Shipping Costs Exercise

• In order to properly price your product so you can make a profit, you need to know what your shipping costs are going to be.
  • In this exercise you will calculate costs based on five different shipping terms:
    • EXW - EX WORKS
    • FCA - FREE CARRIER
    • FOB - FREE ON BOARD
    • CFR - CARRIAGE AND FREIGHT
    • CIF - COST, INSURANCE AND FREIGHT

• The values used for the charges are not exact, but are realisitc for ocean freight.
  • You should contact a freight forwarder to obtain a quote from them.

• Ocean rates are charged per weight or measurements of the shipment, whichever yields greater revenue to the carrier.
  • To calculate the correct ocean freight charges, for each package you need to know:
    • The actual gross weight of the shipment in kilograms.
      • 1 kilograms equals approximately 2.2046 pounds.
    • The measurements (length, width, height) in cubic meters of each package.
      • 1 cubic meter equals approximately 35.31 cubic feet.

• You will need to provide:
  • Size of the packages in cubic meters.
  • Shipping weight in kilograms.
  • Distance to the inland port in kilometers.
  • Cost of your product.
  • Price of your product.
  • Other pertinent information.

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© 2004 - 2005 John Michael Pierobon

Notes