/agent/forwarder/terminal	Charge code, origin/destination, basis, tax, effective date	Estimate both ends.
Booking confirmation	Carrier/NVOCC	Vessel/voyage, cut-offs, freight term, equipment, routing	Match the rate to the actual booking.
Draft B/L and B/L	Carrier/NVOCC/forwarder	Parties, prepaid/collect, packages and container details	Confirm documentation and collecting side.
Arrival Notice/Debit Note	Destination agent	Charge list, tax, payment deadline, D/O, free time	Prepare release and challenge discrepancies.
Sales Contract/PO + Incoterms	Seller/buyer	Rule, named place/port, version and cost clauses	Allocate cost between trading parties.

RFQ DATA REQUIRED BEFORE REQUESTING A RATE

Data group	Minimum information	Why it affects the quotation
Route and scope	POL/POD, pickup/delivery address, port-to-port or door service.	Determines the sea leg, local charges and inland costs.
Shipment format	FCL/LCL; container type/quantity; packages, gross weight, CBM and dimensions.	Determines per-container basis, W/M, Revenue Ton and minimum charge.
Cargo nature	Commodity, indicative HS if available, general/DG/OOG/Reefer, temperature, batteries or special requirements.	May trigger surcharges, acceptance restrictions, equipment and special documents.
Timing	Ready date, preferred ETD/ETA and delivery deadline.	Affects schedule, validity, PSS and routing.
Commercial terms	Incoterms rule + named place/port + edition; intended prepaid/collect arrangement.	Helps define who arranges carriage, who is billed and the quotation scope.
Operational requirements	Requested free time, HBL/MBL, telex release, customs/trucking, invoice and currency requirements.	Prevents omissions in documentation, destination and non-ocean services.

HOW TO READ AND COMPARE QUOTATIONS

Lock the same scope: same POL/POD, equipment, commodity, weight, FCL/LCL, routing and port/door coverage.
Separate four cost layers: Ocean Freight; origin charges; destination charges; conditional surcharges/incidental items.
Normalise charge basis: per container, B/L, shipment, CBM/RT, day and minimum charge.
Read included/excluded: require explicit treatment of THC, documentation, D/O, CFS, customs, trucking, tax and free time.
Check payer: prepaid/collect and invoice recipient do not necessarily equal the party ultimately bearing the cost under the sales contract.
Check validity: effective date, booking/sailing trigger, exchange rate and roll-over/cancellation terms.
Produce the decision output: a total-cost table plus a list of items not yet fixed before booking approval.

LIKE-FOR-LIKE COMPARISON EXAMPLE (HYPOTHETICAL)

This example illustrates the method using converted cost units. It is not a market rate and excludes tax, customs and trucking.

Component	Quote A	Quote B	Observation
Ocean Freight	500	450	B has the lower OF.
Origin Charges	140	200	A is lower by 60.
Destination Charges	210	260	A is lower by 50.
Comparable total	850	910	A lower OF does not guarantee a lower total.
Unfixed items	DEM/DET/Storage, exchange rate, tax and conditional services.		List as exclusions/conditions rather than certain costs.

COMMON RISKS AND ERRORS

Error	Cause	Impact	Control
Selecting the lowest OF	Origin and destination charges are ignored.	Higher total landed logistics cost.	Compare total cost on identical scope.
Treating “all-in” as door-to-door	No included/excluded schedule.	Unexpected trucking, customs, D/O or CFS charges.	Require itemised scope.
Wrong payer assumption	Incoterms read without named place, booking and prepaid/collect.	Debt dispute or document/release hold.	Reconcile sales and carriage contracts.
Expired tariff	Effective date/validity not checked.	Rate change at booking or sailing.	Obtain written confirmation of the trigger date.
Double-counted surcharge	Surcharge already incorporated into OF.	Overbudgeting or invoice dispute.	Mark inclusion by charge code.
DEM/DET/storage omitted	Free time and document timeline not reviewed.	Rapid daily cost escalation.	Control ETA, documents, customs and empty return.

LEGAL AND OFFICIAL REFERENCE SOURCES

Source	Issuer	Reference value	Application note
Decree 146/2016/ND-CP	Government of Vietnam	Article 4 separately defines sea-container transport service price, surcharge outside that transport price and port service price. Articles 5–6 cover listing content, effectiveness and collection according to listed amounts.	The Decree does not define “Local Charge” as one statutory class. Map each line to the actual service/charge code and verify the instrument’s current legal status.
Incoterms® Rules	ICC	Allocation of tasks, costs and risks between seller and buyer.	Incoterms do not replace carrier tariffs or logistics-service contracts.
Incoterms® 2020: FCA or FOB?	ICC Academy	Guidance on FCA for container/pallet movements and FOB for suitable maritime bulk shipments.	Selection guidance only; the contract must still state the named place/port and Incoterms edition.
General Tariffs & Local Charges	CMA CGM	Carrier charges and local charges by country.	Select the correct country, trade, equipment and effective date.
Tariff Lookup	Maersk	Price/tariff and charge-code reference.	Actual contracted and booking rates may differ.
Vietnam OHC & DHC Update – May 2026	Maersk	An official example showing separate origin/destination terminal handling and effective dates.	Do not extrapolate one carrier’s rate to another carrier or trade.

VIEW DECREE 146/2016/ND-CP CHECK INCOTERMS® RULES

FREQUENTLY ASKED QUESTIONS

Does Ocean Freight include THC?

There is no universal default. OHC/DHC or THC may be separate or partly bundled. Review the charge breakdown and included/excluded list.

Do Local Charges include every surcharge?

No. BAF, LSS, PSS, risk or contingency surcharges may be classified separately depending on the carrier and quotation structure.

Under FOB, does the buyer always pay destination local charges?

The buyer commonly arranges the main carriage and bears many costs after the FOB delivery point, but the final answer depends on the contract, named port, booking, freight term and service agreement.

Does CIF mean the seller pays all costs to the buyer’s warehouse?

No. CIF concerns carriage and insurance to the named destination port under the applicable rule. Destination and post-port costs must be read from the contract and the incorporated Incoterms rule.

Why do two forwarders quote different Local Charges for the same route?

They may use different carriers, contracts, B/L structures, destination agents, additional services, exchange rates, taxes and mark-ups. Compare identical scope, not only charge names.

What should be requested before confirming a booking?

Request route, equipment, commodity, validity, currency, charge basis, origin/destination charges, surcharges, included/excluded items, free time and trigger conditions.

Should container cargo use FOB or FCA?

ICC Academy guidance generally treats FCA as more suitable where containerised/palletised cargo is handed to the carrier before vessel loading or moved multimodally. FOB is more suitable for maritime bulk cargo delivered on board. The actual delivery process and contract remain decisive.

APPLICATION NOTE: Ocean Freight and Local Charges are commercial components governed by the applicable contract and tariff at a specific time. “Local Charge” is not one uniform statutory category. Use the shipment’s own booking, quotation, tariff, B/L, Arrival Notice and debit note. Any discussion of Vietnamese legislation in this English version is for operational reference and is not an official legal translation.

TGIMEX IMPLEMENTATION SUPPORT

TGIMEX helps businesses turn the article into a shipment-ready checklist, covering input-data review, dossier preparation, milestone control, and coordination with the relevant parties.

Convert guidance into checks

Assign an owner and deadline to every operational control point.

Reconcile shipment data

Compare booking, transport, commercial, customs, and delivery evidence.

Manage operational risk

Record discrepancies, actions, and decision evidence to prevent recurrence.

Discuss your shipment dossier

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