If you are shipping international cargo, it might be wise to brush up on your Latin. One Latin word that you might want to familiarize yourself with is ad valorem. In the international shipping industry, ad valorem plays an important role in factoring the ocean freight rate you are paying. Ad valorem translates in Latin to roughly the phrase “according to the value” or “in proportion to the value”, which is appropriate to the logistics meaning behind the phrase. Ad valorem is an import duty based on the value of the cargo that is being transported. For example, an import duty rate of 8% is equivalent to 8% of the value of the freight. That is an import duty the shipper must pay.
In the United States, this is highly regulated. The specific commodity that you are importing into the United States will factor as there numerous import duties, each based on the commodity. And the bill of lading also plays a role with regards to ad valorem. The ad valorem rate can be formerly written as a rate on the bill of lading.
For shippers who are unsure about ad valorem and the import duties they will pay based on their commodity, speaking to a trusted freight forwarder can greatly help. They can supply you with important information about the ad valorem rate and how it impacts your shipping quote. Anyone who is used to shipping containers is familiar with the cost of ad valorem duties. They know that the rates could add up.
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