Shipping Goods Around the World

1. Shipping Goods Around the World

2. Introduction When a business has to decide which is the most cost effective and expedient form of transport for their goods to and from their location the choice will come down to what goods they are transporting, the time to delivery and the cost effectiveness of the transportation method. Generally for small businesses shipping to their local partners in a supply chain will result in using local couriers. These companies work to a 24 hours schedule and have tremendous local knowledge and can perform the often onerous task of last mile delivery extremely well. However, if the consignment is relatively small and the time of delivery is critical and the distance vast then they may consider airlines. But if cost is a premium and the consignment large or heavy then they may prefer to transport their large or heavy goods long haul. In this case they then may well look towards rail or trucking services. Rail has the advantage of being able to transport large unwieldy cargo over long distances but trucking has the advantage of direct transportation from distributor to recipient across a more predictable infrastructure i.e. without timetable scheduling. But what happens when you wish to transport goods internationally? Also what if the good you want to ship are of large volume and weight such as coal, grain or timber? The only option is to transport the good by sea and that is why even today ocean transportation accounts for around 70% of all supply chain shipments.

3. Table of Contents • Overseas Shipments. • Sea vs. Air. • Container Ships. • Containers. • What does the Terms LCL and FCL Mean? • The Less than Container Load (LCL). • Intermodal Transport. • Issues with overseas shipping. • End.

4. Overseas Shipments The problem that most logistics and transport departments have is determining the most cost effective way to transport goods overseas. There are really two options, by air or by sea. Air travel is obviously faster but sea can handle far larger cargo. Therefore the solution to the conundrum is not as straightforward as it seems. For instance sending small consignments of goods with a high profit margin and high priority may be best sent by air but what if you are sending a hundred thousand items that are not particularly urgent and have low profit margin? In the latter case sea shipping becomes highly attractive. It could also be argued that if the planning, logistics and supply chain functions are doing their job efficiently then the express delivery by air shouldn’t be critical criteria. But is slow sea transportation always the better option to fast airlines?

5. Sea vs. Air Due to the expanse of global trade most companies are now looking for ways to make profit by reducing their operational costs. A significant operational cost in any business is in supporting their supply-chain. If that supply chain is global then they must ensure that the freight costs are as low as possible relative to the consignment being shipped. A business planning and then reducing transportation costs by utilizing economy of scale will allow them to reduce operational costs, which subsequently will lead to improved profitability. Shipping by sea allows this for modern container ships are behemoths of the ocean and being so huge can carry vast sizes of cargo something even the largest cargo airplane cannot do. As a result sea transport has the huge advantage of scale and can carry even the largest cargo or importantly even the smallest.

6. Container Ships Today most international ocean going cargo ships are container ships. These vessels are huge ocean going vessels designed to transport hundreds of standard size containers upon their deck. The revolution in ocean transportation that took place decades ago that resulted in using standard containers for cargo made loading and offloading of these huge ocean going ships a breeze. Furthermore it made the delivery time from the dispatcher to the recipient much shorter and ships could be turned around faster which kept then in productive work rather than sitting idle at dock.

7. Containers Interestingly, the ocean going ships use the same concept as trucking companies for their shipping containers. Just like the trucking companies they realize that no every one of their customers can fill an entire shipping container. After all the Standard ISO shipping containers are 8ft (2.43m) wide, 8.5ft (2.59m) high and come in two lengths; 20ft (6.06m) and 40ft (12.2m). That is a vast amount of space to fill. However like trucking companies they operate a system of Less than Container Load (LCL) and Full Container Load (FCL) this provides opportunities for businesses to ship smaller consignments at reasonable prices.

8. What does the Terms LCL and FCL Mean? The term FCL or Full Container load means that you have a rented the full capacity of the container. But you are under no obligation to fill the container completely. FCL just means that you will not share the container with anyone else.This is how it differs from LCL (Less than Container Load) transport, where capacity is shared between multi-tenants. One major advantage of FCL is that because you have the whole container to yourself it is easier and faster way of unloading and then transporting goods from the port. Sea freight services are generally cost effective as it allows companies or individuals to ship their goods in large quantities and hence benefiting from the economy of scale. To understand this better it is helpful to understand how carriers charge for international shipping. Airlines charge a chargeable weight, which is calculated from an aggregate of the weight and size of the consignment. On the other hand ocean going carriers charge by the container so if you have larger and heavier shipments, it is often much cheaper to ship by sea.

9. However, as the consignments gets smaller, the margin between the prices reduces and even sometimes air transport may even end up cheaper. However it is not just the price of transportation that you need to worry about as there are what is called landed costs this is the total price of a product or shipment once it has arrived in country. The landed cost is the accumulation of the original price of the product, and all transportation fees both inland and ocean, as well as customs, duties, taxes, and all other additional fees. Having a lower landing cost makes ocean going transportation a highly economical solution. Therefore, if the company has planned diligently and does not require expedited services and so do not have an urgent shipment, sea freight service will be a very viable transport method financially. On the other hand if the consignment is small and a reliable delivery time is a key criterion then air transport may be best. However there is one thing to consider when using FCL. Do you want the container to be delivered for loading to your location and then delivered to the destination by truck or do you want just port-to-port delivery. The former is best for one off transports for example a family moving abroad shipping their car and household possessions may prefer door-to-door transport but for a business skilled in planning and logistics they can save considerably using just port to port transportation. The difference is that using the latter method means that you can control the method of collection and further transportation to the delivery point and thereby control costs. However, if you are not requiring a full container load (FCL) then there is a more cost effective alternative - a less than container load (LCL).

10. The Less than Container Load (LCL) With a less than container load (LCL) you are not taking up the entire capacity of the container instead you are taking up only a partial amount based on size and weight. The way that LCL work is that once the goods have been packaged they will be collected and taken to the port. Once at the port they will be once more carefully packaged and tagged and placed into a container ready for shipment. At the other end the container will be unloaded and the contents discharged and made available for collection or for further transportation. The advantage of LCL is it is significant cheaper, as you pay only for the space and weight that you use, rather than paying for the whole container. But what if you have fragile or perishable goods that you wish to transport?

11. Intermodal Transport For many companies and especially those with a global supply-chain no single form of transportation will be sufficient. As a result companies are often looking for an intermodal freight transport service. Intermodal transport involves the movement of freight using multiple modes of transportation (e.g., rail, ship, and truck). However the key to this is that it takes place without any handling of the freight itself when changing from rail to truck to even to sea or air. As a result many haulage and shipping companies now offer intermodal transport that will calculate and determine using all types of transportation, road, sea, rail and air and select the best route available. However for intermodal transport to work there needs to be a common container that can be easily moved from a truck to a plane, train or even a ship. The change of transportation and environment or the prolonged confinement may be adverse to the health of the goods being transported. For sensitive and perishable goods there are containers that are especially designed for such needs. For example reefer containers are temperature controlled and have 3 separate compartments each with their own temperature settings. There are also ventilated containers that protect the cargo from the elements but keep humidity under control by allowing a flow of air through the container. This prevents perishable goods from being damaged. Intermodal transportation does resolve many of the issues that small businesses have to deal with when dealing with overseas shipping. However there are others.

12. Issues with overseas shipping It is very difficult for small or even large company’s logistics departments for that matter to handle ocean shipping without a reliable partner. For example the partner should relive the business of the burden of selecting the best shipping options and to plan and prepare goods for packing into the containers. The shipping partner should then facilitate the tracking of good both on land when being conveyed through road haulage and later when at sea. However when looking for a container shipping partner you must ensure that they are not tied to a single ocean going transporter and that they have a network of ocean shippers that can deliver the best market prices and schedules. Today there are many bargain rates available as the large container shipping companies are feeling the economic heat of globalization. This is because as the global markets have expanded and supply chains digitized products are being made closer to the customer. This has meant a big drop in the ocean transport for many finished goods such as cars, electronics and technology. Consequently ocean shipping rates have fallen but it is difficult for a non-shipping company to benefit from these prices as they are not in the industry ‘club’. However by partnering with a reliable local shipping company that is part of the ocean shipping network you can reap the rewards of lower prices and preferential rates.

13. End One such company is OCT or Ontario Container Transport, a top rated international shipping company working in Canada and the US. OCT offers a wide array of shipping service for ocean/air/rail. With regards to ocean shipping OCT are not tied to an individual provider of ocean shipping transport as they can use their own network to get the best services available and better more personalized delivery services. Due to this ability to leverage their own network of ocean freight options OCT has built a reputation for timely delivery and knowledgeable service. But they also have a well-earned reputation as well for being a dynamic intermodal transport service company supporting premium handling and packaging. To support this comprehensive ocean/air/rail/truck shipping network OCT has all the specialist trailers, trucks, temperature controlled or ventilated containers as well as expedited services and co-docking that you would ever require.

14. The End Find out more at – http://octi.ca/knowledge-center/