What Is A Destination Charge?
A destination charge refers to a levy that a manufacturer charges to the customer to deliver goods from the assembly plant to the final destination.
It is also a local delivery, destination terminal, freight, or transportation fee and is applicable in the auto, shipping, and freight forwarding industries.
It is also used to describe dues that are charged by the destination ports of cargos that cover movement, (un)loading, inspection, and other administrative duties which see to it that the goods are appropriately unloaded, sorted, tagged, packaged, and prepared for transportation to the final destination.
The levies, unlike sales prices, are non-negotiable and must be paid even if the items are picked up directly from the manufacturer.
They are priced by calculating the average transportation costs for the goods in the closest and farthest delivery points. They have a range when done within the country, but overseas situations attract additional charges, although certain exemptions and considerations may occur in the shape of discounts.
The United States charges sales tax on the destination charge, and as such, the fees are added to the final costs in the invoice before tariffs are imposed. The pricing system and the charges due are determined by the mode of transportation employed.
Sea freight- which could be either full container load or less than a container load- and air freight or any other mode attract different transportation rates.
The different airlines, shipping lines, ports, origin, the integrity of freight forwarders, and nature of the goods are also crucial factors to consider when analyzing the pricing systems for goods.
For instance, it is not uncommon for ports in different continents to have considerably significant rate differences. Dangerous goods automatically bring increased financial responsibility with them. Unscrupulous freight forwarders could set ridiculous prices to improve their profit further.
To help customers manage the prices and save costs, being conversant with the invoices and the allocations for the charges and consultation with the freight forwarders for optional ports or trade lanes as well as freight consolidation to take advantage of shipments with small shipments cargos.
Destination Charge Example
An electronic appliances dealer who makes trans-continental trade must pay a flat rate as destination charge regardless of his physical presence at the production factory.« Back to Glossary Index