What is ocean freight: a complete guide

Ocean freight, also called sea freight, is the movement of goods internationally by sea. Ocean freight is far and away the most popular option for shipping goods internationally.

Roughly 90% of goods 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.

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.

Air freight vs ocean freight: how to choose

While ocean freight certainly is not cheap when shipping small quantities, it scales really well. For larger shipments, it produces a better overall cost. This is why it has become such an important part of international trade. Despite this, ocean freight is much slower, as the typical time for the arrival of most shipments is between 40 to 60 days.

Types of ocean freight services


As mentioned earlier, container shipping is one of the most popular options for ocean freight. This is largely due to its relative safety and ease of handling. Containers can be moved very easily without disturbing the goods being shipped. However, they are only a good option for certain kinds of goods, such as dry or already packaged goods.

When it comes to container shipping, there are essentially two types of shipping services that are available – LCL or FCL. LCL means less than container load, while FCL means full container load.

FCL shipments basically involve shipping your goods via one or more containers that you use exclusively. Only your goods will be in the container, ensuring that your shipment will be undisturbed until you open the container by yourself. This option makes the most sense when you have goods that can fill a container or that nearly fill it up.

With LCL shipments, the goods intended to be shipped are usually less than it takes to fill a container. So, instead of having a container all to yourself, which can be relatively expensive, you can split the cost and share the container with goods belonging to other people. But the downside to this option is that your goods may be more vulnerable to mishandling or damage during the voyage.

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.
The freight forwarder can be charged with handling every stage of the process. Or you may decide to make alternative arrangements for certain stages to save costs.

How are ocean freight rates calculated?


Ocean freight rates are usually determined based on a number of charges, such as the cost per weight of goods and the space they take up. For instance, ocean freight typically costs around 50 cents per kilogram (kg)2.

Other charges that may be included in the freight rate include:

Insurance
Customs security surcharge
Container freight station (this applies to LCL consolidation only)
Pickup and delivery at ports and warehouses
Routing charges
Customs brokerage
Fuel surcharge

Ocean freight charges are not static. Depending on a number of factors, the price may go significantly higher, or may fall even lower. Some of these factors include:

Fuel costs: Fuel is critical to shipping goods via sea freight, and the prices can sometimes be volatile. When prices rise, you can expect rates to rise as well.
Exchange rates: Slight fluctuations in exchange rates can result into a severe loss for shipping lines, especially considering how long a single trip can take.
Supply and demand: Festive holidays often mean people work less, and this also affects the shipping industry. As a result, just before festive holidays like Chinese New Year, there is usually a spike in demand that can drive freight rates up.
Size of shipment: Obviously, larger-sized shipments will include a lot more work and will cost significantly more.


Type of vessel required: Containerised shipping is quick, easy and effective, which makes it relatively cheap. Other vessels, such as tankers for liquid cargo, or bulk carriers for unpackaged dry goods may cost more.
ocean freight charges

What are the pros and cons of ocean freight?


As you have learned already, ocean freight may be popular, but it has both its high points and low points. Some of the advantages you can expect from ocean freight include:

Higher shipping capacity: Sea freight is perfect for bulky shipments. Other shipping options are only viable for lighter products that are not being shipped in bulk.
Cheaper costs: Overall, ocean freight is much cheaper than other options, costing just 50 cents per kg. Compare this to standard air freight which costs roughly $4 per kg and express air freight, which costs $6 per kg.


Fewer restrictions: Shipping by air freight is subject to several restrictions relating to the type of goods you can ship. For instance, you cannot ship flammable products like perfumes or biochemical products like some medicines on air freight. There are fewer restrictions for shipping by sea.


Lower carbon footprint: Ocean freight produces relatively lower emissions than air freight. New regulations introduced by the International Maritime Organisation will reduce these emissions even further.


Despite the positives, here are some negatives to keep in mind:

Longer shipping time: Ocean freight is so much slower than air freight, which is usually five to six times faster. Taking the example of the freight between the US and China, shipment by sea will take about 30-40 days, whereas shipment by air only takes about a week, and express air may only take 3 days.


Unpredictable shipping: Ocean freight is more vulnerable to external shocks like bad weather, customs delays and port congestion. This can easily add days or weeks to your delivery.


Less protection: Since they are in transit for much longer, goods shipped by ocean freight are more susceptible to damage.


Less reliable: Due to the many moving parts involved in ocean freight, goods are at a greater risk of being mishandled or misplaced.

When does it make sense to choose ocean freight?

You should consider going with ocean freight if you are shipping large or bulky goods, or when it is vital to reduce your shipping costs to save money. Ocean freight also works very well when you have a high volume of orders within the same period.

But if you are deciding to go with ocean freight, you should generally leave more than enough time for the goods to arrive. If you do not have flexible delivery dates, then you may be better off looking elsewhere. The complexity of the process and the potential for delays may put you in a less than ideal situation otherwise.

Overall, ocean freight represents a great option for international shipping, but only in the right circumstances. It can be a relatively cheap option, but this is often offset by the ambiguity in the process.

Source: Alibaba.com

The impact of the COVID-19 pandemic on the UK’s export market

Perishable Movement Limited’s Business Development Manager Robert Haynes explains how the global COVID-19 pandemic has caused huge disruption to the goods import and export market.


The industry has seen huge uncertainty with prices and cost of transporting goods due to an uncertain global transport system.


Despite the tough market PML has managed Block Space Agreements and Single Carriage Agreements to secure and maintain competitive prices for their customers.


PML continue to work closely with all carriers to ensure customers’ products arrive on time and in perfect condition.

A working day: an interview with Mike Parr, Director, Perishable Movements Limited

Mike Parr Director Perishable Movements Limited

Q. What in your background prepared you for your current role?
I’ve been in logistics for 38 years, and in perishables for about 36 years. It’s a long time. I’ve prepared for my current role through this experience – there is not much I haven’t come across in this area.

Q. What has been the key challenge in getting your organisation ready for Brexit?
The biggest challenge is the continual changing of the rules and not knowing exactly where we’ll stand once Brexit occurs. This all could have been handled more than two years ago and we would have all been ready. It’s not complicated and would have been done. With a deal or not, it would have been made a lot easier if they’d have stopped moving the goalposts. The country most ready for these changes is the Dutch, and they are miles ahead of everyone else.

For us, we’ve recruited a bit, and we are doing continual train- ing on all the different scenarios and every eventuality. We are ready for whatever happens. For example, we partnered with transport and logistics company FreshLinc to operate an HMRC/ Defra approved border control post (BCP) and ERT (bonded warehouse) facility at Fresh Linc’s Spalding headquarters, enabling a speedier movement of product from the ports and extending shelf life by up to 48 hours.

The BCP, which has been in development for the last four months, will be effective from 1 January 2021 and represents a £400,000 (€439,360) investment. This includes the creation of a purpose-built, 10,000 square-foot warehouse with the ability to store 330 pallets; dedicated inspection areas for customs and Defra and the training of four new dedicated staff to run the 24-hour operation.

Q. How has the business changed in light of recent events such as Covid-19?
Covid-19 has been a huge challenge for the business. We have spent a fortune keeping our 70 to 100 employees and contrac- tors safe with gloves, masks, temperature checks and keeping a safe distance. We have foreign lorry drivers delivering loads, and they have to be kept safe too when they come to our facility.

The aviation industry furloughed a lot of staff, and this had a knock-on effect on us in handling freight, not to mention the airlines added a surcharge for Covid-19 – the latter move baffled me.

Q. What has been your greatest achievement/greatest challenge?
Our company started in 2003 and we are in our 18th year now. Our greatest achievement has been to develop a really good team in all areas of the business: sales, operations, adminis- tration. Putting a team together is like getting a football team together. You have talented players and they have to work as a team to succeed. Challenges are ongoing, and the leaders in our industry stay at the top by continuing to challenge themselves. The minute it stops being challenging, I might as well retire.

Q. What do you think the perishable business will look like in a few years, considering the changes? Brexit will thin the industry from a freight aspect. I suspect the big players will get bigger, while the smaller players will struggle. On a company level, we’re planning to develop a purpose-built site, once the lease runs out on our current facility – one that will last for another 20 years.

Q. How do you expect dairy to expand?

British dairy is coming on strong, as we are exporting a lot of cheese all over the world. The rest of the world sees our cheese as a quality product, and I think the dairy industry will grow a lot in exports. In the Middle East, in countries such as Dubai, Kuwait and Saudi Arabia, and Hong Kong, they love British products, so I expect that area of our business to grow substantially. Long may it last.

Q. What does a typical day look like for you?

It’s always opening hours somewhere with logistics. I was at the office at 5am this morning and starting early to deal with the rest of the world – it never stops. I am always either on email or on the phone, and it can be seven days a week. We opened our doors in 2003 and the doors have never been locked since. In fact, Christmas Day is usually a busy one for us, as we help top-up the supermarket shelves.

Q. Outside of work, what are your hobbies/interests?

I am a family man – I have seven children of varying ages, so they keep me busy. I also like a bit of golf and to watch football.

Gustavo Mundel of PML looks at how Brexit and the pandemic are impacting the sector

The airfreight sector has shown significant growth in recent years with global airfreight volumes reaching 61.3m tonnes in 2019 (source: Statista 2020). 

Two dominant factors can be identified which have led to the clear increased demand for air transportation services capable of transferring commercial goods. The meteoric rise of e-commerce and the ability to purchase products from all over the world simply by the click of a button has stimulated a dramatic interest in delivery services that can provide a means of speedy fulfilment, to match consumer expectations.

In addition to this, while airline fuel prices reached an all-time high in 2012 which attributed to slow growth in air freight volumes, the notable fall in the cost of airline fuel in 2016 resulted in clear evidence of a growth in airfreight volume.

Benefits of airfreight

For a company involved in the transportation of temperature-sensitive, perishable goods, the advantages of moving consignments via airfreight lanes are clear. Firstly, the sheer speed of transit – air travel is by far the fastest mode of transport and hence, for products which have a finite shelf-life, the opportunity to maximise the length of time during which the goods can remain on sale in store, is critical. The difference between moving goods by air or sea can represent an extended shelf-life of up to 48 hours.

In addition, flights to destinations all over the world (under normal conditions), are frequent, providing a much wider window of opportunity to book in the expeditious transfer of cargo.

Finally, given the much-debated impact of Brexit, air travel provides the ability to transcend border delays and while the pandemic obviously has had a major impact on passenger numbers, airports largely have been able to remain operational and have been able to continue providing a much-needed service to maintain the supply of essential goods – including PPE – around the world.

Competitive charters

Within the specific chartered air freight sector competition is fierce. There are a number of carriers now offering their services directly rather than via a charter broker and in some ways, these airlines are starting to operate as logistics providers in their own right.

From merely selling space on the aircraft, they are increasingly offering a complete one-stop shop to secure business and ensure flights are filled to maximum capacity.

Although passenger traffic has been seriously compromised by the global outbreak of coronavirus, many of the airlines have been quick to seize the opportunity to retrofit aircraft to enable them to operate as cargo carriers providing the ability to continue flying at improved capacity.

Trends for 2021

But what does the future hold for chartered airfreight services? There is no sign of any slow-down in the world of e-commerce, in fact quite the opposite. With so many consumers forced to adapt their shopping habits in response to the restrictions imposed as a result of Covid-19, it is likely that the changes that have been made will be long lasting.

While the world remains optimistic that the traditional retailers will be able to resume normal trading, the fact is that consumers will have become accustomed to revising their approach to purchasing and will be loathed to turn their back on the speedy digital shopping experience.

In response to this, more and more aircraft are being reconfigured to carry cargo, rather than passengers and there has been a spike in the number of aircraft retrofit businesses able to undertake these specialist works.

Since the production of the Boeing 747 has stopped in favour of the more fuel efficient, newer 777, so interest in the procurement of 777s to lease or buy has increased and while some of these may already be converted for cargo, we are likely to see more of these passenger aircraft configured to accommodate the exclusive handling of cargo. 

The world of e-commerce traditionally focuses on a high proportion of goods being transported out of China into major European hubs. As a result, there is likely to be a predicted growth in the number of chartered airfreight services transferring consignments out of these hubs and delivering them to local European markets. This means that once again, the pressure for space will be intensified on these flights.

Given the world’s growing mandate to address the need to slow down climate change, it is also likely that the future will bring new breakthroughs in fuel efficient engines which represent an improved carbon emissions proposition. 

For companies who trade on their ‘green’ credentials, this will enable them to potentially reconsider the use of chartered aircraft, which will in turn create further demand for space.

Impact of Brexit

Brexit has effectively provided a massive boost to the chartered airfreight industry. Companies which specialise in perishable goods cannot risk being caught up in cross-border delays, delays which can have a devastating impact on time-sensitive produce.  UK supermarkets and independents demand quality fresh produce, with a good shelf-life.

Goods that have been kept in transit when they should have been on the shelves will have a reduced shelf-life triggering substantial losses to the producer. 

For PML, the speed of transit associated with chartered aircraft services, supported by the company’s ability to handle product with an unbroken cold chain thanks to its unique relationship with Heathrow’s only dedicated chilled airside facility, has dictated an even stronger interest in chartered air freight in the wake of Brexit. Such is the demand that PML, has seized the initiative to charter its own aircraft to ensure the seamless and timely transfer of fresh produce.

Coronavirus crisis

The impact of the global pandemic continues to be felt in all sectors of industry and the chartered airfreight sector is certainly not exempt. As countries begin to prepare for massive vaccination programmes the priority for many airlines is to capitalise on the opportunity to carry the vaccines and as a result the race for space on chartered flights continues to heat up.

Competition for space in turn brings with it spiralling prices. Now the charters are becoming even more expensive due to the potential to charge a premium price for the transportation of PPE and vaccines.

Looking ahead

As the biggest independent perishable goods importer, PML continues to work hard to stay ahead of the curve. In addition to chartering its own twice-weekly flight from Nairobi to Heathrow, the company is watching the market to identify new opportunities to increase the number of flight rotations operated by PML and its partner network.

Having an in-house air charter service division, headed up by someone who has acted on both sides of the fence, working for an airline as well as an independent charter broker means that the company is well placed to access the very best air trade lanes. But as anyone in the logistics business will testify, these will be challenging times for the industry.

Source: Fruitnet.com

PML announces innovative solution to border control delays

PML, the global perishable cargo specialist is partnering with transport and logistics company FreshLinc to operate an HMRC / DEFRA approved Border Control Post (BCP) and ERT (bonded warehouse) facility at Fresh Linc’s Spalding HQ, enabling a speedier movement of product from the ports and extending shelf life by up to 48 hours.

The BCP which has been in development for the last four months, will be effective from 1st January 2021 and represents a £400,000 investment. This includes the creation of a purpose-built 10,000 sq ft warehouse with the ability to store 330 pallets; dedicated inspection areas for customs and DEFRA and the training of four new dedicated staff to run the 24-hour operation.

The decision to set up a BCP away from the ports – Spalding is within easy reach of both Dover and Southampton docks – is in direct response to the ongoing delays and excessive queues which currently impede the onward movement of freight. The imperative to take action is amplified given the specialist and sensitive nature of PML’s cargo – the majority of consignments require temperature-controlled conditions – and the anticipated further disruptions likely to be caused post Brexit.

The long-standing and trusted working relationship between the two companies has enabled a seamless journey from the inception of the idea to create a dedicated BCP at FreshLinc’s 70,000 sq ft site, to completion of all the works required to meet the demanding criteria as defined by HMRC and DEFRA.

“This is a great opportunity for us to work with PML to maintain the continuation of the food supply chain especially against the backdrop of the uncertain times we are now facing as a result of the challenges posed by Brexit and the coronavirus. The BCP is a perfect example of two like-minded businesses coming together to provide an innovative solution to an industry problem.”

Lee Juniper, Operations Director at FreshLinc.

“This venture will enable us to move product much faster from the ports, cut down on wasted journeys and should ultimately deliver a minimum of 24-48 hours additional shelf life on all our customers’ products. Our priority is to guarantee the safe and timely transfer of goods, ensuring that there are no breaks in the cold chain. By creating a remote BCP, we are no longer constrained by the issues at the ports and PML is able to operate and manage its own facility.”

PML Sales Director, Nick Finbow.

PML flying high with new airfreight charter service

PML flying high with new airfreight charter service

Twice-weekly service will fly from Nairobi to London carrying essential perishable cargos

We’re thrilled to announce the news that we are now chartering our own airfreight flights. The investment comes as we seek to expand the commercial offering of PML as a leading global perishable cargo specialist. Our new airfreight flights will compliment our pivotal role in maintaining the supply of fresh produce during the pandemic, post Brexit and in support of new UK trade deals.

We’re working in partnership with Kenya Airways and have chartered a Boeing 787 Dreamliner aircraft that will fly from Nairobi to Heathrow twice a week, carrying essential perishable goods on behalf of PML’s clients looking to export out of Kenya. 

The two weekly flights began on 18 November and will be able to carry 36 tonnes of cargo per flight. From January, post planned modifications to the aircraft, the capacity will increase to 42 tonnes.

With the flights departing at 04.00 GMT on Wednesdays and Sundays, PML are now able to successfully deliver fresh produce into the UK on the same day as it left Nairobi, representing the speedy transfer that is key to maintaining the quality and shelf life of any fresh produce consignment. 

The move to charter a bespoke PML air freight flight comes hot on the heels of the company setting up a dedicated in-house charter air freight service to cater for the increasing demand for the transfer of perishable goods by air. 

“We remain committed to providing a seamless service to our clients. With competition to secure availability on chartered air freight services becoming increasingly intense, we were keen to identify a solution that would ensure our ability to guarantee the fastest transfer of perishable goods. The response to this service has been very positive. We anticipate that flights will be operating at full capacity, both up to Christmas and beyond. We are driving forward towards Brexit and are well prepared to navigate restrictions that are likely to severely impact on the supply chain business.”

PML sales director Nick Finbow.

Take a look at the press coverage so far:

PML flying high with new airfreight charter service

http://www.fruitnet.com/eurofruit/article/183571/pml-flying-high-with-new-airfreight-charter-service

https://www.freshplaza.com/article/9269936/pml-to-start-new-air-freight-charter-service-from-kenya/

https://centreforaviation.com/news/kenya-airways-and-pml-launch-nairobi-london-cargo-service-for-produce-1038718

https://www.fpcfreshtalkdaily.co.uk/

https://www.logupdateafrica.com/uk-kenya-ink-deal-for-tarifffree-fresh-produce-trade-trade-e-commerce