When you want to start shipping your products in bulk, ocean freight is probably your best bet. We have explained the basics of ocean freight shipping and the phases involved in ocean freight shipping. This article will comprehensively guide you through the practical detail of ocean freight shipping, including selecting the best mode for your needs and figuring out costs and transit times.
Table of Contents
- When to choose Ocean Freight
- Ocean Freight Shipping Costs
- Pros of Ocean Freight
- Cons of Ocean Freight
- Important Ocean freight shipping documents
- Final Words
When to choose ocean freight
There are basically three shipping options for moving your products from one country to another – Express shipping, Air freight, and Ocean freight. In selecting your preferred shipping method, key factors to consider include Delivery time, Shipping rates, and the Dimension/size of your products.
If you are sending large or bulky items or when it is essential to lower your shipping expenses in order to save money, you might think about using ocean freight. When you receive a lot of orders all at once, ocean freight is also a great option.
However, if you choose to ship your items via ocean, you should typically allow plenty of time for delivery. You would be better off exploring elsewhere if your delivery dates are not flexible. Otherwise, you can find yourself in a worse-than-ideal scenario due to the process’ intricacy and the possibility of delays.
In general, ocean freight is a fantastic and inexpensive choice for international shipping, but only under ideal conditions.
Ocean freight shipping costs
When shipping or importing products from abroad, there are a variety of duties and expenses to take into account. Depending on the terms of your contract with your supplier, and the modalities of delivery – whether to your terminal, warehouse, or port, the costs of shipping your products can vary greatly. In ocean freight shipping, there are standard fees and charges to be taken into consideration.
Some applicable fees and charges
- Container fees (LCL or FCL)
- Transportation to Port of Loading
- Export customs declaration
- Loading port fees
- Ocean freight charge
- Insurance
- Destination port fees
- Import customs clearance
- Customs duty/tax
- Transport from the Destination Port
- Destination country customs-related fees such as Duty/Tax
- Destination port/terminal handling fee
- Destination agent service fee
Factors that affect the ocean freight shipping costs
For products weighing more than 200 kilograms (440 pounds), ocean freight delivery is frequently the least expensive choice. However, figuring out the total cost of shipping using this method can be challenging. This is because there are certain external factors that contribute to the rates of ocean freight shipping. These factors include:
- Fuel: This is the main determinant of shipping costs. The cost of ocean freight shipment will fluctuate along with the price of oil. Ocean transportation costs typically decrease as oil prices decline.
- Foreign Exchange Rates: The value of currency exchange rates is another important factor. Although the U.S. dollar is the most widely utilized currency in cross-border transactions, ocean transportation costs are subject to daily fluctuations in the financial markets.
- Season: The cost of ocean shipping may also be influenced by the seasonal demand for specific items at particular times of the year. Also, during festive periods and holidays, the dynamics of ocean shipping change. Rates rise along with a season’s increase in demand.
- Capacity and Demand Levels: Ocean freight shipping can be very popular. On occasion, lower ship capacity brought on by excessive demand can result in higher shipping costs.
- Type of vessel required: Containerized shipping is inexpensive because it is rapid, simple, and efficient. It may be more expensive to use other vessels, such as tankers for liquid cargo or bulk carriers for unpackaged dry products.
- Shipment size: Larger shipments will undoubtedly need a lot more work and cost a lot more money.
- Port Charges: Sometimes, charges levied by port authorities on containers in their ports may contribute to ocean freight costs. These charges include a terminal handling charge, early arrival charge, late arrival charge, shifting charges, and amendment/cancellation charges.
How to calculate ocean freight costs
Ocean freight rates are often calculated based on a variety of fees, including the price per weight of the products and the amount of space they occupy. For instance, the average cost of ocean freight is about 50 cents per kilogram (kg). With the exception of very large items, the majority of ocean freight is priced based on the volume of the goods rather than weight.
To calculate the cost of ocean freight shipping for your product, you need to know the cost of 1 CBM (Cubic meter) from the shipper. CBM calculation is used by shipping agents when carrying out ocean freight shipping
CBM = Height x Length x Width (all in meters)
1 CBM = 1000 kg
CBM is used to determine the space your product will occupy in the container. Information to determine the CBM (dimension/size) of your product is gotten from your supplier.
In addition to the cost of CBM costs, insurance, container freight station (for LCL), pickup and delivery at ports and warehouses, routing fees, customs brokerage, and fuel surcharge are some of the additional costs for determining ocean freight shipping rates.
Pros of ocean freight.
- Increased shipping capability: Bulky cargo is best transported by ocean freight. Only lighter goods that are not being transported in bulk can benefit from alternative shipping methods.
- Lower prices: Compared to other options, ocean freight is far less expensive, costing only 50 cents per kg. Contrast this with express air freight, which costs $6 per kilogram while normal air freight costs about $4 per kg.
- Fewer limitations: In general, more items are prohibited for air cargo than for ocean freight, such as gases (such as lightbulbs), everything flammable (perfume), toxic or corrosive items (such as batteries), magnetic materials (such as speakers), oxidizers and biochemical products (such as chemical medicines), and items that pose a threat to the public’s health. There are a number of limitations on the kinds of goods you can ship by air freight. Fewer limitations apply to ocean freight shipping.
- Reduced carbon emissions: Compared to air freight, ocean freight emits far fewer emissions. Compared to 6,605 kg of CO2 emissions from air freight, it is estimated that 2 tonnes traveling 5,000 kilometers by ocean freight will produce only 150 kg of CO2 emissions.
Cons of ocean freight
- Prolonged shipment period: Compared to air freight, which is often five to six times faster, ocean freight moves far more slowly. Using freight shipping as an example, shipping by water will take approximately 30–40 days, however shipping by air only needs about a week, and express flight may just need three days.
- Uncertain shipping: Ocean freight is more susceptible to outside shocks like adverse weather, delays at customs, and traffic jams in ports. This might easily prolong your delivery by a few days or weeks.
- Less protection: Goods carried by ocean freight are more prone to damage because of the length of time they are in transit.
- Less dependable: Goods are more likely to be mistreated or lost in ocean freight because of the numerous moving parts that are involved.
Important Ocean freight shipping documents
Bill of Lading
The bill of lading (BoL), often known as BL or B/L is used in international trade when transporting products from supplier to buyer. The BoL is a legal document that serves many purposes to increase shipping security.
A Bill of Lading (BL) is also necessary for shipping products; for ocean freight, these are known as Seaway or Ocean Bills of Lading. The cargo that will be loaded or transported aboard a ship and given to the items’ consignee is listed on a bill of lading. A bill of lading can serve as a receipt for the loading of goods, a legal agreement to prove that the commodities are being shipped, and a record of the ownership of the cargo.
When goods are traveling and a transfer of title occurs, bills of lading are used. They serve as a receipt, which the carrier issues once the product has been placed into a ship. The BoL is used as shipping documentation. For use in financial instruments, insurance, and the customs process, this is very crucial. It is often employed in commerce as evidence of contract fulfillment.
Freight Shipping Forms
Moving products from one location to another involves the use of numerous freight shipment forms. Even though you might not require all of this paperwork for every shipment, it’s crucial to comprehend the functions and specifications of each one.
Certificate of Origin
A Certificate of Origin is required by several countries. This is essentially a declaration that has been signed and includes information about the export item’s origin. Certificates of Origin are typically signed through unofficial institutions like a local Chamber of Commerce. It’s crucial to realize that a Certificate of Origin could be necessary even if the business invoice already has the necessary details.
Commercial Invoice
A commercial invoice will be included in your shipment paperwork. A commercial invoice is a statement from the seller to the customer for the goods. When deciding how much to charge in tariffs and customs charges, governments frequently utilize these invoices to estimate the actual value of the items. The information that business invoices must contain is typically prescribed by the governments that use them to regulate imports. Additional copies of the commercial invoice can also be required.
Inspection Certificate
Depending on the country, you might need to include an inspection certification with specific transactions. Typically, a third party or independent testing company conducts the inspection.
Packing List
Another crucial shipping document when sending ocean freight abroad is the packing list. It is a thorough description of the cargo listed on the aforementioned Commercial Invoice. Additionally, it contains details about the shipment’s packing, including what marks and numbers are written on the outside of the boxes.
Insurance Certificate
To reassure the consignee that insurance would cover the loss or damage to the cargo during transit, an insurance certificate is employed. The insurance certificate will specify the scope of coverage and the dollar amount.
Export/Import Customs Declaration
Details about the products that are exported or imported are listed in an export or import customs declaration. When transporting international freight, this notification is particularly crucial. Legally speaking, a person expresses their desire to place items under a specific customs procedure by submitting a Customs Declaration. The Declaration is used to determine the charges or taxes that will be charged to the goods and to clear customs. A customs broker creates it using the packing list and invoice.
Final Words
Ocean freight shipping could be quite tasking and arduous, considering the various factors, documentation, and the complexity of players involved in the industry. At Allwin freight, we have the capacity to comprehensively handle all your ocean freight needs and make sure moving your products from your supplier to your preferred destination is as hassle-free as you would want.
