What Is Ocean Freight?

When it comes to getting your products overseas, ocean freight tends to be the most cost-effective option. It usually offers the most value, especially for heavy or bulk shipments, and evolving technologies have made transit times almost comparable to air freight. This method of shipping can get your goods across the water in a timeframe that spans from just over a week to more than a month, depending on your carrier.

The Organisation for Economic Co-operation and Development (OECD) tells us that ocean shipping is used for about 90% of traded goods. As we look more closely at this method, it should be easy to see why it’s so popular.

How International Ocean Freight Works

Ocean freight shipping is a great choice for sellers with large or heavy items because its pricing model is based on containers, not weight. Even if your items are smaller or lightweight, ocean freight is still a low-cost option. The goods are either sent to port already in a container or are containerized there, ready to be loaded onto a large cargo ship. That ship sets out for its destination and drops the goods off, where they are removed from containers and sent onto the buyers’ warehouse.

Containers come in standardized sizes, usually 20- or 40-foot boxes, that stack neatly for easy transport on large cargo ships. If you can pack a lot of products into one container, you can get more for your money.

If your shipment won’t fill a container, you can also use less-than-container load (LCL) services, too, which also usually bill by volume. LCL shipping makes it possible for many businesses with loads that would otherwise be too small to save money with ocean freight services. With this method, the carrier consolidates the loads of multiple shippers together into one container.

When you send international shipments by sea, you typically work closely with a freight forwarding company. They can organize freight from manufacturer to destination or just help with the overseas part. You have options based on the level of responsibility you want over the shipment. We’ll talk more about this when we discuss Intoterms®.

The actual process of ocean freight shipments involves many steps. If the whole process is taken care of by a freight forwarder, it looks something like this:

Export haulage: First, the products must be sent from the seller’s warehouse to the warehouse of the freight forwarder.
Export customs: Customs must then receive all of the appropriate documentation, including the declaration of cargo.
Origin handling: The cargo is prepared for shipping. The freight forwarder inspects and confirms the items and issues a cargo receipt confirming that they’ve received the goods as described. The container is then filled or the products are set aside to wait for consolidation with other goods. Next, the container is sent to the port of departure.
Ocean freight: After loading onto the ship, the items are sent off across the water. Ships can vary widely in speed, so this process can take anywhere from a little over a week to a couple of months.
Import customs: Once it arrives at the destination port, the right forms must be completed, including cargo declaration, and the fees that go with them.
Destination handling: The cargo is then unloaded from the boat, and the shipment is confirmed. Handlers check the documentation, such as the bill of landing, and transfer the container to the freight forwarder’s inland warehouse. They’ll then check the goods and sort them for further transport.
Import haulage: Finally, the goods get transported by on-land methods like trains or trucks to the final destination.

Typical Cargo Shipped on the Ocean

One of ocean freight’s big advantages is the cargo flexibility it offers. Sea freight doesn’t have the hefty limitations you’ll find in air freight since ocean shipping uses large containers that can support heavy goods in less sensitive environments. Dangerous items can be transported under certain conditions, and frozen and refrigerated containers are available as well.

What type of cargo is sent by sea? Most products that won’t go bad within the week, such as produce, can be sent via sea. It’s a popular choice for e-commerce items, but also for oddly shaped or large items like heavy equipment. You can send items in a full container load (FCL) or LCL.

Part of choosing your freight method is determining which is the best fit with your typical cargo. Ocean freight has very few limitations, so almost everything can fit on a ship. Planes, in comparison, cannot carry many items that could be dangerous, like aerosols or paint, and won’t be cost-effective for heavy items. Sea freight doesn’t have these limitations and is good for everything from T-shirts to heavy machinery.

Cargo is generally quite safe with ocean freight. As with any shipping method, some items will need more packaging care than others, but aside from the movement of the boat and the initial loading service, there aren’t many hazards to worry about.

Containers are fairly standardized, with 20- and 40-foot sizes in use. You can also get some variations:

High cube: High cube boxes are a bit taller and are good for light, high-volume cargo or especially tall items.
Open top: Open top containers are also suitable for tall cargo, as they can be loaded from above with a crane or from the door end.
Flats: Flat containers can be fixed or collapsible and can house cargo that doesn’t fit neatly into a container. The sides are open, and the cargo is tied down to the bottom. Multiple flats can be placed beside each other to accommodate extra-wide or large items.

Another thing to keep in mind regarding ocean freight cargo is the bill of lading, something that all cargo ships require. The bill of lading lists the cargo that will be loaded onto a ship with details about the type, destination and quantity of the items. It also serves as a receipt for the goods, a contract between the shipper and carrier, and a document of title for the goods. It moves with the cargo and gets signed by authorized representatives from the shipper, carrier and receiver.

Timeframes for Ocean Freight

The timing of ocean freight can vary widely by carrier and shipping services. Traditional ocean freight typically takes about a month or two, but expedited options can reach their destinations in as little as eight days. These newer express options have made ocean freight a strong competitor to air freight at a much lower cost.

Some contributing factors to this speed include new canal routes, ships and tracking technology. It’s become much easier for ships to reach their destination faster and for carriers to watch their progress, redirecting ships when needed. New technology has also allowed for better dependability, so time-sensitive shipments are better protected. Many carriers offer guaranteed arrival dates, too.

Still, there are many factors that can influence the speed of a cargo ship. Ports can get complicated, with potentially long handling times, congestion or issues with customs. Cargo can also be held up with delays on the water, such as bad weather or unpredictable currents. If a ship gets off track, it can take a few days to get back on the right path. The distance between your departing and arrival ports will affect the transit time, too.

Despite longer transit times, many shippers find that ocean freight’s lower cost is well worth it. You can send larger loads and enjoy minimal restrictions. Long shipping times can often be mitigated with on-shore warehouses and careful scheduling.

The Cost of Ocean Shipments

For most products, shipping by sea is the cheaper choice. Of course, express options will cost more than standard freight, but both are cheaper than air. If you’re looking for the lowest cost and your customers or warehouses can wait a week for their products, ocean freight is a great choice.

While costs are generally low, there are a few factors that can affect pricing, including:

Fuel: Oil costs are always changing, so this market will play a role in the shipping price. The carrier may need to adjust prices to cover changes in the cost of fuel.
Currency values: Exchange rates fluctuate regularly and can affect the value of your payments.
Seasonality: Like any industry, supply and demand will impact the cost of shipping. Seasonal demands, such as spikes in e-commerce purchases in the holiday season, can cause prices to rise. Weather effects, like monsoon season, can cause greater delays, too.
Vessel type: If your goods need special care, such as refrigeration or a tanker for liquid, these vessel requirements can also drive up the cost.

There are also several fees associated with international ocean shipments, including:

LCL or FCL fees.
Export customs declaration fees.
Loading port and destination port fees.
Ocean freight charges.
Import customs clearance and duties/taxes.
The cost of transportation to the port of loading and from the port of destination.
Destination port handling fees.
Insurance.
Customs brokerage.
Destination agent service fees (D/O).

Incoterms®

Incoterms® are developed by the International Chamber of Commerce and provide clear definitions for industry terms regarding the sale of goods. They’re useful for purchase orders, packaging requirements and many other steps in the sales and fulfilment processes. When it comes to international shipping, these are normally used to outline where responsibility for a shipment transfers from the seller to the buyer. Incoterms® are a valuable part of minimizing miscommunication and ensuring smooth transit. They can also help you understand included costs better.

Some popular Incoterms® used with ocean shipping include:

Ex-Works (EXW): Ex-Works puts most of the responsibility onto the buyer. The buyer picks up the goods from the seller, such as at a warehouse or factory, and takes care of the transit to the final destination.
Free on Board (FOB): With FOB, responsibility passes onto the buyer when goods pass the ship’s rail at the port of shipment. The seller takes care of clearing the items for export, packaging and loading them, then the buyer takes over.
Cost, insurance and freight (CIF): CIF has the seller release responsibility at the same spot as FOB, the ship’s rail in the port of shipment. The difference here is that they also pay for the costs of delivering the goods to the port of destination. Risks of loss or damage still fall to the buyer, but the seller pays for and contracts the insurance for the cargo.
Delivered Duty Unpaid (DDU): In a DDU shipment, the seller delivers the goods but does not clear them for import or unload them from the ship. The buyer pays the duty and is responsible for unloading and importing the goods.
Delivered Duty Paid (DDP): DDP puts the most responsibility on the seller, who takes care of shipping, insuring and importing.

Freight forwarding services typically use the Ex-Works or FOB methods, but you can always talk over contract terms with your provider if you’re interested in other options.

The Economic Impact of Sea Freight

Another reason that many shippers turn to ocean freight is its economic impact. Airplanes release a lot of carbon dioxide and other emissions that are damaging to the environment. While ocean freight can come with risks for oil spills, its emissions are much lower than those of aircraft, trucks and trains.

If you’re looking to make a green commitment, ocean freight shipping is the best choice. In an increasingly eco-conscious market, green practices are becoming more and more necessary. With the speed of express sea shipments and LCL options, ocean freight is becoming a viable alternative to aircraft shipments that contributes much less to climate change.

Ocean Freight vs. Air Freight

The primary reason for using air freight to ship goods is the extra speed it offers. Air freight is faster and usually arrives within a few days, but it comes at a much higher price. There are also more limitations for aircraft cargo, which is often carried in the limited space on passenger planes. Heavy, large or dangerous items typically cannot be taken on a plane or will cost a premium.

The choice between air and ocean freight often comes down to the nature of your items, the size of your shipments and the timeliness your customers require. For high-value, lightweight items and small shipments, air freight can be a good choice, but for many sellers, the added cost for faster transit times simply isn’t necessary. Read our page on the subject to learn more about what goes into choosing between ocean vs. air freight.

Ocean Freight From Kesco Logistics

If ocean freight sounds like a good fit for your products, let the experts at Kesco Logistics organize your next shipment. We have years of experience as a trusted freight forwarder and can get your cargo from point A to point B safely and efficiently with full visibility.

We know there are many factors to consider when choosing freight, so our experienced representatives can help you determine the right method for your goods. To learn more about what ocean freight could look like for your business, get in touch with a Kesco Logistics team member today.