How Sea Freight Works: The Complete Process Explained
December 15, 2023 Sea Freight
Understand how sea freight works, step-by-step, from an importer’s perspective.
Sea freight serves as the backbone of global logistics, facilitating the movement of goods across oceans.
Whether you’re a seasoned importer seeking to optimise your logistics or a complete newcomer to the industry, this guide is designed to provide you with valuable insights into the nuances of sea freight.
What is sea freight?
Sea freight, also known as ocean freight, is a fundamental component of international trade, enabling the transportation of goods across vast distances via the world’s oceans. You may also hear it referred to as deep sea freight transportation.
It plays a crucial role in connecting markets and facilitating the global exchange of products.
Sea freight services involve the shipment of cargo in containers, and it is an indispensable part of the supply chain for businesses engaged in international trade.
The anticipated growth of the container fleet industry worldwide is projected to be 6.3% this year. This is expected to further increase to 8.1% in 2024.
Types of sea freight shipping
There are two types of shipments you can use when transporting goods over the ocean – LCL and FCL.
Less than Container Load (LCL)
When your shipment doesn’t fill an entire container, you opt for Less than Container Load (LCL) shipping.
This method allows multiple shippers to share a single container, making it a cost-effective solution for smaller shipments.
Full Container Load (FCL)
Full Container Load (FCL) shipping is suitable for larger shipments that require an entire container.
Businesses shipping FCL do not need to share their container with anyone, as the container can exclusively be filled with their own goods. Shippers often prefer it when shipping large quantities of goods.
How Sea Freight Works: The Complete Process Explained
So, how does sea freight work?
Understanding the process is crucial for businesses engaged in international trade.
Here’s a step-by-step breakdown:
Step #1: Request quotes and order your product
First, you’ll need to order your goods. Approach suppliers and manufacturers overseas and negotiate a deal to purchase the products you want. We recommend you to read our blog Why You Shouldn’t Rely Only on Your Supplier to Handle Your Imports.
You should negotiate not only on price, the minimum order quantity, and the deadlines but the terms of your purchase (incoterms) you will use. This is the most important thing to define at this stage, as the chosen incoterm will define who pays for what in the shipping process, from the moment it leaves the supplier’s warehouse, until it gets delivered to your premises. The incoterm also states who is responsible for insurance or is liable for risks (supplier or buyer) at each stage of the shipping journey.
Step #2: Consider the right transport mode
Ocean transport solutions take longer than air transportation, making sea freight less suitable for time-sensitive shipments.
If your cargo is urgent or perishable, air freight should be the right choice.
Businesses must plan their logistics accordingly to accommodate longer lead times. Typically, you can expect your goods to be at sea from 15 to 60+ days to Australia.
To compare sea freight with other forms of transport, read our article on air freight vs sea freight.
Step #3: Book your freight
Once your cargo is prepared, book your freight with the chosen shipping company. Your freight forwarder should be able to provide a few carrier options according to your requirements.
Shipping lines offer different ETAs and pricing depending on the type of goods you are shipping and how quickly you need your goods. Faster direct services are usually more expensive than longer ones, with transshipment.
Consider arranging marine insurance with your freight forwarder or insurer for extra peace of mind in case your goods get lost, damaged or get caught in an incident.
Step #4: Freight forwarder arranges shipment
A sea freight forwarder will then arrange the transportation for every leg of the journey, door to door. They will liaise with the shipping lines, transport operators and port authorities to book every movement of your shipment.
They will also handle your shipping documentation and communicate the status of your shipments so you know when to expect receival and prepare for the unload of your goods.
Freight forwarders help to mitigate risk and offer established relationships with trusted carriers and providers to handle your cargo as smoothly as possible.
Step #5: Goods go through import customs clearance while in transit
After your cargo leaves the country of origin, it undergoes import customs clearance. This step ensures compliance with international trade regulations and is how countries control what comes into the country. Australia has one of the strictest biosecurity import regulations in the world.
A customs broker needs to be engaged at this stage as they are the licensed professional authorised to liaise with government authorities to arrange all documentation necessary to clear your goods. The process starts while goods are still in the water.
They will review your goods classification, arrange the correct import documentation and calculate the right amount of duty and GST you need to pay upon import.
Once cleared, your goods are allowed to be collected at the port by a transport company (also arranged by your freight forwarder on your behalf).
Advantages of sea freight
One of the primary advantages of sea freight is its cost-effectiveness, especially for large shipments.
Though there are still certain duties and fees you’ll have to pay, the economies of scale associated with transporting goods in bulk containers make sea freight a budget-friendly option for businesses engaged in international trade.
Easier to Maneuver Heavy or Oddly-Shaped Products
Sea freight is well-suited for transporting heavy or oversized items that may be challenging to ship via other modes of transportation.
The flexibility in container sizes and types allows for the efficient movement of a wide range of products.
Less Restrictive for Hazardous Goods
A lot of items are prohibited in air freight, depending on the laws of your country of origin and destination.
Restricted goods may include:
- Flammable items
- Corrosive or explosive substances
- Magnetic items
- Biochemical products
- Products considered dangerous to public health (e.g. medical and clinical waste)
More Carbon Efficient
Compared to air freight, sea freight is a more environmentally friendly option.
Statistics show that sea freight emits up to 92% less carbon compared to air freight.
The larger carrying capacity of vessels and slower speeds contribute to lower carbon emissions per unit of cargo transported, aligning with sustainability goals.
Disadvantages of Sea Freight
How long does sea freight take? It depends on the origin/destination, but shipping to Australia via sea can take anything from 4 days to 65 days, approximately. Airfreight, on the other hand, only takes 1-3 days, sometimes even same day delivery if it is a domestic shipment.
While sea freight offers significant cost savings, it comes with a trade-off in terms of time.
With sea cargo shipping, you run a risk of weather events, labour strikes in the supply chain, port congestion and limited availability of services or equipment during peak shipping seasons.
Sometimes, these delays may happen even when your cargo has reached your port of destination. Customs clearance, for instance, may take a while if your documents are not in order.
This can lead to further delays and unpredictable arrival times, which may be disruptive for some businesses.
It is always recommended to allow some extra time in your logistics planning to mitigate risks.
Risk of Damage And Loss of Sea Freight
Sea freight, despite its efficiency and affordability, carries inherent risks for cargo damage, loss or even theft as multiple parties handle your cargo until delivery. Rough weather, collisions, groundings, fires, and even piracy are also a risk. Additionally, improper packaging, inadequate loading and securing, and mishandling during port operations can further contribute to cargo damage.
Arranging marine insurance through your forwarder is highly recommended to safeguard your cargo should any of the above happen.
Bonus: Packaging Requirements of Sea Freight Transportation
If you are on the other end exporting your goods, proper packaging is crucial to protect your goods during transit.
When packing Less than Container Load (LCL) cargo, remember to use strong and sturdy boxes, preferably double-walled for added protection. Opt for high-quality packing tape that can withstand extreme temperature changes during transit. If possible, palletize your cargo for easier handling and place the heaviest items at the bottom. Wrap your cargo tightly in black shrink wrap for both concealment and protection. Ensure clear and accurate labeling, including any special handling instructions like “fragile” or “top load only.” Be especially cautious with wood packaging and ensure it complies with ISPM 15 regulations to prevent the spread of pests.
When packing Full Container Load (FCL), ensure even weight distribution throughout the container. Spread out the cargo and use dunnage to fill any empty space. Pack tightly but avoid putting pressure on the container door. Be mindful of the maximum weight limit and accurately declare the verified gross mass to avoid misdeclaration fees.
Improper packing can lead to damaged cargo, safety issues, and rejection by carriers, causing delays and additional costs.
- Dead space charges: how to avoid them when packing your cargo
- Packing Cargo for Sea Freight: How to Prepare Your Shipment
- Packing List in Shipping: All You Need to Know [+Template]
- Packing Declaration: Definition And Template For Australian Customs
Questions About Sea Freight as a Transport Solution?
Are you considering sea freight for your commercial international shipments?
Our world-class team of freight forwarders and customs brokers at ICE are highly qualified and can provide personalised shipping recommendations and real-time support – all backed by our 35+ years of expertise. Our “customer service as a priority” approach means you get an experienced professional to listen and fully understand your business requirements before proposing a custom shipping solution that suits your budget and timeline like a glove.
Don’t hesitate to give us a call if you have questions or if you need assistance in planning your logistics. Contact us to request a tailored quote or call our dedicated team at 1300 CARGO 1.
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