Sea freight is a method of transporting large quantities of product and heavy shipment via cargo ships. All goods are packed into containers and these containers are loaded onto a vessel, where they will be sailed to their destination place. As a typical cargo vessel can carry 23,000 containers (TEU), sea freight is a cost-efficient way to transport high quantities of products. Sea freight shipping is usually the cheapest and the most cost-efficient shipping method when transferring a bulk amount of goods. There are many possible variations when it comes to size and shape when using sea freight, and therefore, there different sea freight rates provided by the freight forwarder. When the seller or buyer shipping shipment via sea freight, one of the biggest things that will affect the sea freight costs you run into is what Incoterms you’re trading under.
The most sea freight shipment is under LCL and FCL
- LCL (Less-Than-Container Load) is the goods that will load into a shared container and shipped either as pallets or loose cartons. This mode is normally shared container with other customers which are charged by cbm (cubic meter) or m3 (meter cube). When the seller or buyer goods are too small to fill the entire container. Instead of own goods being loaded into own container, they will use a shared container with others to reduce the cost. However, LCL takes more time to deliver then FCL shipment and increased risk of damage, misplacement, and loss.
- FCL (Full Container Load), is using the whole container to load the goods at the seller place and deliver it to delivered to the buyer with sealed. It is for high enough volume shipments to warrant being transported in their own container. The goods will be loaded into a container which might be 20ft, 40ft, and 45ft long. It is charged as a flat fee per container.
Common Ocean and Sea Freight Costs and Rates:
- Customs security surcharges (AMS, ISF)
- Container Freight Station (these are the consolidation charges, and apply for LCL only)
- Terminal Handling Charges (charges by the port authority)
- Customs brokerage
- Pickup and delivery
- Accessorial charges (fuel surcharges, handling hazardous materials, storage, etc)
- Routing charges (e.g. Panama Canal, Alameda Corridor)
What are the advantages of sea freight?
- Cost-effective – sea freight is cheaper than air freight, especially heavy or large shipment.
- Duty and VAT – calculated as a percentage cost of goods plus the export cost
- Different Options – More shipping options for seller and buyer to choose either taking entire containers or sharing with others depends on the loads.
- Size – Seller and buyer can ship bulky items of shipment bigger items like furniture, automobile parts, industrial parts, machine, and even vehicles all kinds of heavy objects without incurring enormous costs in transportation.
- Specialist operators – Seller and buyer can ship goods from more or less anywhere in the world.
- Eco Friendly – Ships have a minimal carbon footprint as they consume lesser fuel in comparison to air
What are the disadvantages of sea freight?
- Time-consuming – It takes several weeks to move the goods which ideal for those items which have a long lead time.
- Pricing – It not suitable for small loads, which more cost-effectively sent by air cargo or courier service.
- Safety – It is easier to damage, misplaced, or lost during transit compared to air freight because of a high amount of time involvement from shipping to delivery. Sometimes it delayed or weather obstructions which can cause loss or damage to the shipment.
- Tracking – Sea freight is not like air freight and courier, the customer unable to trace status due to transit time is longer and not fixed.
- Lack of Infrastructure – Some of the places don’t have facilities of ports and terminals to receive large ships carrying containers. Usually, a significant amount of capital expenditure is essential to handle container-based networks.