How to Calculate Garments Shipping Cost with 3 Easy Steps

Introduction

A shipping cost of garments is the cost incurred by a company while transporting garments from the garments industry to the place of sale. This article will discussed how to calculate garments shipping cost with 3 easy steps and proper example. When the destination is not so far, they are transported by road through containers. But when the destination is so far from garments industry, then garments is transported to buyer by sea or airway. Garments shipping cost through sea is comparatively low than airway. However, the transport time makes a huge difference between air and sea modes. The garments shipping cost depending on the transportation, the distance to be covered, as well as the forwarder the garment manufacturer uses.

garments shipping cost — Figure 1: Garments shipping port

List of Charge to be Paid for sea shipment

There are another party works between garments manufacture and buyer. These third party are called forwarder. We can say easy way, forwarders are the person who perform the work of transporting the garments form the garments industry to buyer. They charged for their work. The following are the list of charge that must me paid for sea shipment. Following charge charge should be consider when calculate garments shipping cost.

Inland Container Depot (ICD) charges: The ICD is the location where the manufactured garments are loaded into containers, near the place of garments industry. The manufacturer, when the garments are ready for shipment, transfers the garments to the ICD. The ICD charges include the cost of loading the containers and storing them.
Container charges: Generally, ocean freight container charges are determined by the space the garments occupy within the container. There are three different sizes of containers available.
- 20 feet container: these types of container capacity of 28 cubic metres.
- 40 feet container: these container’s capacity is 58 cubic metres.
- 40 high cube container: these container’s capacity is 68 cubic metres .
Shipping bill: For export and for duty drawback, the shipping bill is filled out and processed by the government.
Bill of lading: In a bill of lading, the details of which ship was used for the shipment, the date in which the vessel departed, the total quantity of goods in the vessel for a particular supplier, the goods exported by the ship and the goods to whom are included. A forwarder issues it for reference as the buyer cannot clear the goods at the destination and the exporter cannot negotiate the bill.

Factors Effect the Garments Shipping Cost

Below the listed some common factors effect the garments shipping cost calculation.

Government rules and regulations is effect the garments shipping cost calculation.
Destination country is also effect the shipping cost calculation.
Types of assortment,
Garments shipping cost depend on the shipping mode .i.e. whether by road, air, sea, or by combination of these.
Volume of the order
INCO (International Commercial terms)

The following examples will help to you how to calculate garments shipping cost in apparel industry.

Exercise : Calculate Garments Shipping Cost

Example 1: The packaging instructions for the girls T-shirts order were as follows: for the order quantity of 20,000 pcs, the product was packed in such a way that each carton box contained 3 pouches of 15 pcs and carton box size is 80cm ×60cm × 30cm. In the case of 20 feet containers, the freight charges are typically Rs. 30,000. Documentation costs are Rs. 3,000, transportation charges are Rs. 8,000, port charges are Rs. 6,000, custom charges are Rs. 7,000, agent commissions are 2% of the calculated cost, and other service charges are Rs. 4000. Now, calculate garments shipping cost per garment.

Solution

Step 1: Calculate freight charge

Total order quantity= 20,000 pcs garments
Each carton box contains 3 pouches of 15 pcs each. So, total garments in a box= 15×3= 45 pcs.
The number box required for the order quantity= 20,000 ÷ 45= 444.44 ~ 445 box
Size of the single box= (80× 60× 30) cm³ = 1,44,000 cm³ = 0.144 m³
Total area of 445 boxes= 0.144 × 445= 64.08 m³
Freight charge for 20 feet container= Rs. 30,000
Area of the 20 feet container= 28 m³
Hence, the cost of a cubic metre= 30,000 ÷ 28= Rs. 1,071.43
Here, 1 m³ cost is Rs. 1,071.43
So, the for 64.08 m³ = 64.08 × 1,071.43= Rs. 68,657.23

Step 2: Calculate overhead cost

Documentation charges Rs. 3,000
Transportation charge Rs. 8,000
Port charge Rs. 6,000
Custom charges Rs. 7,000
Other service charge Rs. 4,000
Total overhead cost= 3000+ 8000+ 6000+ 7000+ 4000= Rs. 28,000

Step 3: Calculate garments shipping cost

Total garments shipping cost= Freight cost + overheads= 68,657.23 +28,000= 96,657.23
Total garments shipping cost with commission= { 96,657.23 + ( 96,657.23 of 2%)}= Rs. 98,590.37
Shipping cost per garment= 98,590.37 ÷ 20,000= 4.93
Shipping cost per garment is Rs. 4.93

Example 2: A company received an order of 30,000 pieces. Packing instructions are as follows: each carton box contains 150 garments, each carton box is 60cm ×40cm × 30cm. Freight charges for a 20 feet container are Rs. 650000. Terminal handling charges 500 per meter cubic, documentation charges Rs. 4000, transportation charges Rs. 15,000, port charges Rs. 5000, customs charges Rs. 10,000, agent commissions Rs. 3000, and other service charges Rs. 5000. Now, calculate garments shipping cost per garments.

Solution

Step 1: Calculate freight charge

Total order quantity= 30,000 pcs garments
Each carton box contains 150 garments.
The number box required for the order quantity= 30,000 ÷ 150= 200 box
Size of the single box= (60× 40× 30) cm³ =72,000 cm³ = 0.072 m³
Total area of 200 boxes= 0.072 × 200= 14.4 m³
Freight charge for 20 feet container= Rs. 65,000
Area of the 20 feet container= 28 m³
Hence, the cost of a cubic metre= 65,000 ÷ 28= Rs. 2,321.43
Here, 1 m³ cost is Rs. 2,321.43
So, the for 14.4 m³ = 14.4 × 2,321.43= Rs. 33,428.5

Step 2: Calculate terminal handling charge

The terminal handling charges= 500 per m³
Total volume of space required= 14.4 m³
Total handling charges= 14.4 × 500= Rs. 7,200

Step 3: Calculate overhead cost

Documentation charges Rs. 4,000
Transportation charges Rs. 15,000
Port charges Rs. 5,000
Custom charges Rs. 10,000
Other service charges Rs. 5000
Agent commission Rs. 3,000
Total overhead cost= 4,000+15,000+5,000+10,000+5,000+3,000= Rs. 42,000

Step 4: Calculate garments shipping cost per garments

Total garments shipping cost= Freight cost + terminal handling charge + overheads= 33,428.5 + 7,200+ 42,000= Rs. 82,628.5
Shipping cost per garments= 82,628.5 ÷ 30,000= Rs. 2.75
Shipping cost per garments= Rs. 2.75

Conclusion

Shipment costs for garments increase with the shipment weight. Sea shipment rates are determined by the volume of the shipment. It is either the producer who sends the product or the buyer who receives it who pays for the freight on the ship or the ari. If you have any questions or concerns, please let us know below in the comments box. Please share this article with your friends and social media.

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