What is Ocean Freight: A complete guide of working

What is Sea Freight?

Sea freight transport, or maritime transport, is the most common mode of transport in international trading. Since container shipping was introduced in 1956, it totally revolutionized the logistics industry and became a big contributor to globalization. Today, a whopping 90% of the goods traded are shipped by ocean via container shipping. Ocean freight, also called sea freight, is the movement of goods internationally by sea. Ocean freight is far and away from the most popular option for shipping goods internationally. Roughly 90% of goods1 are transported around the world by sea. But while it’s popular, that doesn’t mean it is the only option or the best one for that matter.

Whether you are just starting or are a veteran in international shipping, most business owners find that they need to review their shipping options from time to time. If you’re currently at that point where you need to ask “Does ocean freight make sense for me?”, we’re here to help. We will cover some of the basics in this blog.

• Who’s involved in sea freight transport?
• What can be shipped using sea freight?
• Steps in sea freight transport
• When to choose sea freight shipping?
• How long does sea freight take?
• How much is shipping by sea?
• What are sea freight container sizes?
• What are LCL and FCL?
• What are some of the major sea shipping carriers?
• Who’s involved?

Same as all types of freight transport, normally it involves seller (manufacturer), buyer (brands), ocean carriers, freight forwarders, custom brokerage, port authority, insurance providers.

What Can be Shipped?

Generally, most of the goods can be shipped using sea freight. Thou you should consult your freight forwarder or shipping agent to confirm. If your goods are weighed over 100 kgs, there’s a good chance and probably the best to use ocean freight. However, there are restrictions applied to which commodities can be shipped by sea. Also, there are special containers designed for dangerous goods, perishable goods, and temperature-sensitive goods. Make sure your shipping agent understands what you are shipping.

What is ocean freight?

Ocean freight is the method of transporting goods through the sea. It is an important part of cross-border trade that lets people move massive amounts of goods between countries. The goods are typically transported on ships through the open ocean. There are many kinds of shipping options available for different kinds of goods. One of the most popular is container shipping, technically named containerization. With this option, goods are shipped using containers with standard sizes of 20 to 40 feet. Apart from ocean freight, there are other international freight transport modes, which include courier, express air freight, and standard air freight. All of these transport modes involve shipping by air and are therefore much faster than ocean freight. They typically take between 1 to 2 weeks. But they are also far more expensive than ocean freight and can only take smaller shipments.

How to ship using ocean freight

Ocean freight relies heavily on the services of third parties called freight forwarders. Freight forwarders usually mean a third-party individual or company who pick up your goods, properly arrange them to be loaded and onboard for shipping, and eventually correctly delivered to the final destination. This is because it is usually necessary to have trusted eyes and hands that can help collect your goods from the seller, arrange shipping and place your goods aboard the ship. The shipping contract is also an important part of the process you should know about. There are standard international shipping terms that govern ocean freight contracts. These are called “Incoterms”, short for international commercial terms. It defines how far along the process will the seller be held responsible for the goods, and at what point will the buyer takes over the liability for the shipment.

The most popular incoterms are:

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. After deciding your shipping terms, the process of concluding the ocean freight will involve the following stages:

Export haulage: This is the start of the shipping journey. At this stage, your goods will be transported from the seller’s warehouse to your freight forwarder’s warehouse.

Export customs clearance: Most countries require goods that are meant for export to first go through clearance. Clearance will include providing a detailed declaration of the cargo, along with supporting documentation.

Origin handling: This stage covers all the activities that will be necessary to prepare your goods for shipping. The cargo will be put in a staging area for inspection and confirmation. Once confirmed, the freight forwarder will issue a cargo receipt confirming that they have received the goods as described. If the shipment is FCL, the goods will be stacked in their container. If LCL, they will be placed in the warehouse to await consolidation with other goods in a container headed for the same destination port. Finally, the container will be trucked to the port of departure to await loading on the ship.

Ocean freight: This is the actual transportation of the goods across the ocean. The stages up to this point may take days or weeks, depending on several factors. Ocean freight itself will likely take anywhere from 20-60 days, depending on where the goods are headed.

Import customs clearance: Once the goods arrive at their destination port, they will await import clearance. It also involves completing the necessary forms, declaring the cargo and paying the necessary fees.

Destination handling: This stage covers all the activities necessary to confirm the goods, check the documents including the bill of lading and transporting the container to the freight forwarder’s warehouse. Here, the goods will be opened, checked and then sorted for import haulage.

Import haulage: This is the final stage of the process. At this stage, the goods will be transported inland by train or truck to the final destination determined by you.

• How does Sea Freight Work
• Goods packed and picked up
• Container or Space booked
• Goods Passing through customs at the port of origin
• Goods loaded into full or shared containers
• Shipping
• Goods unloaded at the port of destination
• Goods pass through customs again
• Upon payment of duties and taxes, Goods got released for delivery
• Goods are delivered in the original container or on pallets
• When to Choose Sea Freight Shipping?

Sea freight shipping is often a cost-effective option and cheapest method when you have a bulk amount of goods to ship. But it takes longer to get to the destination, so you need to plan well beforehand if you choose ocean freight.

How Long Does Sea Freight Take?

The time of transit a sea freight takes is determined by a wide range of factors. Going through customs on both ends, vessel space availability, port capacity, all affect the time needed to move freight by the sea. Crossing the Pacific, for example, generally takes about 1 to 1.5 months depending on the weather. If you are planning your shipping for a specific holiday or sales season, always remember to add at least a week’s time on both ends of the process to be safe.

How Much to Ship a Container Overseas?

Shipping by sea is probably the cheapest option for shipment over 200 kgs. But calculating the sea freight rates isn’t an easy task. Because there are so many variables and most of them keep changing depending on the time of the year. There are four major factors affecting sea freight rates:

Fuel:

Oil price change and it’s associated with bunker fuel. Plus the recent Low-sulfur regulation also affects the ocean freight rate.

Currency:

Exchange rates have a significant impact on sea freight rates. Fluctuations during the shipping might affect the rate.

Peak Season:

High seasonal demands for certain goods affects the rate and space. What’s cheap in low seasons will be charged premiums during high ones.

Capacity:

Sea shipping capacity is like a commodity. The dynamic of supply and demand has huge power over the freight rate. If you absolutely want your goods to be shipped when there’s no space, you will pay the premium to get the spot. There are plenty of online marketplaces and tools you can use to get shipping quotes. If you are looking for general idea about container rates, you can check it out here.

What are Container Sizes?

There are varying sea freight container specifications for the different containers available. Depending on your cargo type, volume, and shape, certain sea freight container sizes may be more appropriate than others. In case you’d like to figure out what container to pick yourself, here’s the standard container specification table.

Standardized Container Specifications

From the standard 20-ft, 40-ft, and 40-ft high cube shipping containers to open tops and flat racks, there are many ocean freight container dimensions that you can choose from that will suit your sea freight shipment.

What is LCL and what is FCL?

LCL and FCL are two types of shipments for ocean freight. LCL or Less Than Container Load shipments suit the goods which are too little to fill a whole container. The goods are loaded into a shared container with other shipments. FCL or Full Container Load, on the other hand, is good for high volumes of goods that can fill an entire container. This type generally gets dedicated container(s) for itself.

Major Sea Shipping Carriers

Sea carriers are key players in international logistics. These carriers move goods from one place to another all around the world by sea. Here are the top ocean shipping carriers heading in TEU capacity and market share:

1. Maersk Line
2. Mediterranean Shipping Company (MSC)
3. COSCO
4. CMA CGM
5. Hapag Lloyd
6. Ocean Network Express (ONE)
7. Evergreen Marine
8. Yang Ming Marine Transport Corporation
9. Hyundai M.M
10. Pacific International Line (PIL)

How Can Freight Forwarders Help?

International shipping is a very specialized industry and it’s full of subcategories. For anyone who’s not familiar with overseas shipping, doing it yourself can be very daunting. Working with professional international freight forwarders not only saves you the potential trouble, but it can also save you time and money. From pickup, packaging, and delivery, documentation, communication with carriers and ports, freight forwarders really eliminate all the hassles for you. 

Courtesy: Best logistics company in Lahore