What is CFC in Shipping?

What's in this article?

Cargo Facility Charge
Controlled Foreign Company
Wait.. Are There Extra Port Charges When Shipping?
Avoiding Port Charges for Containers
Plan in advance
Keep track of your container
Manage all documentation
Use shipper-owned containers (SOCs)
Wrapping Up

The shipping industry is a complex beast.

It's common for shipping procedures and instructions to contain various abbreviations and acronyms unfamiliar to most of us. What makes these even more complicated is that each can have multiple definitions.

Today, we're going to aim to reduce any confusion for you while covering the main definitions of what exactly CFC is in shipping.

Grab your compass, and get ready to sail through this article.

Cargo Facility Charge

The CFC includes additional costs for activities such as container load inspections and document processing by agents, stevedoring companies, and terminals.

Additional fees also apply for arranging storage between quick turnarounds upon arrival or departure from the port, known as time/demurrage.

All shipping lines should be aware of additional shipping charges so that their budget planning includes any necessary outlays for smooth operations.

Let's use The Port of New York and New Jersey in the United States (PANYNJ), a significant hub for containerized cargo, as an example of how a cargo facility charge can be used.

With an extensive network of facilities and services in operation, as part of its ongoing commitment to keeping the port up-to-date and efficient, it has recently announced a revised Cargo Facility Charge (CFC) effective from January 1st, 2021.

This cost-pass-through means the charges levied by the Port Authority will be passed on to those using the facility, such as carriers.

But, as mentioned earlier, one acronym can stand for multiple definitions.

Controlled Foreign Company

While Cargo Facility Charge is the most commonly known definition, meaning additional costs for activities such as container inspections and document processing by agents, stevedoring companies, and terminals, CFC can also stand for Controlled Foreign Company.

A controlled foreign company (CFC) is established in a foreign country with lower taxation than the owners' home country, which is used in tax planning.

This type of company allows its owners to exploit the tax discrepancies between the two countries. It will enable transferring assets to a foreign country company so the owners can utilize lower tax rates from the host country.

Wait... Are There Extra Port Charges When Shipping?

Unfortunately, yes. Hidden fees are part of the shipping experience. You must brush up on the acronyms and broader knowledge of the entire transportation process.

Port charges for containers can significantly add to the shipping cost, making it difficult for companies to predict the total cost of their shipments accurately. These hidden fees can be complex and challenging to identify without a detailed analysis of all potential costs.

Port container charges are essential to the shipping costs that operators and customers must factor in. The port authorities collect or impose these charges as fees according to established regulations or arbitrary amounts if certain conditions arise.

For example, if the shipment arrives late or there is any last-minute change in its route, these penalties can be imposed. They increase the total cost of transportation and ultimately affect the final price of cargo transportation.

On the flip side, some port charges can also be avoided altogether; for instance, demurrage and detention charges. However, these different types of port charges are unavoidable in most cases.

Though operators should try to remain aware of any changes that could occur to keep their costs as low as possible. When managing money and finances, it is essential to calculate port charges to optimize budgets accordingly and accurately.

Fortunately, there are some strategies that businesses can put in place to help reduce or avoid charges at your destination port altogether.

Avoiding Port Charges for Containers

When managing the costs associated with shipping containers, some port charges cannot be avoided. These items include terminal handling costs and goods dues.

No matter how hard you negotiate, these fees must be accepted as unavoidable expenses.

However, we have some tips on how to avoid hidden fees.

Plan in advance

Proper planning and negotiating in advance are essential for staying ahead of port charges. Many of these charges can be avoided or reduced with the right strategy and ample research.

An excellent place to start is organizing your shipments so that transshipment can be avoided whenever possible. This small change can significantly impact terminal handling costs, as they are often linked to trans shipment activities.

When it comes time to select containers, signing on for extra free days can help avoid or significantly reduce demurrage and detention charges when the container arrives late or is left behind at the port beyond a specified duration.

Free days depend on your particular arrangement with the leasing company in charge, so understanding their policies before signing any contracts can go a long way toward staying within your budget.

Planning and negotiating in advance ensures you only incur costs for what you need, helping keep costs low and profits high.

Keep track of your container.

Tracking containers is a great way to ensure your shipments are efficiently planned. This process allows you to get an estimate of delays and ensures that necessary steps can be taken to address them.

By tracking your containers, you can reduce port charges for canceling or D&D when the shipment is delayed or arrives ahead of schedule.

This method also enables customers to access real-time updates about their shipment, such as its exact location and estimated arrival time. They can plan and prepare for any potential delay or other issues in advance.

It gives them a sense of security and controls over their shipment and the entire shipping process. The tracking system also allows carriers to proactively research problems and take measures to minimize the impact on their customers and the whole delivery chain.

Manage all documentation

Shipping documents are a critical set of paperwork necessary for international trade. They are legal documents attesting to the true nature of the shipped goods. They also confirm that there is no contraband or irregularities in the shipment.

Shipping documents provide extensive details about the consignment, including the origin and destination of the goods, description of items, the value of goods, date and port of shipment, taxes, and other custom-related charges.

It also serves as documentary evidence for commercial transactions, for purposes such as insurance or proof of delivery. Also, customs authorities often require shipping documents when containers clear customs.

Unless all necessary shipping documents are at the port upon delivery, containers can be held up at the terminal and incur storage and detention charges until all the required documents arrive.

Therefore it is vital to ensure that all shipping documents related to a consignment are correctly managed to keep freight movements running smoothly and avoid costly delays.

Use shipper-owned containers (SOCs)

Using shipper-owned containers (SOCs) is an effective way to avoid costly demurrage and detention charges. When using a SOC, the shipping company is essentially leasing it from the container owner for the duration of their voyage.

This arrangement benefits both parties as the owners benefit from their containers being repositioned, which saves them money on storage and repositioning. Additionally, the shippers can avoid extra costs associated with traditional COCs, such as demurrage and detention fees.

The challenge is connecting with reliable container owners with containers available in your desired locations. To ensure access to these services, you first need to establish multiple avenues of contact.

Ensure there are clearly outlined standards for quality. Expect regular communication between yourself and the container owners to ensure your cargo reaches its destination safely and on time without any extra fees incurred due to missed deadlines or delays.

With all of the above tips, you should be able to navigate the murky waters of hidden shipping port fees!

Wrapping Up

Ultimately, understanding acronyms in shipping is crucial for anyone involved in the transportation industry. Remember that many can have more than one definition. It is best to read any documentation with acronyms carefully and ensure you know what each is discussing. This will ensure the safe and efficient delivery of your goods worldwide.

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