What Is Ocean Freight? A Complete Guide

Global commerce is dependent on ocean shipping. Regardless of whether it’s a delivery of new technology from China or fruits from South America, ocean freight is the backbone of trading between continents.

If you’re interested in learning more about how the shipping industry works, this article will guide you through the processes involved in getting a product from one continent to another.

Understanding Ocean Freight

Ocean Freight refers to the transportation of goods by sea internationally. This method accounts for 90% of all goods transport, making it a central pillar of global trade. The Importance of Ocean Freight.

Global logistics presents a few challenges when it comes to moving goods across borders, and ocean freight services play a critical role in overcoming them. Compared to other modes of transportation, Ocean Freight offers solutions to various issues.

1. Cost-Effectiveness

Ocean freight is cheap compared to other forms of delivery. Ocean shipping via shipping containers give businesses the option to transport large quantities of their product around the world for a fraction of the cost, keeping profits and competitiveness high.

2. Accessibility

Using ocean freight allows you to source and manufacture your goods at the lowest cost, as well as opening your product to the global market.

3. Sustainability

Global logistical needs still must be met, even for those conscious of the freight industries C02 emissions. Today, ocean shipping is the most sustainable and eco-friendly medium to move goods around the world.

Furthermore, modern ships are far more fuel efficient than ever before with advancements in the technology that builds them, further lessening their carbon footprint.

Key Parties of Ocean Freight

Transporting ocean freight across continents by sea is a complex operation and requires a lot of collaboration. Different groups need to maintain a seamless transition of cargo from one place to another.

Shippers

Anyone who wants to send their products through freight transport is called a shipper. This is anyone from an individual sending a letter, to a large business sending entire containers to be sold and anyone in between.

Freight Forwarding Companies

The middlemen between shipper and carrier. The freight forwarders are the entities who document, book cargo space, and arrange transportation for the seller’s product. They are all important in the process of moving your goods.

Carrier Companies

A carrier company will operate the ship transporting your ocean freight to ports around the world.

Ports and Terminals

Vessels transporting a shipper’s goods will dock here to leave off their cargo and pick up their next load.

Customs Brokers

Responsible for making all incoming goods to a port compliant with international freight shipping laws.

Types of Ocean Freight Services

There are two main ways to avail of Ocean freight services.

Tramping

Organised as and when its needed, tramping is commonly the method used to take raw materials like coal and oil across the sea.

Linear Transportation

This more common service works along established shipping lanes. Products are usually shipped via freight transport with this mode of travel and freight forwarders offer this service to get a shipper’s products across the ocean.

Types of Ocean Freight

The most common way to use ocean freight services is by transporting your product through standardised containers. There are two main types of ocean freight, LCL and FCL.

LCL (Less than Container Load): This is the most common way to avail of ocean freight services if you operate a smaller business or aren’t shipping large amounts of product across the ocean.

LCL allows multiple shippers to share the same container and is cost effective for smaller shipments. A shipper using this service will only pay for the space they use.

FCL (Full Container Load): If you’re moving a lot of freight abroad, FCL is the best method to use. The shipper will pay for the use of an entire container and as such, is responsible for filling it in its entirety.

You should take note that the cost is calculated by both the size of the container and the destination it’s going to.

The Process of Ocean Freight

Navigating the ocean freight process involves several essential steps.

1. Booking: To begin, a shipper or freight forwarder will need to pay for container space on the carrier’s vessel at a port. They’ll have to document what type of product they’re and how much of it to be sent by ocean transport.
2. Documents: A lot of information is required to send a product overseas. From packing lists and customs forms to invoices and bills of lading, without this documentation, you won’t be able to ship your product and should expect a delay in delivery as well as experiencing issues with customs.
3. Loading: Products to be delivered by freight should be properly packed into the shipping container to protect the cargo during transit.
4. Transportation: From here, the cargo is taken and loaded onto the vessel at the departure port, where it is then transported to its destination port.
5. Customs: Once the vessel arrives at its destination, the cargo undergoes a process of customs checks. The seller shouldn’t have to worry if its documentation is up to date and correct. However, freight forwarders and customs brokers will ensure that compliance with regulations has been met beforehand.
6. Delivery: Once all previous steps have been carried out, a product or shipment will find itself being moved onto a lorry or a railcar to be taken to its intended destination.

Challenges Within the Sector

Being an important part of global logistics, ocean freight has always had to contend with its fair share of challenges.

1. Weather: Bad weather can lead to delays or losses to your cargo.
2. Congestion: Some ports can’t keep up with the traffic that comes in and out of their jurisdiction. This means delays and a higher cost for a shipper, especially if their product is time-sensitive, like consumables or goods that require refrigeration.
3. Regulations: Customs regulations and the effort to comply with international laws can be time-consuming.

The Future of Ocean Freight

1.  Digitising Records and Bookings: Managing shipments has become a lot easier with computerised records, meaning shipments can be tracked more easily and the overall process has become streamlined.
2. Sustainable Initiatives: The freight industry is trying to lessen its impact on the environment by using cleaner fuels, as well as more efficient and sustainable ships.
3. Automating Processes: Helping to make the loading and unloading system more efficient which, in turn, speeds up operations by automating the process.

Trade Across the Seas

The ocean freight industry has many challenges facing it in the future with higher demand expected in the coming years and must streamline and upgrade their processes to adapt to this ever-changing situation.

Thankfully, the industry is focusing on engineering and technological advances to keep up with global logistics. As well as that, such advancements are also pushing the industry to become eco-friendlier and more sustainable as its aware of its carbon footprint.

Remaining as the main appendage of trade around the world, understanding the freight industry is vital for a businessperson to make informed decisions on what to do with their goods.