What is ocean freight? What are the different options? What is the Process?
Ocean freight is the transport mode for the vast majority of global trade, accounting for over 90% of world trade movements. It is key to the global economy and is a key part of the process to getting your products from your manufacturer to your customers! Here, in this Knowledge Centre article, we will provide an overview of the key considerations for ocean freight before, of course, providing you details of suppliers that can help you to secure your product's journey in the Logisto directory.
What is ocean freight?
Ocean freight or ocean shipping is the mode of transport of shipping goods by sea, inside containers. Sea freight presents a reliable means of large volume across the world's oceans, usually from one continent to another (for intra-continent sea shipments, see our guide to short sea). Ocean freight supports all levels of commerce, with options to support large-scale shipments in the form of Full Container Loads (FCL) or those that need to ship smaller amounts in the form of Less Than Container Loads (LCL).
So, what exactly is a sea container?
We have all seen a sea container at some point, whether it is being unloaded at a port, transported by HGV on the motorway or even in a farmer's field or as part of a self-storage facility! A shipping container is essentially a big box, but a big box that is absolutely crucial to the movement of goods and to the world economy. In its simplest form, a shipping container is a container that can withstand shipment, storage, and handling, whilst at all times keeping the contents safe and dry. They are large reusable steel/corrugated boxes that can be used for intermodal shipments i.e. the same container can be used from one mode of transport to the other without the need to unload and reload the contents. Very useful stuff!
There are traditionally 3 types of shipping container; a 20ft container, a 40ft container and a 40ft high cube container. They all have the same functionality, but they vary in the volume they can transport (and price…but more on that later!). The volume of containers is measured in Cubic Metres or CBM and is the common way for determining the volume and cost when securing space in a container
| Container Size | Maximum Capacity | Dimension (feet|meters) | Door Height |
|---|---|---|---|
| 20" Container | 28 cbm (stretch to 29) | Length: 19'5" | 5.919 m Width: 7'8" | 2.340 m Heigth: 7'9.5" | 2.380 m | 7'5.5" | 2.278 m |
| 40' container | 58 cbm (stretch to 59) | Length: 39'6.5" | 12.051 m Width: 7'8" | 2.340 m Heigth: 7'9.5" | 2.380 m | 7'5.5" | 2.278 m |
| 40' HC container (High Cube) | 65 cbm (stretch to 68) | Length: 39'6.5" | 12.056 m Width: 7'8.25" | 2.347 m Heigth: 8'5.5" | 2.684 m | 8'5.75" | 2.585 m |
| 45' HC container (High Cube) | 75 cbm (stretch to 80) | Length: 45' | 13.716 m Width: 8' | 2.438 m Heigth: 9'6" | 2.896 m | 8'5.75" | 2.585 m |
Full Container Load vs. Less Than Container Load – what are the different shipping methods?
When shippers and freight forwarders refer to FCL and LCL, they are referring to the ‘ownership’ of the contents of the container. FCL refers to the shipment of a container for which the goods inside are owned by one party whilst LCL involves multiple shippers’ goods being packed and shipped together in one container. FCL is traditionally used by high volume companies that require bulk and large volume movements, whilst LCL is more often used by smaller companies looking to trial a new product or ecommerce sellers.
When to ship FCL?
FCL is when you pay for the use of an entire container instead of paying to use part of it. When shipping using FCL, there is a flat rate for the container and you have access to all the available space within it. This means it is only your goods that are being transferred and only your supplier will be the other person to touch the goods before they arrive to you (other than Customs if there is an inspection).
When to ship LCL?
LCL will often be best for smaller companies or those that are testing new products and/or don’t want the financial outlay on stock or freight required in order to fill a container. LCL is a method of shipping that will consolidate multiple shipments, from multiple businesses into one container.
It provides you with flexibility and allows you to ship any volume you desire. Unfortunately this flexibility does come with additional cost and you will pay more per CBM than if you fill a container.
However, there is a point where it is best to upgrade from LCL to FCL, regardless of whether you can fill a container and that is because FCL is charged at a flat rate. This does vary by shipper/origin and location, but a good general rule of thumb is that under 15cbm is best by LCL, whilst anything more is better via FCL.
Other considerations:
Delivery
When it comes to your goods arriving at their final destination, there are a few things to consider when selecting FCL or LCL:
- Convenience
One of the main differences between FCL and LCL is how the goods with be delivered to your final destination. When using FCL, your goods will be delivered directly in the sea container. The container can’t be dropped on the ground (unless you have very specialist equipment!) and so you will have 3 hours from its arrival to unload the goods before it needs to leave. At the very least you will need a ladder (a container is 6 feet high) as well as a number of hands to help unload it and a pump truck and maybe a forklift truck. From experience, we can tell you that this can be a very long, very tiring process!
LCL shipments, however, are delivered (often palletised) on the back of a truck and it is significantly easier for you to unload your goods. LCL goods will come on a smaller vehicle which makes it easier for the delivery company to access your delivery location.
There are traditionally 3 types of shipping container; a 20ft container, a 40ft container and a 40ft high cube container. They all have the same functionality, but they vary in the volume they can transport (and price…but more on that later!). The volume of containers is measured in Cubic Metres or CBM and is the common way for determining the volume and cost when securing space in a container
Transit times
If speed is of the essence…
Whilst it is unlikely to influence your decision, it is worth noting that FCL shipments will have a slightly shorter transit time than the equivalent LCL shipment. Due to the fact that LCL will be combined with multiple people’s goods, there will be additional steps in ensuring the container is unloaded and the correct goods are sent to their respective owners. If speed really is of the essence, then we recommend sending a small portion of your goods by air, with the rest following by sea.
Amazon Deliveries
Direct to Amazon – LCL vs FCL. LCL wins
If you plan to send your products directly to Amazon, then LCL is certainly easier. As a team, LOGISTO regularly do this. If you wish to ship a full container, it is more difficult. Amazon do allow you to send full containers to their warehouses, but it will be subject to a number of considerations. They won’t like receiving loose cartons and they would require that your supplier label, palletise and shrink wrap the products. If Amazon reject the container, you could be left facing a hefty bill as you will need to unpack, repack and redeliver the container.
Summary:
There are many considerations when deciding between FCL and LCL and which you decide (or a combination of both) will be dependent on your individual requirements. There is no right or wrong, but please ensure you consider everything we have detailed above. We have created a visual representation for you below (for those that are visual focussed!) and after that we cover the process of moving your goods by ocean freight….. in detail!
Now that we have covered the basics in terms of determining the options for sea freight, let us now take some time to investigate the process of getting your product from one side of the planet to the other, which is largely the same regardless of which container you select and whether you choose FCL or LCL.
Ocean freight – The Process
When planning how you are going to utilise ocean freight as part of your supply chain, there are a number of considerations that will help shape which route, shipping method and supplier is best for you. Of course, to be able to make informed decisions, you need to be fully informed. Luckily, we are here to help.
Step 1: Quotes
The first step, attaining quotes let’s you understand the costs you can expect to pay for shipping your goods from origin to destination. In order to do this, you will need to contact a number of shipping companies/freight forwarders (see the LOGISTO Directory) with your requirements. This should include, but not be limited to the following information:
Approximate shipping date: if FOB, what date your supplier will be ready to deliver to the port
Product characteristics: what are you shipping?
Dimensions: what volume of product are you shipping (CBM)? If you are not too sure, it is best to check with your supplier
Origin and destination addresses: Where are you shipping from and where are you shipping to? This end destination can either be a UK port, or you can request a quote that includes the final delivery to your warehouse
Details: make sure you are clear and open about what you are shipping. Please detail whether you are shipping hazardous goods or whether you need a vehicle with a tailgate (makes unloading pallets a whole lot easier at the end warehouse – critical if you don’t have a forklift truck)
Reviewing the quotes
Once you receive the quotes (should only be a day or two), it is important that you check what is included. A shipping quote is broken down into numerous elements, please see our page on ‘Shipping Quote Breakdown’ for a more indepth look at a shipping quote.
Negotiate
Once you are confident that the quotes are accurate and you have reviewed them thoroughly, it is time to downselect to one or two suppliers. You should check that the freight quotes fit your price range and shipping schedule.
Once happy, at this stage, you should negotiate with the supplier to see if you can save additional money. It is always worth asking and could result in hundreds (or even thousands) of £’s.
Step2: Paperwork
When shipping, there are three main pieces of paperwork that are crucial to ensure a swift and seamless journey for your products:
- Bill of Lading: This is the document issued by the carrier that verifies that they acknowledge receipt of the cargo, ready for shipment (click here for an example)
- Commercial invoice: A document that specifies the type of products being shipped, the consignee and the value of the goods (this helps determine the import VAT and Duty that you will owe when you import into the country (click here for an example)
- Packing list: Details the type of product and the quantity that have been shipped (click here for an example)
Step 3: From factory to port
In many cases, suppliers provide the products to the port (FOB) and will support the haulage from the factory to port and as well as the export customs in the country of origin. If this is not the case, then you will require a freight forwarder or a haulage expert in the country to support this element. A customs expert will also be able to support the customs element. They will finalise the declaration of freight with a certificate of origin before it leaves the port, after verifying the contents of the cargo against the Bill of Lading.
Step 4: Origin handling
This element of the process contains a few different processes. When your cargo arrives at the port, it is inspected (not always physically!) and is checked against the booking details. A cargo receipt is then issues to verify the cargo has been received, inspected and is ready for shipping. The origin handling will be handled by your shipping company/ freight forwarder/ Customs agent and the process will be similar every time. Where differences arise is with who pays for these steps and this is dependent on the Incoterms that were agreed (see our section on Incoterms).
If the cargo is sold Ex Works (EXW) or Free Carrier (FCA) then the consignee (receiver of the goods) is responsible for the costs.
If the cargo is Free on Board (FOB) or Delivery Duty Unpaid (DDU), then origin handling charges will be covered by the shipper.
Step 5: Set sail!
At this stage – good news…your products are ready to hit the ocean! Your shipping line will now commence the movement of the goods on the ship (if you are using a freight forwarder then they will handle this with the shipping line).
A bill of lading will state the vessel and origin port and the shipping line will bill you, including any surcharges. If a freight forwarder is handling your cargo, then they will break down all the costs, apportioning the costs to yourself, especially if it is a less than container load (LCL) movement. At this stage, it is always best to double check your quote and see that the costs you are being charged are aligned to the quote.
Step 6: Customs Clearance
As your product reaches the port of destination when the authorities review the declaration of goods and other documentation. Customs duty is the related charge for the products you’re bringing in the country.
Your freight forwarder or customs broker can handle the import customs clearance (see the LOGISTO Directory for suppliers). Cargo can’t be released into the country until they are cleared, although the process usually begin long before they products physically reach the port.
Step 7: Destination Handling
This step involves unloading of your cargo off the ship and moved into a secure location on the quay (or warehouse). More documentation moves hands, including the original bill of lading.
Step 8: The final journey
The last step for your cargo is from the port to your end destination, most likely a consignee warehouse or even a personal address. The route/type of transport will depend on the goods (parcel delivery vs. haulage) and can be handled by your freight forwarder or by a road haulage supplier.
Congratulations… your cargo has now arrived!
Whilst it may seem like there are a lot of steps, the process is actually very simple and of course, well established! We hope this section of the Knowledge Centre has been informative and if you have any questions please reach out to the team or post a question in the LOGISTO Forum.
Lastly, we have mentioned that you would require the support of one or more of freight forwarders (shipping lines), customs brokers, haulage or parcel delivery companies in helping facilitate the movement of your goods. Of course, we have plenty of highly skilled and relevant suppliers in the Logisto Directory, ready to support you and your goods with their journey!
Thank you
LOGISTO Team