Freight Rate
A Freight Rate is the price a carrier charges to transport cargo from origin to destination. It is quoted according to the mode and cargo: per container for FCL ocean freight, per freight ton (weight or measure) for LCL and break-bulk, and per chargeable weight for air, with the base rate almost always accompanied by surcharges (BAF, CAF, THC, peak-season, war-risk and more) that can add substantially to the total.
Freight rates are highly volatile, moving with supply and demand, capacity, fuel prices and seasonality. Shippers buy them in two main ways: spot rates (the current market price for immediate shipment, fast-moving and volatile) and contract rates (fixed for a period under a service agreement, giving stability and priority). Understanding how a freight rate is built up — base plus surcharges — and when to use spot versus contract is central to controlling transport cost, comparing quotes accurately, and budgeting. The all-in rate, not the headline base, is what actually determines shipping cost.
Transport is a major cost, and the freight rate is deceptively complex — a low base rate can hide a stack of surcharges that dominate the total. Knowing how the all-in rate is built, and when to lock in contract rates versus ride the spot market, is one of the biggest levers a shipper has over logistics cost.
What is the difference between spot and contract freight rates?
Spot rates are the current market price for immediate shipment (volatile); contract rates are fixed for a period under a service agreement (stable, with priority).
Why is the base freight rate not the full cost?
Surcharges such as BAF, CAF, THC and peak-season charges are added on top and can substantially increase the total.