Ocean freight guide: containers, bulk cargo, freight and insurance
Most raw materials travel by sea, and freight is often a major part of the cost. This guide explains container types and liquid packaging, bulk cargo and chartering, laytime and demurrage, quantity determination, cargo insurance and general average for buyers and sellers who want to control cost and risk.
Updated October 14, 2026
In this guide
- Freight (freight rate)
- Bunker adjustment factor (BAF)
- Freight forwarder
- Full container load (FCL) and less than container load (LCL)
- Container types (20’, 40’, 40’HC, reefer, open top)
- Flexitank
- ISO tank (tank container)
- Big bag (FIBC – flexible intermediate bulk container)
- Bulk cargo (dry and liquid bulk)
- Charter party (C/P) (C/P)
- Notice of readiness (NOR)
- Laytime
- Demurrage and detention
- Draft survey
- Cargo insurance (marine cargo insurance)
- Institute Cargo Clauses (A), (B), (C) (ICC (A)(B)(C))
- General average (GA)
- Marine fuels: VLSFO, HSFO, MGO and the IMO 2020 sulphur cap
Freight (freight rate)
The price paid to the carrier for moving goods. Container freight is priced per box (e.g. USD per 40’HC), bulk freight per tonne (USD/mt), and chartered ships by daily hire (USD/day). Surcharges can be added to the base rate: bunker (BAF), currency (CAF), terminal handling (THC), congestion and war-risk surcharges. Freight markets are volatile and are tracked through indices such as Drewry, Freightos (FBX) and the Baltic Dry Index (BDI).
Full entry and related terms in the glossary →
Bunker adjustment factor (BAF)
A variable surcharge that carriers add to the base freight to pass on fluctuations in ship-fuel (bunker) prices. It is usually revised quarterly or monthly in line with VLSFO prices in Singapore and Rotterdam. BAFs rose markedly after the IMO 0.5 % sulphur cap took effect in 2020; always ask whether a freight quote includes BAF.
Full entry and related terms in the glossary →
Freight forwarder
A company that organises transport on the shipper’s behalf: it obtains freight quotes, books space on ships or aircraft, arranges containers, warehousing and trucking, prepares documents and often works together with a customs broker. Forwarders that issue their own bills of lading (house B/L) act as NVOCCs and take on carrier liability. FIATA membership and liability insurance are good indicators when choosing a reliable forwarder.
Full entry and related terms in the glossary →
Full container load (FCL) and less than container load (LCL)
With FCL a whole container is dedicated to one shipper’s cargo: it is stuffed and sealed at the factory and opened at the buyer’s warehouse. With LCL small lots from several shippers are consolidated in one container at a consolidator’s warehouse and charged per cubic metre or tonne, whichever is greater. In raw material trade FCL is usually cheaper and safer above roughly 10–15 m³; LCL suits samples and small orders.
Full entry and related terms in the glossary →
Container types (20’, 40’, 40’HC, reefer, open top)
A 20-foot container (about 33 m³, payload around 25–28 t) suits heavy, dense cargo such as metals, minerals and bagged chemicals; a 40-foot (67 m³) and 40-foot high cube (40’HC, 76 m³, ~26 t) suit light but bulky goods such as plastic granules, fibres and foam. In practice road weight limits are often more restrictive than container capacity. Reefers are used for the cold chain, open-tops and flat racks for machinery and oversized items, and tank containers for liquids.
Full entry and related terms in the glossary →
Flexitank
A single-use, multi-layer polyethylene bag fitted inside a standard 20-foot dry container, carrying 16,000–24,000 litres of non-hazardous liquid. For vegetable oils, glycerine, base oils, latex, wine, syrups and some non-food chemicals it is far cheaper per litre than drums or IBCs. Dangerous goods cannot be carried; for food cargo check the bag’s food-grade certificate and the container’s cleanliness.
Full entry and related terms in the glossary →
ISO tank (tank container)
A reusable tank of about 20,000–26,000 litres, usually stainless steel, set in a steel frame with 20-foot container dimensions. It is suitable for chemicals, solvents, dangerous goods classed under the IMDG Code and food-grade liquids, with options for heating jackets, pressure rating and insulation. A cleaning certificate (ECD) is required before each loading, and previous cargoes (usually the last three) are checked for compatibility.
Full entry and related terms in the glossary →
Big bag (FIBC – flexible intermediate bulk container)
A large sack made of woven polypropylene that usually carries 500–1,500 kg of granules, powder or flakes and is lifted by forklift on its loops. Its safe working load (SWL) and safety factor (5:1 single-trip, 6:1 multi-trip) are specified under ISO 21898. For combustible powders use Type B, C or D bags against static electricity; food and pharma need food-grade bags with liners. It cuts packaging and handling cost compared with 25 kg bags.
Full entry and related terms in the glossary →
Bulk cargo (dry and liquid bulk)
Cargo loaded directly into a ship’s hold or tanks without packaging: grain, coal, iron ore, scrap, fertiliser and cement are dry bulk; crude oil, fuels, vegetable oils and chemicals are liquid bulk. Ship sizes are classed as Handysize (15–35k dwt), Supramax/Ultramax (50–64k), Panamax/Kamsarmax (65–82k) and Capesize (over 100k dwt). Quantity is determined by draft survey or weighbridge and quality by sampling at loading and discharge.
Full entry and related terms in the glossary →
Charter party (C/P) (C/P)
The contract between a shipowner and a charterer governing the use of a ship. Under a voyage charter a specific cargo is carried between named ports at a freight per tonne; under a time charter the ship is hired for a period at a daily rate; under a bareboat charter it is leased without crew. Standard forms include GENCON, NYPE and ASBATANKVOY. Bulk sales contracts should be drafted so that loading rates and demurrage terms are back-to-back with the charter party.
Full entry and related terms in the glossary →
Notice of readiness (NOR)
A written notice from the master or agent to the charterer or buyer that the vessel has arrived at the agreed port and is ready in all respects – holds clean, clearances obtained – to load or discharge. A valid NOR is the precondition for laytime to start. A NOR tendered when the ship is not actually ready may be invalid and changes the demurrage calculation, so it should be filed together with hold inspection reports.
Full entry and related terms in the glossary →
Laytime
The time agreed in the contract during which the charterer or buyer may use the ship to load or discharge without paying extra. It is usually stated as a daily rate, e.g. “5,000 mt per day SHINC” (Sundays and holidays included) or “SHEX” (excluded). Laytime starts after the Notice of Readiness (NOR) is tendered and any agreed turn time has passed. If it is exceeded demurrage is due; if cargo work finishes early, despatch may be earned where agreed.
Full entry and related terms in the glossary →
Demurrage and detention
In bulk shipping, demurrage is the daily compensation the charterer pays the shipowner when laytime is exceeded (e.g. USD 15,000 per day). In container shipping, demurrage is charged by the line when a full container stays in the terminal beyond its free time, and detention when the container is kept outside the terminal – at the buyer’s warehouse – beyond its free time. Customs delays inflate these costs quickly, so free days should be settled when negotiating freight.
Full entry and related terms in the glossary →
Draft survey
A method of calculating the weight of bulk cargo loaded or discharged by reading a ship’s draughts at six points before and after cargo work and correcting for seawater density, ballast, fuel and fresh water. For coal, ores, grain and fertiliser the bill of lading quantity is usually set this way, with an accuracy of about ±0.5 %. Having it performed by an independent surveyor such as SGS, Intertek or Bureau Veritas increases confidence on both sides.
Full entry and related terms in the glossary →
Cargo insurance (marine cargo insurance)
Insurance against loss of or damage to goods and related expenses during transit. Cover is usually defined by the Institute Cargo Clauses (A, B or C), with war and strikes risks added by separate clauses. The sum insured is typically 110 % of the CIF value. Which party insures depends on the Incoterm; under rules other than CIF and CIP, whoever bears the transit risk should buy its own cover. Claims require a survey report, bill of lading, invoice and a damage report.
Full entry and related terms in the glossary →
Institute Cargo Clauses (A), (B), (C) (ICC (A)(B)(C))
The standard cargo insurance conditions drafted in the London market and used worldwide (latest edition 2009). (A) is “all risks” cover, paying for any loss or damage except listed exclusions; (B) covers named perils such as fire, sinking, collision, earthquake, lightning and entry of seawater; (C) covers only major casualties – fire, explosion, sinking, stranding, collision and general average. For raw materials exposed to theft, wetting or handling damage, (A) cover is recommended.
Full entry and related terms in the glossary →
General average (GA)
The sharing of deliberate sacrifices and expenses made to save the ship and cargo from a common peril – jettison, salvage fees, firefighting – among the ship and all cargo owners in proportion to their values. It is calculated under the York-Antwerp Rules. When a shipowner declares general average, every receiver must provide security before taking delivery of its cargo; uninsured buyers may have to put up large cash deposits.
Full entry and related terms in the glossary →
Marine fuels: VLSFO, HSFO, MGO and the IMO 2020 sulphur cap
Under MARPOL Annex VI the sulphur cap for ship fuel fell from 3.5 % to 0.5 % on 1 January 2020 (IMO 2020); in Emission Control Areas – northern Europe, North America and, from 2025, the Mediterranean – the limit is 0.1 %. VLSFO (0.5 % S) is now the main fuel; HSFO (380 cSt, 3.5 % S) may only be burned by ships fitted with scrubbers; MGO/MDO (0.1 % S) is used in ECAs and auxiliary engines. Fuel quality is specified under ISO 8217, and every delivery requires a bunker delivery note (BDN) and a MARPOL sample.