What is Sea Freight? Understanding Ocean Freight for Your Business.

What is Sea Freight?

Sea freight is a method of transporting large quantities of goods using carrier ships. It is an important part of cross-border trade and enables people to move large quantities of goods between countries. Goods are loaded into containers and then loaded onto ships. A typical cargo ship can carry around 18,000 containers, which means that sea freight is a cost-effective way of transporting large volumes over long distances.

For different types of cargo, there are a number of transport options available. One of the most popular is container transport, technically known as containerisation. With this method, goods are transported using containers with standard dimensions of 20 to 40 feet.

In addition to sea freight, there are other modes of international shipping, including express, air express and standard air freight. All of these modes of transport involve air freight and are therefore much faster than sea freight. They usually take 1 to 2 weeks. However, they are also much more expensive than sea freight and can only accept smaller shipments.

Types of Sea Freight Services

﹒FCL or Full container load, which you purchase one or more full containers to send on a ship.

﹒LCL or Less than container load, where your product shares a container as you may not have a full container's worth. Once they reach their destination, the contents of the container will be split again.

﹒RORO or Roll on roll off, where your products enter the cargo vessel without leaving the vehicle they are in. The vehicle is simply driven onto the ship and then driven away from the other end.

﹒Dry bulk transport for specific items that are stored in the hold of a ship rather than being transported in a container

When Should You Ship Full Containers (FCL) and Less than Containers (LCL)?

The obvious answer seems to be that when you have enough stuff to fill a container, you should fill it, otherwise you fill a collocated container. This is not entirely true.

From a financial point of view, a container that is 75% or more full is usually cheaper than shipping in LCL (in other words, LCL has a pro-rata surcharge of about 25%). However, there are two other important considerations. Firstly, LCLs take around 1-2 weeks longer to transport than FCLs. This is because the freight forwarder has to work with others to pack your items and unpack your items.

Secondly, because of this extra handling, LCL shipments are more likely to be lost and damaged (although this is very rare). If time and care is important to you, even shipping in half empty containers can sometimes be justified.

How Does Ocean Freight Work

Ocean freight relies heavily on the services of a third party known as a freight forwarder. A freight forwarder is usually a third party individual or company who picks up your goods, properly arranges for them to be loaded on board and transported on board, and ultimately delivered correctly to their final destination. This is because it usually takes a trusted eye and hand that can help collect your goods from the seller, arrange transport and place your goods on board.

The shipping contract is also an important part of the process that you should be aware of. There are a number of standard international shipping terms that govern shipping contracts. These are called 'Incoterms', which is short for International Commercial Terms. It sets out the extent to which the seller will be responsible for the goods during the process and when the buyer will take over responsibility for the goods.

The Most Popular Incoterms of Ocean Freight:

﹒FOB (Free on Board): Under the FOB agreement, buyers and sellers share the responsibility of the delivery process. Seller takes obligations to make sure the goods are packaged, labeled appropriately, and loaded correctly ready for shipping. Once the goods have been loaded onboard, the obligations transfer to the buyer.

﹒EXW (Ex Works): An EXW contract places the majority of responsibility on the buyer. The buyer picks up goods at the manufacturer’s and is responsible for the transit of the goods to their final destination.

﹒DDP (Delivered Duty Paid): With DDP, the seller takes the maximum obligations and buyers take minimum obligations. The terms dictate that the seller will be responsible for the costs of shipping, insuring the goods and inland transportation.

There's obviously a lot to learn about how these Incoterms work and which makes the most sense for you.

Benefits vs Disadvantages of Sea Transport

Benefits of Sea Freight

﹒Possibility of carrying a wide variety of cargo, with high availability of routes and vessels

﹒Sea freight rates are low for transporting large quantities at once, over long distances

﹒Most carbon-efficient mode of transport when comparing the fuel consumption to the weight transported per shipment

﹒Shipping by sea or ocean is the safest form of worldwide transport

Possibility of safely transporting dangerous and hazardous goods that are forbidden in other shipping services

﹒Lower maintenance costs compared to rail or road transport

Disadvantages of Sea Freight

﹒Sea freight transport is slow, only suitable for shipments that are not time-sensitive

﹒Not cost-effective for short-distance shipments

﹒Vulnerable to weather conditions such as excessive rain or dry season where the water level in rivers are too low

﹒Further inland transportation needed to connect the port to the final destination

Tracking of goods transported by ocean freight might be tricky

﹒The biggest danger of the sea freight industry is piracy

Ocean freight is economically superior to other forms of product delivery service, but only if you are looking to transport large quantities or if the destination country is far away. However, even with the option of LCL, courier services and Air Freight may still be better options depending on the product in question.

International Sea Freight Services

Sea freight forwarding, also known as ocean freight, is a very cost-effective solution for transporting large quantities of goods that are not time sensitive. Whether you require pallet transport, FCL or LCL shipping, at STU Supply Chain, we can organise effective transport of your goods by sea freight and other efficient shipping services.

STU Supply Chain is one of the largest global freight forwarders operating in the global network. Providing tailor-made solutions for your specific ocean freight requirements is at the heart of our services and STU Supply Chain offers flexible global ocean freight services and near ocean freight services for LCL and FCL cargoes.

Our Advantage

Regardless of the size of your business, our experienced ocean freight team can keep your cargo unimpeded on the high seas and the open ocean.

From STU Supply Chain: https://stusupplychain.com/what-is-sea-freight.html