Sea Freight
Sea Transportation
International transportation is considered a part of business, and one of its methods is sea transportation, which is carried out by large cargo ships with special equipment and features. Providing efficient and useful services in this type of transportation will be an effective role in successful international business. Also keep in mind that 90% of the international trade of any country is dedicated to the movement of goods by sea. Sea transportation is considered the most effective way to move goods at the global level, and every year in the world, it carries out the largest percentage of goods transportation. This method has many advantages compared to other international transportations.
One of the international maritime shipping methods is the NVOCC (Non-Vessel Operating Common Carrier) method that we provide international transportation FCL services in addition to renting containers based on freight forwarding facilities. In less- than- container- load or LCL, your cargo will be combined with other shippers’ cargos in one container. LCL is suitable solution for small cargo which due to its small number or size and low weight, does not need the full space of a container. Thus, the shipper only has to pay for the space or capacity (in cubic meter) of the full container that is given to their cargo.
Benefits of Ocean Freight Shipping
Exploring maritime routes have been the first and foremost thing that connected the world. Transportation of cargo, including hazardous and flammable materials, has become convenient and safe through ocean freight. Sea freight offers shipping of products, raw materials, and personnel cargo at a relatively low cost. No wonder, about 90% of global trade happens via ocean freight.
• Low Costs ;
It’s not a secret that businesses and companies maintain low costs as much as possible so that they can focus on other core business transactions. That is why a sea freight service is the best option for you if you want to pay less for a reliable and credible freight forwarding provision.
• Safe Option ;
According to statistics, there are lesser chances of accidents if you choose to opt for a sea freight service, compared to the other freight cargo transportation modes.
• Eco-friendly ;
Business entities would know that choosing sea freight services would mean that they are not contributing to environmental problems. Shipping your goods through cargo ships emit less polluting gases compared to other modes of transportation. This means it’s not only cost-friendly but eco-friendly as well.
• Admirable Efficiency ;
You can ship any quantity of items in a single trip via sea freight. The choice is yours to book a Less than Container Load (LCL) or a Full Container Load (FCL) depending on the size and volume of the shipment. This evades any sort of limitation concerning the cargo. Other shipping methods lack this efficiency.
• Flexibility of Shipment ;
The client can choose to ship the entire volume together or part by part. Ocean freight offers this flexibility to opt for an economically viable option.
• Safe Transportation Methods ;
One of the top benefits of ocean freight shipping is that you can carry hazardous cargo via ship safely. Observing high safety standards and meticulous precautions, ocean freight guarantees the safe shipment of dangerous materials. Accidents during ocean freight are minimal compared to other modes of shipping. Therefore, sea freight is the internationally approved means for transportation of almost all legally approved items.
Methods of Freight Shipping
There are three general methods in sea transportation:
1- Direct shipment
2- Cross-Staffing
3- Transshipment
1- Transportation of the goods by the Direct shipment method :
Direct Shipping, as the name suggests, is a method of delivering the goods directly from the supplier to the customer. As said, whenever a product is shipped directly, the seller only passes the delivery information to the supplier, and the rest is then managed by the supplier.
Practically, the cargo & shipment will go right from the factory directly to the customer without any stopping in the supply chain that could be a warehouse or any seller facility.
2- Transportation of the goods by the cross-staffing method :
when the cargo is shipped by two different shipping lines from the origin to a third country and from there to the destination, There is a need to change the shipping line in a third country, in which the cargo must be unloaded from the container of the first line and loaded in the container of the second shipping line, which is called cross-staff operation.
Cross-stuffing is one of the best and most common methods of transportation.This method is great when there are no direct shipping lines from the origin to the destination or the shipper of the goods insists on delivering the purchased goods in a country other than the origin country.
In this section, we will explain the reasons for using this method in cargo transportation.
what are the reasons for using cross stuffing in Sea / Ocean freights?
As we mentioned at the beginning, we use cross-stuffing for many reasons.
• sometimes there is no direct service to destinations.
• when the origin country is under sanctions.
• seller insists on delivering the purchased goods in a country other than the country of origin.
• Due to port restrictions & space availability.
• Using the cross-staff method to circumvent sanctions
there is a need of third country to circumvent the sanctions with the cross-staffing method. The third country should not have any special restrictions, and the destination country should allow the ship to dock there. The countries that are under sanctions should transfer their cargo to the third country and load the cargo on a new vessel using the cross-staffing method so the destination countries will not realize the true origin of the cargo. so the vessel can dock and unload at the destination without any problem. This is a useful method for countries that are under political sanctions. Containers and ships that operate in logistics transport all have a unique code that identifies the identity of the ship and cargo. Due to political and economic sanctions, some countries do not allow ships from a specific origin to dock.This is where the cross-staff transfer method comes to the aid of merchants so that they can export their goods anywhere they want or supply the products needed by people from anywhere in the world.
This method is also usable for the import of goods, in such case customer has to order the goods through a third country, and the ships will load the cargo from the origin and deliver it to the third country, and then from the third country to the destination
3- Transportation of the goods by the Transshipment method :
Transshipment usually occurs when there is no direct trade route between the export and the import location.
All ports around the globe are not directly connected. This is where transshipments help the shipping business. It’s also a very cost-effective option as compared to direct shipments. Apart from using transhipments, you can also lease containers at best rates to reduce the shipping cost.
What is transshipment?
Transshipment (also known as trans-shipment or transhipment) means unloading cargo from one vessel and loading it into another to reach the final destination.
During transshipment, the containers are unloaded at the site, reloaded onto a different vessel, and transported to the endpoint. This intermediate location or the point of shipment transfer is known as the transshipment hub.
Transshipment process
The transshipment process involves several key steps in the shipment journey. Initially, the cargo is dispatched from its country of origin. Subsequently, it’s forwarded to a transshipment centre, acting as an intermediate hub. Upon reaching the transshipment centre, the cargo is then directed to its ultimate destination port. Once the cargo reaches the designated port of arrival, it marks the completion of the transshipment process. Take a look at the image below to get a better understanding of this process.
What are the reasons for transshipments?
Transshipment is a very common process in the shipping industry. Here are a few reasons why it happens:
• No direct connection between ports:
One of the main reasons for transshipment is when there is no (or only an expensive) direct air, land, or sea link between the port of origin and the port of destination.
• Challenges with large vessels:
Another reason why freight forwarders choose this process is when the port of destination is not available because of low tide or if the port is not able to accommodate mega vessels In such a case, the containers are transferred to a smaller vessel to arrive at the destination.
• Cost savings:
Irrespective of the ports, direct shipping is usually costly. The transshipment option may take longer but ensures minimum transportation costs for freight forwarders.
• Intermodal transportation:
intermodal transportation is a combination of two or more modes of transportation in order to move cargo from one place to another. Such instances also call for a transshipment. For example, you may have to transport a shipment by rail from point A to B and via sea from point B to C.
• Political or legal restrictions:
It may also be necessary to avoid legal or political restrictions on certain types of shipments. Hence, it’s used to bypass trade embargoes or other regulations that restrict direct shipments.
Top 5 busiest transshipment ports in the world:
Difference between direct shipment and transshipment
Take a look at the table below to understand the difference between direct shipment and transshipment.
| Direct shipment | Transshipment | |
|---|---|---|
| Meaning | The container is shipped directly from one port to another through one vessel | The container goes through a transfer of vessels at a transshipment port and is thus, shipped through two vessels |
| The number of ports | Two: The port of origin and the port of destination | Three: The port of origin, port of transshipment and port of destination |
| Cost | Relatively more expensive | Relatively cheaper |
| Time | Comparatively shorter duration | Comparatively longer duration and may be delayed |
Difference between transshipment and transloading
Being part of the shipping industry, you might also have heard the term transloading. Although it sounds similar to transshipment, there is a difference between the two.
Transshipment and transloading both refer to the transfer of goods from one form of transportation to another. However, transloading refers to the transfer of goods between different types of containers, while transshipment refers to the transfer of cargo from one ocean vessel to another while remaining in the same container.
Vessel Chartering
Vessel chartering often called ship chartering is a contract between the ship owner who hires out the ship and the Cargo owner who charters the ship for the transportation of goods. The treaty between the charterer and ship owner is known as the ‘charterparty’. The agreement covers the cost, tenure and terms and conditions.
A ship can be chartered in three different ways;
• A voyage charterer
• A time charterer
• A bareboat charterer/demise charterer
A voyage charterer
A voyage charterer is a common practice in which the ship is hired out for a single voyage between predetermined ports. According to this agreement, the charterer pays the shipowner on a basis of per ton (based on the agreed quantity) or lump sum (regardless of tonnage), while the shipowner covers all operational costs of the ship, including crew, fuel, and port costs.
A time charterer
A time charter is the rental of a vessel for a specific period of time. In this case, the owner still oversees the ship, but the charterer chooses the ports, decides the itinerary, and maintains complete operational authority over the ship for the life of the agreement. He pays commissions, a daily hire fee, port taxes, fuel costs, and cargo handling costs.
A bareboat charterer/demise charterer
In a bareboat charter, also referred to as a demise charter, the charterer has total control over the boat. Except for the capital cost of building the vessel, which is the owner’s obligation, the charterer is responsible for all costs, including fuel, labour, port fees, and insurance.
The charterer is in charge of the vessel’s financial and legal obligations. Contracts for long-term charters that extend for many years are permitted under the demise clause.
What are the benefits of vessel chartering?
• Greater adaptability & risk management:
The main benefit of chartering a ship is flexibility. Any business that has to be able to scale up or down in response to demand will find chartering to be a desirable choice. All businesses can reduce their risk exposure to the macroeconomic environment by using chartering. Due to the short duration of charter agreements, the company employing the vessel is not burdened by the cost and overhead of owning a vessel during a protracted economic slump.
• Reduction of tax and debt:
Most often the income statement classifies charter payments as an expense, enabling your company to deduct the full cost of the payments from income and lowering the net cost of the vessel. By giving the charterer the tax benefits, which in turn lowers the interest rate and further decreases your net cost, chartering may also enable you to strategically manage your tax status. Due to the minimal upfront fees, most businesses are able to pay for chartering without using their current lines of credit.
• Enhanced cash flow & strengthened balance sheet:
Typically, only the first payment is expected at the beginning of a charter agreement, allowing you to save money for investments in other areas of your company. When credit is required, the company is more appealing to traditional lenders because a charter is not regarded as a long-term debt or liability and does not appear as debt on your financial statement.