Common Shipping Modes Explained

When shipping goods internationally, it is important to have a clear understanding of who claims ownership and responsibility for the goods while in transit and through arrival at the customs port.

To help make things more clearly for the consignor and consignee, the International Chamber of Commerce in 1936 created 13 International commercial terms (Incoterms for short) to “define the roles, responsibilities and transportation costs between the seller and buyer of goods for the purpose of shipping goods.” These Incoterms are recognized by governments, freight forwarders, and attorneys around the world making it easy for buyers and sellers to understand each other.

While it may not be necessary to master all of the Incoterms, it is important to become familiar and have an understanding of them. Below are the most common of the 13 terms to get started with.

1. FOB Shipping

The most widely used shipping method is FOB shipping. FOB stands for ‘Free On Board’ or ‘Freight On Board’. For this shipping, the buyer takes charge of the consignment as soon as it leaves the seller’s shipping dock and therefore the buyer is in charge of the delivery. As soon as the goods leave the seller’s dock, the seller should record a sale at that point. At the same time, the buyer should record an increase in inventory as the buyer takes on both risks and rewards for owning the goods. The supplier is not liable for any damages during delivery and does not bear any delivery cost.

2. CIF and CNF Shipping

CIF Shipping

CIF stands for ‘Cost, Insurance, and Freight’. In CIF shipping, the price quoted to the buyer is inclusive of delivery costs and insurance to guarantee compensation against loss or damage of goods. The seller is responsible for delivery of the consignment up to your port. However, delivery beyond the port is up to the buyer. The seller records a sale after the goods leave the destination port and the buyer as well records an increase in inventory.

CNF Shipping

CNF stands for ‘Cost nd Freight’ or ‘Cost, no Insurance, Freight’. CFR (Cost and Freight) can also be used to refer to CNF shipping. This shipping mode is similar to CIF except for the insurance cover against loss or damage to the consignment. Therefore, the seller is still responsible for sea freight delivery up to your port. Similarly, the buyer takes charge of delivery after the consignment leaves the port. CNF prices are cheaper but there are other additional costs when the goods reach your port such as import duty, VAT, customs clearance, docking charges, warehouse fees for storage, port security fees, fuel surcharge and others. So before deciding on CNF shipping, one should be aware of the additional charges required at the port. Only after will it be possible to determine if it is truly cheaper than CIF shipping.

3. LCL and FCL Shipping

LCL Shipping

LCL stands for ‘Less than Container Load’. LCL is used when the good being shipped are not enough to fill a shipment container. The shipper engages a consolidator who arranges for the shipment to be shipped along with other shippers in the same container. Consolidators arrange for goods from different shippers to be transported in the same container. At the destination dock, the shipments are separated and delivered to the final destinations. LCL shipping provides an economical way to ship goods that can’t fill a container and is a very popular

FCL Shipping

FCL stands for ‘Full Container Load’. In FCL shipping, the goods in one container all belong to a single shipper. If a shipper has enough of a load to fill a container, he books FCL shipping. However, the container does not have to be fully loaded for it to qualify as FCL shipping. FCL just means a shipper has exclusive rights to a container for the trip. FCL offers the advantage of faster and more secure shipment than in LCL shipping. Due to the consolidation of different shipping, LCL tends to take longer time in transit.

Why You Must Hire a Freight Forwarding Agent

Today, numerous players are a part of the freight industry, all of whom play a vital role in ensuring that not only the consignees, but also the freight companies are completely satisfied with the business. It is not easy for any person, however, to gain expertise in the field of freight forwarding and meet all requirements to make the shipment successful. Especially, if one is new to the transport field. If one chooses to contract other individuals’ services, it may actually turn out to be off-putting.

Here, a freight forwarder comes in to make things easy. These people are associated with companies that are completely focused on arranging shipments for firms or individuals. Not necessarily will they be carriers of your goods, but they would definitely help you deliver your goods to the desired destination safely and without hassle.

When it comes to transferring goods from one place to another or from one country to another, a freight forwarding agent may act as a third party. You may not need to visit the freight office to avail the service; rather, the agent would do it on your behalf. Particularly, if you are new to this field, you are likely to make many mistakes if you do it on your own.

On the other hand, a freight forwarder has complete know-how of the shipment requirements. Thus, he would suggest the best way to deliver your cargo. The agents save you time while only demanding the shipment information from you to fill in the forms such as bill of lading and export declaration bill. Thereafter, they make sure to see if the goods are delivered to the intended destination. They would also assist in clearing as well as forwarding at the port, if they are told the same.

Some reliable freight forwarding companies also provide insurance cover for the shipments. They make the process of risk assessment easy using their experience in the domain. Any risk during shipment is easily identified by them, which helps them to provide you the best insurance cover.

Make sure that the freight forwarding company you choose has a vast network, especially when you talk about carriers, to manage your enterprise. Since, the peak season makes shipment a problem, therefore, you must hire a freight forwarding agent who has varied options to avoid any kind of delays in shipment. Besides, they must have enough financial resources which could help resolve obligations to carriers immediately.

Advantages Of Ocean Freight Over Air Freight

Air and ocean freight are two major methods of shipping cargos on international grounds. With increasing globalization and technology advancement, more opportunities have become available to businesses which help them in exploring a wide network of their consumers and in expanding. Transactions, unlike ever before, have become easier to make in the international market owing to the introduction of new communication tools.

Today, hardly any business can elude the inevitable activity of international shipping. For the same, they hire international shipping companies, which are on continuous rise owing to the fact that they perform this function perfectly. The best oversea shipping services are available with these firms. Though, a wide variety of shipping methods are available in the present era, only sea freight was used to ship products to different locations earlier.

When it comes to sea freight, it is a well-assessed method of shipment. Also, the international freight firms have been able to overdo the challenges that were brought in front by shipping by following appropriate practices. The below-mentioned factors contribute to the huge popularity gained to date by ocean freight.

1. A cost-efficient method – It is not that air freight is never chosen by any company, but it is generally only when they need to transfer goods in urgency or within a limited time frame. If your shipment is not time sensitive, you should consider choosing the sea freight option. Since, this is a viable as well as a cost-efficient option. Also, you can ship as heavy a load through this method as you want. The shipment is completely safe.

2. Ensures safety of goods – Usually, a company providing ocean freight service would associate it with truck deliveries so that the shipment reaches the exact destination. Most of the time, inter-modal containers are offered which ensures zero damage to your goods during shipment.

3. Ocean freight is eco-friendly – Not only the sea freight option is feasible and cost-effective, but eco-friendly too. Since, the advanced cargo ship machines have been manufactured in a way that they ensure minimum emission.

Ocean freight may be a limited option, but is still a recommended one. If are on look for the best international freight method, you must go for this one that helps you save on money. Nevertheless, you must look for experience and excellent customer support in a trusted freight forwarding company that may also offer varied other oversea shipping services to you.