In this guide, we're going to cover all the important aspects of ocean freight, including what documents are required, where to find a freight forwarder, how rates are calculated, along with some useful tips on reducing your costs.
Let’s dive right in and learn all about shipping goods.
What is ocean freight?
Ocean freight is simply the process of sending goods from one place to another via ship.
As early as the 12th century, fleets of ships have crisscrossed the globe carrying all varieties of goods. Today, ocean freight is still the most cost-effective way of getting things from point A to B. Around 90% of the world’s traded goods are carried over the waves.
As centuries passed, advancements in shipbuilding, navigation, containerization, and communications have improved efficiency and reduced cost such that today you can ship a 40-foot container from Shanghai to Los Angeles in about 50 days for under US$ 2,000.
Types of ocean freight
There are five major types of sea transport used for freight purposes. These are
- Bulk carriers
- General cargo ships
- Container ships
Bulk carriers and general cargo ships are the largest ships measuring anywhere from 500 ft to 800 ft long.
Container ships are the most commonly used ships for transporting freight. Tankers carry liquids and gasses and can be up to almost a quarter of a mile long! Barges usually need a tugboat to assist them.
Typical freight container sizes
Ever since 1956 when American truck driver Malcolm Mclean used stackable metal containers to transport goods for the first time, container shipping has been more popular than any other mode of transportation,moving 95% of the world’s manufactured goods.
Mclean’s excellent idea revolutionized the industry, and soon afterward, shipping container sizes were standardized for easy administration and cost calculation.
Typically, freight containers come in four sizes.
- 20 GP (General purpose 20ft long).
- 40 GP (General purpose 40 ft long).
- 20 HC (High cube, which is 1 ft taller than GP but still 20 ft long).
- 40 HC (High cube, which is 1 ft taller than GP but still 40 ft long).
To share or not to share your container
Less than Container Load (LCL)
LCL, or “less than container load”, means the goods only fill part of a container, and you will share the rest of the container with other importers. This can cut costs, but the downside is that you may have to wait a little longer for your delivery because the container won’t be shipped until it is full.
Full Container Load (FCL)
FCL, or “full container load”, means that the goods take up almost all of a full container. The container can be packed on the seller’s premises and driven straight to the shipyard.
How to ship via ocean freight
The easiest way to ship via ocean freight is to use our freight calculator. Enter your shipment size, your route, and select the rate that works best for you. Bookairfreight handles all the details, from pick-up at your factory/supplier to drop-off at your delivery address.
Here’s how the ocean freight shipping process works in detail.
Send goods to your freight forwarder’s warehouse
The freight forwarder you chose will organize for collection, storage, and shipping of your goods. You must ensure they have the correct documentation before they set your goods in motion.
Standard documents required
- Bill of Lading (BL or BoL) – this legal document contains the quantity, type, and destination of the goods transported. It doubles as a receipt when the carrier delivers the goods.
- Commercial Invoice – this document is issued by the shipper and contains details about the shipment, including a description and the value of the goods. It is also used as a customs declaration for moving goods across international borders.
- Packing list – this is an itemized list of the contents of each package or container. It consists of measurements, weights, and other relevant information. The list is either fixed to the outside box or packaged with the goods inside.
- Other product-specific documents – certain products require permits to transport. Any other documents related to your goods, or the transportation of your goods, should be included. For instance, if you are transporting dangerous goods, you will need a “dangerous goods” form.
Pick the correct incoterms
Incoterms are the agreed-upon terms between you and your overseas contact. Incoterms include regulations and rules regarding payment and delivery. They also list risks involved in the delivery and sale of your goods.
Incoterms were last updated in 2020 and there are 11 in total. Seven of the terms are for any mode of transport and four terms are exclusively for sea and inland waterway transport.
Incoterms that apply to any mode of transport:
- EXW - Ex Works
- FCA - Free Carrier
- CPT - Carriage Paid To
- CIP - Carriage and Insurance Paid To
- DPU - Delivered at Place Unloaded
- DAP - Delivered at Place
- DDP - Delivered Duty Paid
Incoterms that apply to sea and inland waterway transport only:
- FAS - Free Alongside Ship
- FOB - Free on Board
- CFR - Cost and Freight
- CIF - Cost, Insurance, and Freight
When you negotiate an Incoterm with your supplier, do remember that what works best for you may not be the best for them (and vice versa!).
Transfer of cargo
When transporting your goods from their port of origin to their port of destination, the following steps will have to be followed:
- Export haulage
- Origin handling
- Ocean freight
- Destination handling
- Import haulage
Your incoterm will determine who is responsible for these arrangements.
Let’s take a look at these steps in more detail.
1. Export haulage
Moving the goods from the shipper’s property to the freight forwarder's origin warehouse is called export haulage. Export haulage can take a few hours to a few weeks, depending on the distance and transportation available.
2. Origin handling
This involves transporting the goods from the origin warehouse to the port. Here, the cargo is unloaded from the truck or train and put into a holding area where it is checked. The shipment is stored until the vessel is in port and ready to be loaded.
3. Ocean freight
Ocean freight is carried out by a shipping line. Note that with LCL, you cannot decide the other goods with which your cargo should be transported.
4. Destination handling
Destination handling consists of quite a few activities. First of all, the relevant documents are received. The container is then fetched from the port and transported to the destination warehouse. At this point, the cargo is unpacked and inspected. The freight forwarder is always in charge of the destination handling.
5. Import haulage
This involves moving goods from the import warehouse to their final destination, either by truck or train. Alternatively, you can collect the shipment yourself. Your incoterm will determine whether you or your freight forwarder make transportation arrangements for your goods.
Calculating ocean freight rates
While you can easily check your rates using Bookairfreight’s freight calculator, it’s always good to understand how these things are calculated.
FCL vs. LCL
You need to choose if you will use a full container load or a less-than-full container load. Sometimes it can get confusing when trying to choose between the two. These few simple points should make the decision easier for you:
- FCL is usually quicker than LCL since LCL has to wait until the container is full before transportation begins. This means that you could conclude your purchase and arrange for ocean freight, but your goods can remain in storage at the port of origin for weeks, or even months, before the container is full enough to be sent on.
- LCL causes an increased risk of damage to goods compared with FCL. With FCL, there are only your goods in the container, whereas with LCL, the container might be packed and repacked any number of times before being full enough to be sent on.
- You’ll be surprised to know that sometimes you get better value for your money when taking a FCL, even if your container is not full. Always check the rates for both.
Origin and destination port
Terminal handling costs (THC) will need to be paid at the origin and destination port. These costs include the following:
- Port security – this is a storage fee to ensure the safety of your goods if they are being held in a secure area at the port. There is a lot of movement in and out of the holding area, with trucks loading and offloading goods.
- Seal charges – the container must be adequately sealed once fully loaded to prevent damage and theft. This charge covers that.
- Verified gross mass filing (VGM) – after the carrier weighs your container, the figure will be checked against the declared weight you supplied. If your declared weight doesn’t match the weight at the port, it can cause additional delays and costs.
- Customs clearance – different countries have different rules and regulations concerning customs. They may charge differently or have different prohibitions, so you need to be aware. The incoterm you’ve chosen will determine who is responsible for arranging customs clearance. It’s much easier to leave it to your freight forwarder.
Types of incoterms used
There are 11 different types of incoterms in use. They help determine your rates and clearly define the responsibilities of cost and risk for the buyer and seller.
Think carefully before choosing which incoterm you are going to use.
The heavier your shipment is, the more you’ll pay. In freight, weight is determined either by the gross weight (i.e. what you see when you put the shipment on a scale) or volumetric weight (i.e. the size of the shipment). See our article about chargeable weight to learn more.
Be flexible on delivery times and save. If you can afford to wait 60 to 70 days for your goods to arrive, this will be cheaper than needing the goods in 25 to 35 days.
The best way to slash your ocean freight rates
What it really comes down to is negotiating with multiple freight forwarders to find the best price and service quality.
Check your rates now to compare thousands of freight forwarders covering routes all over the world.
Ocean vs. air freight
Perhaps this is your first time importing, and you’re not sure whether to use air freight or ocean freight. Here is a list of the advantages and disadvantages of ocean freight compared with air freight.
Advantages of ocean freight
- Lower cost per unit – the cost per unit of mass transported is lower compared to air freight. This means that ocean freight is suitable for transporting bulky goods.
- Fewer restrictions – there are fewer restrictions when it comes to ocean freight, making it easier to arrange for the transportation of goods.
- More eco-friendly – ocean shipping is more eco-friendly than air freight. It produces fewer carbon emissions, which damage our atmosphere.
Disadvantages of ocean freight
- Longer transit time – ocean freight takes much longer than air freight. Ocean freight is not the right option if you are in a hurry for your goods. Arrival time is also less predictable than with air freight.
- Higher risk of damage – ocean freight carries a greater risk of damage to goods than air freight. Air freight is the better option when transporting very fragile goods, especially if they are not bulky items.
- Higher warehousing fees – storing your goods costs more at the shipping yard than at airports. You need to consider this.
If you struggle to decide which is the better option for you, we’re just a message away.
How long does ocean freight take?
Shipping usually takes anywhere from 20 to 45 days before delivery. Owing to unpredictable situations, it can take even longer than this. Air freight is the quickest mode of transport but is not suitable for bulky objects.
What is ocean freight forwarding?
A freight forwarder is a go-between between you and the company supplying the shipment. Your freight forwarder does not move your goods, but they make all the necessary arrangements to ensure that your goods reach you safely. Freight forwarders will offer air freight, ocean/sea freight, or even road and rail transport.
Why are ocean freight rates so high?
First, the trade wars between the US and China pushed up shipping costs. Then the COVID pandemic hit and made it difficult for transporters to move goods over borders. That giant container ship also got stuck in the Suez canal and blocked water traffic for days before it was refloated. This combination of world events had shipping costs soaring into the stratosphere. Today prices are coming down again though due to shrinking demand caused by inflation.
Proud Co-Founder and CEO of Bookairfreight. Shortly after starting to work in the world of logistics, I was astonished at how difficult and time consuming it was for businesses to get their hands on a simple air freight quote. I saw this as an opportunity to really make a difference in people’s lives, and felt like I had to do something. It was the spark that lit the fire of Bookairfreight’s creation.