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International removals freight rates

Source: Flickr NOAA's National Ocean Service

As the number of people who up sticks and head for a new country increases year by year the international shipping market for personal goods grows and becomes more sophisticated. Where once an international migrant was at the mercy of one or two freight agents when it came to finding the best shipping rates, now you can quickly and easily compare quotes from a wide range of international shipping providers by filling in a single form on the internet.

But straight shipping costs only tell a small part of the tale. The international shipping business is global in reach and incredibly complex. What factors affect personal cargo prices, how can we expect the industry to change in 2015 and what can an international mover do to minimise the cost of transporting their treasured possessions to their new home abroad?

Freight Rate Trends

In terms of what it’ll cost you to get your personal belonging from here to there, 2015 was a good year for international migrants and a commensurately bad year for those in the freight business.

In order to understand why we’ll need to put on our economist’s hat for a minute.

The overwhelming majority of international freight - both sea and air freight - is not due to people moving countries but to the transport of commodities between nations. Economic growth the world over has been struggling to return to pre-crisis levels ever since the financial storm that began in 2007-08. That means demand for consumer goods, construction material and fuel has been depressed and, as a result, demand for shipping those goods and materials around the world has also been depressed. Low demand for shipping means that freight carriers have been forced to lower their prices to compete for the remaining business.

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In addition the capacity that freight carriers have for shipping goods has increased massively over the last few years. While this ostensibly lowers the costs of shipping companies (and allows them to expand their businesses while the cost of building ships is low) it’s also meant a big increase in overcapacity, forcing yet more competition among carriers and even lower prices. In 2015 there’ll be an extra 56 ships carrying cargo around the world, each capable of carrying 5,000 40ft containers. Another 52 will arrive in 2015.

So, despite the optimism of some analysts, with global economic prospects looking much the same over the next couple of years as they have in the past couple, good deals on international shipping look set to continue.

Factors which affect your freight costs

When shipping personal and household goods between countries you’ll most likely be dealing with a shipping agent rather than a shipping company directly. This means you’ll pay just one company who can arrange a door-to-door service for your belongings. But how are the costs they quote you calculated? In general they’re made of three main cost elements.

The cost of freight

This forms the bulk of the cost and is dependent on the distance between point of origin and destination as well as the mode of transport: air freight is always more expensive that sea freight (but is also much quicker). Here are the rough prices of transporting 1,000kg of goods from the UK to various destination cities.

1,000 kg LCL Air VS Sea Freight Costs
Destination Sea Freight Sailing Time Air Freight
New York £235 GBP 7 days £1,900 GBP
Los Angeles £225 GBP 22 days £2,000 GBP
Dubai £205 GBP 17 days £1,750 GBP
Sydney £210 GBP 38 days £2,700 GBP
Hong Kong £205 GBP 23 days £1,700 GBP

The costs above are purely indicative - the actual cost of shipping will depend not only on the weight of goods to be shipped but also the volume that they take up when packed - but they demonstrate that air freight prices are not only much higher than sea freight prices but also wildly more sensitive to differences in distance. This is due to the high cost of airline fuel and the ability of sea freight companies to take advantage of increased logistical options, leading to longer transport times but much reduced costs.

The cost of handling

The cost of clearing customs in the destination country is often rolled into the cost quoted by the shipping agent, with any extra costs arising at the destination port invoiced to the customer on delivery. Custom rates vary from country to country. Some agents will also include packing your goods (so they take up the minimum space possible) and offer optional insurance for your valuables at a cost of around 5% of the insurable value.

The cost of haulage

A door-to-door service will also include transporting your goods to and from the ports/airports involved. While this cost can be negligible if you’re moving between two major world cities it can be very significant when you’re moving to a town that isn’t near a major port or to a rural area where there’s a limited choice of local hauliers.

Finding the best shipping companies

Choosing the best shipping company for your international move is a case of more than just comparing several quotes for the best price. Often you’ll be transporting goods of high value (or at least high sentimental value) that are critical for making the transition to your new life as smooth as possible.

Here a few questions you might consider asking your prospective carriers:

  • Do you bill by weight alone or by volumetric weight? How do I verify the cost that appears on my invoice?
  • Do you offer a tracking service so I can monitor the progress of my shipment?
  • Do you offer a packing service to minimise the potential of damage to my belongings?
  • How do you ensure the quality of the hauliers you hire at each end of the route?
  • What is the process for making an insurance claim? How soon can I make a claim? What is the typical wait for a pay out?

Getting answers to the above should ensure that the few weeks you spend waiting for your shipment aren't filled with sleepless nights.

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