Options
The best option for the transport of goods on export will depend on the destination and on the type of goods concerned.
The following options may be available:
- air freight;
- carriage by sea;
- roll on roll off ferry transport / transport by road;
- consolidation of consignments by a freight forwarder;
- express courier.
The Irish International Freight Association publish a directory of freight forwarders. Freight forwarders assist traders in the import and export of goods. They may provide services in relation to paperwork and regulatory compliance, act as an intermediary and generally arrange and support the process of transportation of the goods. An export cargo shipping instruction is used to set out he basic information required by them.
Costs
The costs incurred in transporting goods will depend on the form of transport and the route chosen. Costs and quotes can vary from operator to operator and freight forwarder to freight forwarder.
Sea transport tariffs may incorporate ocean rates, terminal and a range of other charges. They are often quoted in US Dollars.
Air freight rates are published in air cargo tariffs. Air freight is usually charged per kilogram with discounts for higher volumes.
Express operators may offer door to door services providing tracking systems by which the location and progress of the transit of packages can be constantly checked.
Marine freight may be based on the size, weight and quantity. Within weight bands, there may be uniform tariffs per container, irrespective of the quantity of goods shipped in it. Some cargos are subject to particular usually higher rates known as commodity rates. These may include dangerous goods and goods requiring refrigeration.
Types of Ship
Different types of ships are used to transport goods around the world. Container ships carry their cargo pack in standard 20ft / 40 ft. containers that are stacked both on and below deck. Smaller fleet of ships carry containers on inland waters. Roll on and roll off carriers carry both road haulage and passenger vehicles.
General Cargo ships carry pre-packaged cargo of all types. Bulk carriers carry unpackaged goods usually large volumes of singe commodity goods such as grain, coal etc. Tankers carry liquids such as oil, fuel and gas.
Container ships dominate commercial and international shipping. The advantage of packing goods into containers include; ease of transit onto different modes of transport; the opportunity to offer door to door service; speed and efficiency. The largest container ships can accommodate 9,000 20ft containers. There are 20 internationally recognised types of container including refrigerator units and open top containers.
Break bulk refers to any non-bulk cargo that is not containerised, such as goods in pallets or in crates, drums or stacks which are loaded directly into a ship’s hold. Break bulk tends to be used for specialised trade such as fresh fruit or for trade to small ports which do not have the necessary infrastructure to handle containerised traffic. Goods carried as bulk break can be more susceptible to damage than containerised goods because they are stored in the ship’s hold. Strong packaging is essential.
Large shipments of certain commodities such as coal, wheat and oil are usually carried in bulk and packaged in the ship’s hold.
Shipping Routes
Merchant shippers do business in two different ways. Liner vessels operate on fixed routes to fixed schedules using the standard tariff. Liner trade is dominated by container ships, roll on roll off carriers and general cargo ships. Chartered vessels operate according to the demand of the persons chartering them. The ports of loading and discharge are determined by the charter which depends on supply and demand. Most tankers and bulk carriers operate in the charter market.
Shipping routes reflect world trade flow. The North Atlantic Route linking Western Europe and the United States and Canada is busy. There are well established routes to the Middle East, Far East, India, Australia, New Zealand, Central and South America as well as East and West Africa. There are direct liner services to all main trading economies. If cargo is destined for a smaller port in one of these countries there may not be a direct sailing.
Trade routes reflect the place of origin of consumption of the commodities carried. Many of the oil routes begin in the Middle East and end in developed countries. There may be a range of routes by which cargo can reach its destination and a number of options may be available.
Pricing
The cost of transporting and consignment of goods are the ocean freight cost charged by the carrier and the cost associated with handling and clearing goods at the ports of loading and discharge. A number of factors influence the charges. The liner traffic rate is usually charged according to the ship company’s standard tariff. Larger or frequent shippers may be able to negotiate preferential shipping rates.
Other factors may impact upon the price includes rates for specific types of goods and general cargo. Congestion charges may apply at busy ports. Currency adjustment factors take account of exchange rate variations during the journey. Bunker adjustment factor (BAF) takes account of fuel price fluctuation.
Contract of Carriage
In the case of smaller shipments, the shipper reserves a space with the shipowner through an agent. The contract of carriage is thereby constituted. Where there is a bill of lading, it comprises all or the principal terms of the contract between the consignor and the issuer (carrier). It may apply by loading the goods, even in the absence of other contractual dealings.
The contract may be made through a freight forwarder acting as agent for the shipper. The freight forwarder may itself contract with the shipper as principal and provide carriage by subcontract rather than entering a contract of carriage as agent for the shipper.
Documents
An export cargo and shipping instruction (ECSI) is use to instruct a freight forwarder or carrier. It contains details of the goods and set outs instructions for the shipment.
If the goods are hazardous a Dangerous Goods Note is necessary to detail the nature of the goods in the consignment and the hazards presented. If goods are non-hazardous a standard shipping note will give details of the port of loading and the information needed to handle the goods correctly.
A bill of lading or seaway bill will be necessary. A Bill of Lading shows that the carrier has received the goods, provides evidence of contact of carriage and serves as a document of title to the goods. It is a unique historical document and may not always be appropriate. A sea waybill fulfils the same function as a Bill of Lading but does not confer title to the goods. It is often quicker and easier to use. It is often used where there is a well-established trading relationship between buyer and seller.
Air Freight
Transit times for air freight are speedy and can be appropriate for consignments of smaller and more valuable goods. Air freight is carried by scheduled passenger aircraft as well as by cargo only airlines.
Air freight is generally more expensive than other transport modes. Air freight is charged per weight or volume, whichever is greater. Freight rates are not marketed in a single airline industry tariff. Buyers negotiate rates with airlines on an individual basis. Rates are quoted on the basis of transport from the airport of origin to the airport of destination. Pre-departure and post arrival expenses are additional.
In the case of export goods, airline terminal handling fees, fuel, and risk charges including customs date, entry requirements and physical consignments, security screening must be considered and provided for. For import goods it is also necessary to consider custom duty, import duties and VAT and the brokers service fee.
Air Transport Industry
The air freight industry comprises of a number of organisations including airlines, express carriers, freight forwarders and customs brokers.
A freight forwarder is usually used for buying and organising airfreight requirements. Freight forwarders buy and pre-book airline capacity in bulk in advance and sell this to exporters who want to dispatch consignments to the airport of destination on that date. Once cargo is pre-processed and is ready for dispatch the freight forwarder delivers it to the airlines cargo terminal at the airport of departure.
The cargo terminal operator’s primary responsibility is to the airline. It must ensure that all cargo is transported to the aircraft side at the appropriate point ready for loading. Cargo terminal operations are usually sub-contracted by the airline to operators.
The airlines themselves pre-plan their fuel, baggage and cargo loads in advance of departure. Although airlines allocate flight details in advance for cargo movements they are not usually bound by them under their conditions of carriage and are not responsible for delays. Airlines are generally entitled to off load cargo if necessary.
Courier
International courier and express operators offer a complete door to door pick up and deliver service at an all-inclusive price excluding duties and taxes in the country of destination. Courier services are scheduled on their own charter flight of transport packages.
The value of goods will determine whether a single administrative declaration /document is necessary. This is usually required when the value of the consignment exceeds a certain relatively low threshold.
The services are mainly available for smaller consignments less than 30kg in weight. Some international airlines have developed door to door services that are available through freight forwarders.
Road Transport I
There may be considerable advantages to road transport in comparison to other modes of transport. It provides door to door or warehouse to warehouse service. This reduces cartage, loading and unloading expenses. It is suitable for carrying goods to and from areas which are not served by rail, water or air transport.
Road transport has the advantage of flexibility. The services, routes and timings can be adjusted and changed to individual requirements without much inconvenience.
It is more economic and quicker for carrying goods over short distances. Delays in transit of goods on account of intermediate loading and handling are avoided. Goods can be loaded direct into a road vehicle and transported straight to their place of destination.
As the intermediate loading and handling is avoided, there is lesser risk of damage, breakage etc. of the goods in transit. Thus, road transport is most suited for transporting delicate goods like chinaware and glassware, which are likely to be damaged in the process of loading and unloading.
Road Transport II
As compared to other modes of transport, the process of packing in motor transport is less complicated. Goods transported by motor transport require less packing or no packing in some cases.
Road and motor transport may act as a feeder to the other modes of transport such as railways, ships and airways.
There are more chances of accidents and breakdowns in case of motor transport. Thus, motor transport is not as safe as rail transport. It can be unsuitable and costly for transporting cheap and bulky goods over long distances.
The road transport is comparatively less organised. It can be irregular and undependable. The rates charged for transportation are also unstable and unequal.
Moving goods by rail
Rail is traditionally used for moving bulk materials. There is a significant market in intra– model containers which can be switched between lorries, ships and rail.
Consignments shipped from Europe to the west coast of USA often cross the American continent by rail. Rail services operate from Great Britain via the channel tunnel to mainland Europe with route planning being possible to Russia and central Asia. Freight forwarders and transport operators are experts in finding routes and modes that meet specific criteria in terms of costs and duration.
