What Is FAK (Freight All Kinds) in Ocean Freight?

Freight All Kinds (FAK) is a pricing system that consolidates various cargo types into a single tariff class. This system eliminates the need to classify and rate cargo individually based on type, size, or weight.

FAK groups diverse shipments into a single category, therefore simplifying the logistics process and, in turn, streamlining it for your business. It is widely used in ocean freight for flexibility and cost-effectiveness. You’ll commonly see the term in less than container load (LCL) shipments where there is mixed cargo. These goods will be combined in one container for simplicity.

How Does FAK Work?

Freight of all kinds, meaning the consolidation of various cargo types into a single shipment, is a popular term used in ocean freight shipping. Instead of categorizing individual items by their specific classification, FAK treats diverse goods as part of a general category, simplifying the shipping process.

FAK also makes rate structures clearer, as shippers and carriers can negotiate on a unified rate for the entire grouped shipment. The cost across mixed shipments is standardized, eliminating the need to calculate individual rates for different items. This process removes administrative burden and makes documentation more straightforward.

Some examples of FAK shipments include the following scenarios:

• A retailer shipping a mix of goods, including home goods, electronics, and clothing
• A manufacturer shipping finished products and raw materials
• A distributor who consolidates products from multiple suppliers

Benefits of FAK for Businesses

FAK can be highly beneficial for businesses, especially small—to medium-sized enterprises, that want to optimize the shipping process. The following are the most essential advantages of FAK shipping.

Cost Savings

FAK reduces the cost of shipping by allowing shippers and carriers to negotiate a unified rate for all types of cargo grouped into a single shipment. It also means that the entire shipment is grouped into a single tariff rate. This consolidation is especially advantageous for businesses with smaller shipments that might otherwise be charged higher rates individually.

Simplification

Since FAK consolidates shipments, the whole process is significantly simplified, especially when it comes to billing and tariff management. Instead of needing to manage multiple rate calculations and invoices, FAK delivers a single, straightforward bill for the entire shipment.

Flexibility

FAK offers significant flexibility for shipping small items. This method allows businesses to combine different types of goods in one shipping container, optimizing space utilization. It is particularly advantageous for SMEs with varied product ranges.

When Should You Consider FAK for Your Shipments?

While the FAK benefits make it an attractive option for those shipping by sea, it’s not for everyone. This pricing system is generally ideal for businesses that are:

• Shipping mixed goods in different product categories or SKUs
• Looking to reduce costs in LCL shipments
• Seeking to simplify the logistics process and reduce administrative overhead

If your business doesn't align with the advantages described above, FAK may not be the best option. This statement is particularly true for shipments of high-value or specialized cargo that require specific handling or insurance requirements.

It’s also not recommended for homogenous shipments that consist of a single type of cargo. In this case, traditional freight classification may be more cost-effective than FAK.

Factors That Affect FAK Rates

FAK rates differ and are calculated taking into account the following factors:

Shipment Weight and Volume

FAK is calculated based on the space a shipment occupies in a container or its total weight. Larger or heavier goods will incur higher FAK rates to account for the added cost of handling and transportation.

Optimizing the shipment and its packaging is important to reduce unnecessary bulk and weight and keep costs to a minimum.

Type of Goods

FAK also accounts for the type of goods being shipped. If the goods to be consolidated include hazardous materials, perishable items, or goods that require special handling, there may be additional charges. This is to cover specific safety measures, compliance with regulatory standards, and unique packaging and handling requirements.

Shipping Route and Distance

Of course, the route and distance between the origin and destination also affect FAK rates. Shipments traveling longer distances and through complex routes will incur higher costs to pay for port fees, fuel, and customs clearance procedures.

Carrier Agreements

Businesses can negotiate FAK rates with carriers. In many cases, the relationship between these two parties can significantly affect the cost. If a company has a long history of shipping with a particular carrier, they may have more flexibility in pricing and, therefore, receive favorable rates.

Companies with less frequent shipments and without a relationship with a carrier might experience less room for negotiation and, consequently, higher FAK rates.

Tips for Optimizing FAK Shipments

Now that you know all about FAK in ocean freight, here are some tips to help you optimize and make the most out of FAK shipping:

Ensure Accurate Documentation and Packaging

Properly labeling and documenting your goods can play a huge role in reducing delays and avoiding misunderstandings during the shipping process. When packaging your shipment, always consider maximizing container space and protecting your cargo during transit.

Negotiate FAK Rates With Carriers

FAK rates are highly negotiable. Build established relationships with carriers and negotiate rates to secure competitive prices that fit your budget and are tailored to your shipping needs.

Work With a Reliable Freight Forwarder

Navigating FAK shipping can be challenging for first-time shippers. We recommend working with a trusted freight forwarder to ensure you get the best rates and guarantee a smooth shipment. Contact iContainers to see how we can assist you with your FAK shipment.