Mastering Global Commerce: Maximize Your Opportunities with Ocean Freight

Mastering Global Commerce: Maximize Your Opportunities with Ocean Freight
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The holiday season is upon us once again, and despite some economic woes consumers are starting to shop early this year. The even better news is that consumer research shows they will be shopping for longer too – taking their time to make spending decisions. For businesses that want to end the year with a bang, now is the time to get your goods from your warehouse to the stores.

Ocean freight is still the most popular way for importers to ship their products from overseas – about 90% of the world’s cargo is shipped in this method. With this in mind, what do importers interested in transporting goods by ocean freight need to know?

When is Ocean Freight a Good Idea?

While almost anything can be sent by ocean freight, it’s important to weigh up whether it’s the best option for your business. Three factors will determine which goods are best sent over the seas – cost, shipping volume, and speed.

Ocean freight is ideal for:

  • Goods that don’t have a very high value: Ocean freight can be a cost-effective mode of transportation for goods that are not very valuable or expensive. However, highly valuable goods or those needing strict control (such as some pharmaceuticals, electronics, or particular perishable foods) are in some cases better suited for air freight. 
  • Large products or high volumes of a product: The more space you need, the more cost-effective it is to ship your goods via the ocean. The cost per unit decreases as the shipment volume increases whereas the opposite is true for air freight.
  • Goods that don’t need to be delivered in a hurry: If you have a longer time frame for delivery, ocean freight is ideal as you benefit from the lower landed cost. If time is critical or if you have a specific deadline, the longer cycle time of ocean freight may not be your best option. Ocean freight can also be prone to any number of delays – anything from inclement weather to getting stuck at port for weeks. 

Choosing the Right Container 

Once you have decided that ocean freight is the way to go, you need to choose the packing method that’s best suited to your product. There are several ways that non-specialized goods are shipped by ocean freight. These include: 

  • Container cargo where the products are put in large metal shipping containers. 
  • Break bulk where goods are shipped in crates, bags, or drums, without being placed in a container.  
  • Roll on/roll off goods, like cars and machinery that are driven on-board and then off again. 

More than half of the world’s goods are shipped in containers. The standard size of a shipping container is 20 feet, and these are known as twenty-foot equivalent units (TEUs). Most ocean freight shipping businesses measure a ship’s capacity in TEUs, with the largest container ships accommodating over 20,000 TEUs each. 

 

When shipping your goods in a container you can use less than a container load (LCL) or a full container load (FCL). As implied by their names, using an FCL means only your goods are shipped in the container (you are using the full container) while LCL involves sharing container space with other shipments. 

 

So what are the factors you should consider when deciding which option to choose?

commercial freight shipping scene showcasing three different methods of cargo transport. On the left, large metal shipping

Cost

With FCL, the entire container is dedicated to you, and you are responsible for the full cost of the container, regardless of how much space you actually use. FCL shipments have a higher upfront cost because you are paying for a full container, but the cost per unit is lower than LCL shipments. LCL tends to cost more because you are charged per cubic meter (CBM) for your shipment. In addition, because multiple shippers are sharing space in the same container the cost per unit may be higher compared to FCL shipments because of the additional handling and consolidation processes.

Volume

If you are shipping less than 10 cubic meters, the cost advantages of LCL are an attractive option. However, as the shipment volume grows beyond 10 CBM, the cost advantages of LCL may diminish, and FCL might become a more competitive option. If your volume justifies the cost, FCL can be more cost-effective and may offer other advantages such as potentially faster transit times and less handling during transportation.

Speed

LCL can take more time to arrive than FCL containers. This is because you may have to wait for a container to fill up before it is ready to leave and extra time will be needed to sort, load, unload, and separate the goods at each port. On the other hand, FCLs can leave immediately and take a much shorter time to arrive at your door as the entire container is being delivered directly to you.

Security

FCL is more secure than LCL. As FCL shipments are dedicated to a single shipper, the container is sealed at the point of origin and stays sealed until it reaches its destination. This means there is much less handling of the goods during shipping, reducing the opportunities for damage or loss. While FCL shipments generally involve fewer handling points throughout the shipping process, LCL shipments see goods being consolidated and unconsolidated multiple times, leaving these shipments more open to security breaches. 

Flexibility

Because LCL allows shippers to send smaller quantities of goods, it is quite flexible compared to FCL. This is a particular advantage when you have multiple delivery points for your goods. If a shipper opts for FCL but needs to deliver goods to multiple destinations, they will incur additional costs such as warehousing to temporarily store the goods, unloading the container, sorting the items for different destinations, and arranging trucking to deliver the goods to each specific address. FCL is designed for a single destination per container, and it can become less cost-effective and more complex when you start adding multiple delivery points.

Availability

FCL shipments are not always readily available, particularly during peak periods such as the lead-up to the Christmas or Chinese holidays. In these instances, LCL may be preferable since you don’t have to wait for a full container to become available.

Understanding Shipping Documents

Once you know what shipping container you’ll use, you need to get on top of the documentation. This is a daunting part of shipping goods by ocean freight as there are a lot of documents needed and many forms to be completed. Understanding the different documents is an important part of getting your shipping process right and avoiding delays & penalties or even the confiscation of your goods. Some of the more important documents include: 

  • Commercial Invoice: The Commercial Invoice is issued by the exporter to the importer. It provides a detailed breakdown of the transaction, including the type and quantity of goods, their value, and the terms of sale.
  • Packing List: The packing list is an itemized list detailing the contents of each package in the shipment which must correspond with the commercial invoice. It also includes information on how the shipment has been packed and the boxes marked.
  • Export/Import Customs Declaration: This form is used for customs clearance and is used by customs officials to calculate applicable duties or taxes. All information on this form must be accurate because errors or omissions can lead to heavy penalties and delays. 
  • Bill of Lading: This is a crucial document that serves as a receipt of goods by the shipper, a document of title, and a contract between the shipper and the carrier. The party holding this document is in control of the cargo. 
  • Arrival Notice: This document includes information about the goods, all the sailing details, the destination country, and the contact details of the ocean freight carrier. 
  • Certificate of Origin: This document certifies the country of origin, the destination of the goods, and the country of export (if it is not the same as the country of origin). It is an important form as it helps to determine if goods can be imported and what duties will apply to them.  

eezyImport: Leading You Through Choppy Waters

Ocean freight is a cost-effective and efficient way of shipping your goods worldwide, but it can also be a complex and daunting process. Fortunately, with eezyImport global LCL shipping has never been so “eezy” or secure! Our DIY LCL service makes scheduling your shipment cost-efficient, headache-free, and reliable with the backing of industry giant, the Fridenson Group. With our user-friendly set of tools, you can get an instant quote, book and monitor your freight online, and integrate all of your customs processes. Our DIY booking and filing system saves you time and money, and you don’t have to worry about figuring it out on your own. A whole host of resources and support are always at your fingertips. Contact us now to find out more.

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eezyimport is an online platform and is not a licensed customs broker. However, we work closely with a third-party licensed customs broker who can assist with any entry-related issues.

eezyimport is an online platform and is not a licensed customs broker. However, we work closely with a third-party licensed customs broker who can assist with any entry-related issues.

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