Ocean freight, also called sea freight, is the movement of goods internationally by sea. Ocean freight is far and away the most popular option for shipping goods internationally. Roughly 90% of goods1 are transported around the world by sea. But while it’s popular, that doesn’t mean it is the only option or the best one for that matter.
Whether you are just starting or are a veteran in international shipping, most business owners find that they need to review their shipping options from time to time. If you’re currently at that point where you need to ask “Does ocean freight make sense for me?”, we’re here to help.
In this article, you’ll learn all you should know about ocean freight, including what it means, how it works, how much it may cost, and when it makes the most sense to choose ocean freight.
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Ocean freight is the method of transporting goods through the sea. It is an important part of cross-border trade that lets people move massive amounts of goods between countries.
The goods are typically transported on ships through the open ocean. There are many kinds of shipping options available for different kinds of goods. One of the most popular is container shipping, technically named containerization. With this option, goods are shipped using containers with standard sizes of 20 to 40 feet.
Apart from ocean freight, there are other international freight transport modes, which include courier, express air freight, and standard air freight. All of these transport modes involve shipping by air and are therefore much faster than ocean freight. They typically take between 1 to 2 weeks. But they are also far more expensive than ocean freight and can only take smaller shipments.
📌Read more: Air freight vs ocean freight: how to choose
While ocean freight certainly is not cheap when shipping small quantities, it scales really well. For larger shipments, it produces a better overall cost. This is why it has become such an important part of international trade. Despite this, ocean freight is much slower, as the typical time for the arrival of most shipments is between 40 to 60 days.
As mentioned earlier, container shipping is one of the most popular options for ocean freight. This is largely due to its relative safety and ease of handling. Containers can be moved very easily without disturbing the goods being shipped. However, they are only a good option for certain kinds of goods, such as dry or already packaged goods.
When it comes to container shipping, there are essentially two types of shipping services that are available – LCL or FCL. LCL means less than container load, while FCL means full container load.
FCL shipments basically involve shipping your goods via one or more containers that you use exclusively. Only your goods will be in the container, ensuring that your shipment will be undisturbed until you open the container by yourself. This option makes the most sense when you have goods that can fill a container or that nearly fill it up.
With LCL shipments, the goods intended to be shipped are usually less than it takes to fill a container. So, instead of having a container all to yourself, which can be relatively expensive, you can split the cost and share the container with goods belonging to other people. But the downside to this option is that your goods may be more vulnerable to mishandling or damage during the voyage.
📌Read more: FCL vs LCL container shipping: how to choose
Ocean freight relies heavily on the services of third parties called freight forwarders. Freight forwarders usually mean a third-party individual or company who pick up your goods, properly arrange them to be loaded and onboard for shipping, and eventually correctly delivered to the final destination. This is because it is usually necessary to have trusted eyes and hands that can help collect your goods from the seller, arrange shipping and place your goods aboard the ship.
The shipping contract is also an important part of the process you should know about. There are standard international shipping terms that govern ocean freight contracts. These are called “Incoterms”, short for international commercial terms. It defines how far along the process will the seller be held responsible for the goods, and at what point will the buyer takes over the liability for the shipment.
The most popular incoterms are:
There’s obviously a lot to learn about how these Incoterms work and which makes the most sense for you.
After deciding your shipping terms, the process of concluding the ocean freight will involve the following stages:
The freight forwarder can be charged with handling every stage of the process. Or you may decide to make alternative arrangements for certain stages to save costs.
Ocean freight rates are usually determined based on a number of charges, such as the cost per weight of goods and the space they take up. For instance, ocean freight typically costs around 50 cents per kilogram (kg)2. Other charges that may be included in the freight rate include:
Ocean freight charges are not static. Depending on a number of factors, the price may go significantly higher, or may fall even lower. Some of these factors include:
As you have learned already, ocean freight may be popular, but it has both its high points and low points. Some of the advantages you can expect from ocean freight include:
Despite the positives, here are some negatives to keep in mind：
You should consider going with ocean freight if you are shipping large or bulky goods, or when it is vital to reduce your shipping costs to save money. Ocean freight also works very well when you have a high volume of orders within the same period.
But if you are deciding to go with ocean freight, you should generally leave more than enough time for the goods to arrive. If you do not have flexible delivery dates, then you may be better off looking elsewhere. The complexity of the process and the potential for delays may put you in a less than ideal situation otherwise.
Overall, ocean freight represents a great option for international shipping, but only in the right circumstances. It can be a relatively cheap option, but this is often offset by the ambiguity in the process.
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