Question

1. Please answer the following index related questions.

1. What does the maritime freight index mean? How it is calculated?
2. Please give examples of 5 maritime freight indices and give short information about each of them.

Answer 1

Maritime freight index is also known as Cass Freight Index is a measurement of the monthly aggregate deliveries of U.S. freight. Cass Information Systems, a provider of automated payment systems, compiles the index. The company claims to be the nation’s largest payer of freight bills, on behalf of its shipping clients. The firm’s index is a meaningful indicator of U.S. shipping activity. It encompasses over 1,200 divisions of more than 400 unique companies and manufacturers.

Understanding Cass Freight Index
Cass Freight Index reflects freight volumes for organizations which spend anywhere from $1 million to more than $1 billion per year in the movement of freight. According to Cass, the diversity of shippers and the aggregate volume of transactions included in the index represent a statistically meaningful representation of North American shipping activity.

The data contained within the index reflects rail, truck, air and all other modes of domestic freight transportation. The index comprises the actual freight expenses of the underlying companies whose freight transactions Cass processes annually. Companies and cargo include food, automotive, chemical, retail, heavy equipment, packaged goods, and many more.

Of note, the related Cass Freight Index Report includes data on both aggregate freight shipments and shipping expenditures. Additionally, the report breaks out information related to dry-bulk cargoes and flatbed freight deliveries. The financial media outlets and trade publications frequently cite the index and the report. The index also is included in the national economic data provided by the Federal Reserve Bank of St. Louis.

Each month’s volumes within the index are adjusted to provide an average 21-day work month. Adjustments also are made to compensate for business additions and deletions to the volume figures. According to Cass, these adjustments help normalize the data to provide a basis for ongoing monthly comparisons. The index uses January 1990 as its base month.

How to calculate freight rates ?
Sea Freight rates are normally provided in the form of a Freight quotation, and the format of these quotations can vary from freight forwarder to freight forwarder and sea freight company to sea freight company. Whilst new surcharges seem to be introduced daily.

B.

Common Ocean and Sea Freight Costs and Rates:
Expect to see these items on ocean freight quotes and invoices:

1.Customs security surcharges (AMS, ISF)
2. Container Freight Station (these are the consolidation charges, and apply for LCL only)

A container freight station (CFS) is a facility where freight is consolidated (grouped) or deconsolidated (separated) between shipping legs. CFS facilities are typically based in close proximity to a port where cargo is processed. So there will be some amount remitted inorder to hold the container securely.
3. Terminal Handling charges (charges by the port authority)
4. Customs brokerage
5. Pickup and delivery
6. Insurance
7. Accessorial charges (fuel surcharges, handling hazardous materials, storage, etc)