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Our Top 4 Most Asked Questions For Sea Freight – Answered

We’ve shared the answers below to our most asked questions for sea freight shipments that we receive as a Freight Forwarding company. If you have any additional questions or would like deeper insight which is personalised to you and your business, call our industry specialist team today on (07) 3207 9537 and they’ll be happy to assist with any questions that you have. 

  1. Why do sea freight costs & rates fluctuate significantly?

One of our most frequently asked questions around freight is in regards to cost and fluctuating prices throughout the year. For businesses trying to keep ahead of these varying costs it can be frustrating.

The demand for shipping services is subject to a number of external pressures, including those of a political, economic and environmental nature. Trade sanctions, conflict, consumer behaviour, bad weather and more can affect demand, and that in turn affects cost. As there isn’t a single predictor or reason in the market, but a varying of factors including (but not limited to): 

Destination/distance – the more popular the destination and the shorter the journey, the lower the ocean freight rate. Less common destinations, including those with a reduced capacity to handle freight, are more costly, and the further goods have to travel, the greater the ocean freight rate will be.

Currency – as ocean freight rate is charged in US dollars, the exchange rate has an impact on cost.

Cargo type – the types of goods that are likely to attract higher fees include those that are dangerous, heavy, perishable, or out of gauge (OOG).

Fuel Costs – Bunker Fuel, that’s the name for fuel used to power a ship’s engines, and the cost can fluctuate, meaning the ocean freight rate charged will fluctuate. Bunker fuel has a big impact on the cost of ocean freight.

Seasons – certain goods are in demand, or in higher demand, due to the seasons, for example, in the run up to Christmas or the Chinese New Year. When demand is high prices often rise, whereas when demand is low, they fall.

Vessel size – as the biggest single cost in ocean freight is bunker fuel, the size and capacity of the vessel is important. Bigger vessels might use more fuel, but there are also more containers on board for that cost to be shared between.

Environment – 1 January 2020 saw the implementation of IMO 2020, new legislation introduced by the International Maritime Organisation. The aim is to reduce sulphur oxide gas emissions by using marine fuels with a maximum sulphur content of 0.5%, a hefty reduction compared to the previous limit of 3.5%. The expectation is an increase in cost.

2. What causes sea freight cargo to become delayed?

 Delayed shipments are one of the most frustrating parts of freight forwarding for many companies – the time involved, additional costs and waiting customers which has the potential to incur a larger cost (potentially losing clients/ customers). Vessels essentially move in a giant loop, calling from port to port then back again. if one tiny delay occurs at one port it can cause a chain reaction for all the other ports that the particular vessel calls in on, this can add days or even weeks to a transit time. Things that can cause these delays are:

  • Impacts from weather conditions.  
  • Industrial action.
  • Vessel quarantine.
  • Overbooking of cargo on shipments.  (its common for shipping lines to overbook space during peak season, just like airlines do.)
  • Vessel malfunctions/mechanical issues. 
  • Natural disasters. 
  • Seasonality. 
  • Equipment shortage. (no empty containers)

3. What is the wait time at wharfs typically?

“Waiting time” or “Demurrage” refers to the free time a freight or transport company allocates at a wharf – typically these are around 45 minutes. The purpose of this time is to be used to process freight and shipping collections within this time allocated. But this is of course dependent on the demand, traffic and resources available to have the cargo processed.

4. What happens if my goods are damaged in transit?

This depends whether or not you have insured your cargo and are covered for marine transit insurance – we strongly encourage our customers to cover their cargo and we have a partnership with Coverfreight, to make this process easier.

When you’re covered by marine transit insurance: you’ll be eligible to claim on the insurance that you’ve taken out and will follow the process to see how much you’re eligible to receive post their investigation.

If you’re not covered by marine transit insurance: you’re liable for the complete costs of your goods lost.

Having marine transit insurance also covers you if General Average is called. General Average is a principle of maritime law that essentially establishes that all sea cargo stakeholders (owner, shipper, etc.) evenly share any damage or losses that may occur as a result of voluntary sacrifice of part of the vessel or cargo to save the whole in an emergency.  This includes the cargo owners, which means exporters and importers may be liable to pay towards the losses of a major incident on the vessel, such as:

  • a fire on board 
  • the ship gets stranded or grounded 
  • a container stack collapse 

Cargo might be partially or fully damaged. And, even if there is no damage to cargo, there will be extreme delays in deliveries until the general average procedures are completed, which may result in penalties, fines and chargebacks from end buyers.

The last time a general average was called was in 2021 with the Ever given being grounded in the Suez canal, Prior to that was 2019 after a fire on the Yantian Express.

General average claims are a risk for importers. Having cargo insurance is peace-of-mind in the case of these extreme cases.

Have another question for our team at PFS?

If you still have questions we weren’t able to answer above – or would prefer to speak directly with our industry specialist team, call us directly on (07) 3207 9537.

4 benefits of using Sea Freight for international shipping

If you currently use sea freight as your choice of international shipping or are considering using sea freight, you might be evaluating the advantages of this freight type. We’ll be sharing the top Four benefits of using sea freight as your transportation choice,  if you have any questions our team at Personalised Freight Solutions will be able to help you. If you would like to see more of our range of services in regards to sea freight – please don’t hesitate to visit our Sea Freight page here.

1. You’re able to save money on heavy + large freight loads

In any business, money is an important  part of decision making – especially when it comes to transporting large quantities or bulky items. 

Your average commercial ship  exceeds the size of an average commercial plane by at least 5:1 in terms of cargo space, in fact some commercial ships can hold over 20,000 shipping containers -by using sea freight  you’re benefiting on savings that is able to occur in these huge vessels by sharing the overheads with other companies that have containers on the ship. Even greater savings can be found with sharing containers with other shipments (this is called less than container load or LCL).  

 2. Freight size is less restrictive for oversized, heavy or bulky items

If it fits, it ships! When transporting large quantities of items, oversized or bulky goods,  a 20ft shipping container which has approximately 25-28 cubic meter of usable space could be an option, alternatively, a 40ft container has approximately 58 – 62 cubic meters of usable space. Need more space, consider a Roll on Roll off or Break bulk freight option. If you have smaller quantities of cargo, consolidation could be a better fit and is charged based on a minimum of 1 cubic meter. Typically if you have around 13 -15 cubic meters of cargo, ask your freight forwarder to provide a comparison cost between FCL and LCL shipping.

3.  Fewer restrictions on permitted goods

Unlike air freight, sea freight doesn’t have the same strict level of requirements and restrictions in place – enabling a greater range of cargo being able to be transported. This by no means that there are no restrictions when it comes to using sea freight to transport goods internationally, but by having fewer restrictions in place it does eliminate as much red tape along with being able to actually transport an additional range of items.

4.  You have more options in sea freight types

Unlike air freight, which is restricted to rigid size limitations based on the type of plane, sea freight can provide options for transporting cargo with different pricing structures  based on the method chosen:.

Sea freight services include; 

  • Less than Container Load (LCL): is used where the goods being transported won’t fill the entire container and share the remaining space with items belonging to different people/ businesses.
  • Full Container Load (FCL): refers to the company and/ or person transporting the items within the entire container, only belonging to them. The containers have standardized dimensions. They can be loaded and unloaded, stacked, transported efficiently over long distances, and transferred from one mode of transport to another—container ships, rail transport flatcars, and semi-trailer trucks—without being opened.
  • Roll on/Roll off (RORO): Vessels designed to carry wheeled cargo, such as cars, trucks, semi-trailer trucks, trailers, and railroad cars, that are driven on and off the ship on their own wheels or using a platform vehicle, such as a self-propelled modular transporter. This is in contrast to lift-on/lift-off (LOLO) vessels, which use a crane to load and unload cargo.
  • Breakbulk (LOLO): also referred to as “lift on/ lift off”, Break bulk cargo or general cargo are goods that must be loaded individually, and not in shipping containers nor in bulk as with oil or grain. Break bulk cargo is transported in bags, boxes, crates, drums, pallets or barrels. The cargo is brought to the quay next to the ship and then each individual item is lifted on board separately.

If you are looking to order your first overseas shipment, or just want to bench mark your current freight forwarder, please contact the PFS team to discuss your personal requirements and how we can add value.

What are the 11 incoterms in 2021?

But first, what Incoterms are & why they’re important

‘Incoterms’ is the short and simple way of saying International Commercial Terms. First published way back in 1936 by the International Chamber of Commerce, they’re a set of 11 terms defining who’s responsible for what during international transactions.

Or more simply, Incoterms spell out all the tasks, risks and costs involved during the transaction of goods from seller to buyer. Because they’re known and accepted worldwide and are a requirement on every single commercial invoice, they greatly reduce the risk of potentially costly misunderstandings.

The 11 Incoterms & their descriptions

1. EXW – Ex-Works or Ex-Warehouse

  • Ex works is when the seller places the goods at the disposal of the buyer at the seller’s premises or at another named place (i.e., works, factory, warehouse, etc.).
  • The seller does not need to load the goods on any collecting vehicle. Nor does it need to clear them for export, where such clearance is applicable.

2. FCA – Free Carrier

  • The seller delivers the goods to the carrier or another person nominated by the buyer at the seller’s premises or another named place.
  • The parties are well advised to specify as explicitly as possible the point within the named place of delivery, as the risk passes to the buyer at that point.

3. FAS – Free Alongside Ship

  • The seller delivers when the goods are placed alongside the vessel (e.g., on a quay or a barge) nominated by the buyer at the named port of shipment.
  • The risk of loss of or damage to the goods passes when the products are alongside the ship.  The buyer bears all costs from that moment onwards.

4. FOB – Free On Board

  • The seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered.
  • The risk of loss of or damage to the goods passes when the products are on board the vessel.  The buyer bears all costs from that moment onwards.

5. CFR – Cost & Freight

  • The seller delivers the goods on board the vessel or procures the goods already so delivered.
  • The risk of loss of or damage to the goods passes when the products are on board the vessel.
  • The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.

6. CIF – Cost, Insurance & Freight

  • The seller delivers the goods on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the products are on the ship.
  • The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.
  • The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage.
  • The buyer should note that under CIF the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.

7. CPT  – Carriage Paid To

  • The seller delivers the goods to the carrier or another person nominated by the seller at an agreed place (if any such site is agreed between parties).
  • The seller must contract for and pay the costs of carriage necessary to bring the goods to the named place of destination.

8. CIP – Carriage & Insurance Paid To

  • The seller has the same responsibilities as CPT, but they also contract for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage.
  • The buyer should note that under CIP the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.

9. DAP – Delivered At Place

  • The seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination.
  • The seller bears all risks involved in bringing the goods to the named place.

10. DPU – Delivered At Place Unloaded (replaces Incoterm® 2010 DAT)

  • DPU replaces the former Incoterm® DAT (Delivered At Terminal).  The seller delivers when the goods, once unloaded are placed at the disposal of the buyer at a named place of destination.
  • The seller bears all risks involved in bringing the goods to, and unloading them at the named place of destination.

11. DDP – Delivered Duty Paid

  • The seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination.
  • The seller bears all the costs and risks involved in bringing the goods to the place of destination.  They must clear the products not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities.

Check out these useful links:   Video   Quick reference chart

What are the most economic Incoterms terms? 

From our experience, FOB & EXW are the most common terms used when you are the buyer. This ensures you have control over a larger portion of the shipment & costs. If you are the seller then EXW,CFR & DAP are the recommended terms. 

Looking for additional advice? Speak to our industry specialised team today! 

If you’re looking for a quote or have a question that you would like assistance from our industry specialised team, please call (07) 3207 9537 today and we’ll be happy to help you any way we can.

What are Free Trade Agreements (FTAs)?

Businesses navigating free trade agreements can often find it an overwhelming process of finding the right information. Below we’ve broken down what free trade agreements (FTAs) are, countries Australia has them with, and links to comprehensive resources to assist businesses within Australia navigating freight forwarding – if you have any questions our team at Personalised Freight Solutions will be able to help you.

If you would like to see more of our range of services in regards to sea freight – please don’t hesitate to visit our Sea Freight page here .

What are Free Trade Agreements (FTAs)?

A free trade agreement (FTA) is an international treaty between two or more economies that reduces or eliminates certain barriers to trade in goods and services, as well as investment. FTAs benefit Australian exporters, importers, producers and investors by reducing and eliminating certain barriers to international trade. The Oxford English Dictionary records the use of the phrase “free trade agreement” with reference to the Australian colonies as early as 1877.

What counties does Australia have Free Trade Agreements with?

Australia currently has free trade agreements in force with Brunei, Cambodia, Canada, Chile, China, Cook Islands, Hong Kong, Indonesia, Japan, Kiribati, Laos, Malaysia, Mexico, Myanmar, Nauru, New Zealand, Niue, Peru, Philippines, Samoa, Singapore, Solomon Islands, South Korea, Thailand, Tonga, Tuvalu, United States, Vanuatu, and Vietnam.

Australia’s entry-into-force date’s per country for FTAs

The following are Australia’s free trade agreements (listed with the entry-into-force date).

What resources are available to support Australian businesses navigate FTAs?

DFAT’s FTA Portal is a comprehensive resource for exporters, and importers of goods and service providers looking to explore the benefits of Australia’s current free trade agreements and how to apply for preferential treatment under those FTAs.

You can access the FTA Portal at ftaportal.dfat.gov.au.

Another great resource is the Free Trade Advantage Online platform. The Free Trade Advantage online platform brings together a range of practical advice and resources to help Australian businesses access the benefits of Australia’s FTAs.

Filled with videos, animations, interactive quizzes, and a glossary to explain all the technical terms – Free Trade Advantage is designed to help new and experienced exporters alike navigate the FTA process, making sure Australian businesses make the most of all the benefits FTAs have to offer.

There’s also a range of business case study videos, webinars and other resources available for sharing and creating tailored FTA learning journeys.

Check out the useful links above & If you need further assistance with your individual circumstances please feel free to contact the PFS team anytime!

How to choose between Sea or Air Freight Forwarding

Whether you’ve just started your first business or have years of experience, selecting the right type of freight forwarding for your company can be a stressful process. While it’s easy to think in black and white when reviewing between sea or air freight, it’s important to us at Personalised Freight Solutions that every business has the right information to make the best decision for them – especially, in logistics where changes can occur instantly  and have a significant impact on your business positive or negative.

We wanted to share our knowledge and experience when choosing between sea or air freight, as often new clients come to us only possessing rote knowledge which doesn’t take into account the context of their requirements and the wider environment. The most effective way we thought to share this information at a general level was to cover frequent questions that were asked, which are related to; cost, reliability, flexibility, fastest, safest and if we had to pick only one means of transport – what would we pick?

What is the cheaper option between Sea and Air Freight?

Most often sea freight is the cheapest option for companies to choose when selecting a freight carrier type – but this is often because there are a greater range of container types and has the ability to transport large quantities or bulky items. Sea freight is charged per cubic meter for LCL options or  per container rate for full containers. Airfreight is either based on the actual weight or volumetric weight (the space the cargo takes up) – whichever is greater, which is called the chargeable weight.

What is the more reliable option between Sea and Air Freight?

Reliability often depends on the season because of the changes in demand, rather how long of a delay are businesses impacted by freight types. When delays occur with air freight, whether there’s a missed flight or a delay due to weather – typically, you can expect another flight within the next day or two. In comparison to sea freight, which if your cargo misses the cut-off date for a departing vessel or the ship is delayed in meeting a transhipment vessel – you can expect a delay by up to week or more. Where we have seen this in full impact, was during COVID  lockdowns for a lot of countries through 2020, sea freight then became the more reliable option as there were less flights during this time.

What is the more flexible option between Sea and Air Freight?

Sea freight gives greater flexibility in referring to shipping container options when transporting – air freight, unfortunately, due to higher regulations has stricter policies and procedures in place. The impact of these stricter policies and procedures impact what can be transported, whether it’s restricted all together due to  it’s bulky size or the type of commodity the item  is.

 What is the fastest option between Sea and Air Freight?

If you require your item yesterday and it’s not bulky (leaving shipping as your only method of transport), air freight will enable you to receive your items ASAP. Unfortunately, if you have bulky items and you need these products to be transported ASAP you still are (in some circumstances, depending on what you’re transporting) able to  use air freight but it is likely that you would have to charter an entire plane – a path which is rarely taken due to the prohibitive cost associated with such an activity. It will all depend on the commodity and actual weight and dimensions of your cargo.

What is the safest option between Sea and Air Freight? 

Air freight is typically seen as the safer option when compared to sea freight, because of the high regulations associated with planes and air travel (in addition to the shorter time period of travel, which indicates less time for interferences to occur).

The verdict – is Sea or Air Freight better? 

When it comes to selecting sea or air freight, there isn’t a single black and white answer on which freight option is better – as with most decisions in both business and life, it’s circumstantial. If you’re stuck deciding what’s the best option for you and your business, we encourage you to call our team at Personalised Freight Solutions to answer any of your questions or to click below to find out more about our air and sea freight service offering.