The mode of transportation you use is an important decision when planning your freight shipping process.
Several factors go into choosing the most convenient and cost effective methods of freight transportation, you must consider the costs, the urgency of the shipment, the value of your goods as well as the size and weight of the goods being shipped need to be evaluated before determining the method of transportation.
In this article, Stockwell International want to help you determine and understand, which mode is best to transport your cargo and freight!
Ocean Freight Shipping
Seaborne trade accounts for around 90% of global trade, 1687 million tons (2015 estimation) were carried in around 177.6 million containers (2015 estimation) covering 998 billion ton-miles (2016 estimation), per UNCTAD.
There are several varieties of goods that cannot be or is not cost-effective to move by other methods of transport than sea because of size or volume.
Ocean freight is less expensive, but the downside is a longer travel time. An additional advantage of ocean freight is while size and weight may be an issue for air; it is not for ocean freight.
Ocean freight is utilised significantly for the movement of bulk goods for example agricultural-products, coal, iron ore or crude oil and petroleum. Larger, odd-shaped cargo like engines or propellers tend to move via sea as well, varying on how urgent the delivery time is. Ocean freight is also used to transport high volume and heavy cargo such as minerals, metals, ores, steel coils, etc. which would be impractical to move by air freight.
In recent years, businesses are now highlighting the emphasis of the impact shipping has on the environment. .Air freight produces a higher amount of polluting gases with less space capacity compared to sea freight which with IMO 2020 is considered a much greener transportation mode with a higher carrying capacity.
Key benefits of ocean freight include
- Suitable for wide range of products with long lead times
- Large volumes. A single, ultra-large container ship can carry +/-20,000 twenty-foot equivalent units (TEU)
- Most environmental friendly among all modes of transport
- Economical. Liner shipping is the most efficient mode of transport for goods
- Extensive coverage around the world
- Multiple carrier options for the shippers
Over the next 15 years, as the world GDP grows, there will be a demand for higher value goods. As per a world air cargo forecast, there will be a proportionate growth in the value per ton of total traded goods around the world. To meet the demand for growth, world air cargo traffic is forecasted to grow an average 4.2 percent per year.
Shipping by air is a critical mode of transport. It serves markets and supply chains that demand speed. As we have seen during the pandemic of COVID-19 – while vessels slowed down businesses turned to air freight for their import needs. Space diminished so quickly that air freight was then only limited to essential cargo such a medical items.
Another great example of this was in 1997 when Apple started innovating on the details of supply-chain management. At the time, most computer manufacturers moved cargo by sea, a far cheaper option than air freight.
Steve Jobs took advantage of air freight and used an advanced strategy. He spent $50 million to buy the available holiday air freight space as an insurance that the company’s new, iMacs would be available during Christmas season giving them a huge advantage over their competitors.
Other industries such as the automotive and retail industry also utilise air shipment to ship ‘just-in-time’ (JIT) for inventory stocking. JIT allows retailers, manufacture lines to place order fulfillment based on demand. It provides greater flexibility and reduces inventory and storage costs.
We will see a change in this in the near future due to COVID-19, as companies now look to different locations for goods – an influx in pandemic stocking of inventory will change they way we look at JIT inventory replenishment.
Also, perishable goods like foods, flowers, and pharmaceuticals also tend to use air freight to take advantage of shorter transit time. Another positive for air freight is that there’s less handling of cargo overall, so the likelihood of damage is far less.
Air freight also has its drawbacks because of being one of the most expensive transportation modes due to the requirement of speed and the fuel that is needed. It also has size and weight restrictions. Governing bodies restrict what can and cannot be transported by air, such as oddly shaped or very large items are usually more appropriate for other modes of transport.
Key benefits of air freight include
- Quick transit
- Less handling of cargo
- Less documentation
- Reliable arrival and departures
- Enhanced level of security for your cargo
An alternative method of transport which is also considered a more environmentally friendly option is rail. Trains burn less fuel per ton-mile than road vehicles and a train and a train can have as many as a 100 carriages, and it only needs one driver. However, there are some extra costs which are incurred in a rail journey: at each end of the rail transit, a road delivery will be needed, and there will be a lift cost to transfer the container between the train and the road vehicle.
Generally, longer journeys are likely to be less expensive by rail, and journeys shorter again are even less expensive by road. Point of cost neutrality is regulated by several factors which are route and commodity specific, but generally, the point of cost neutrality can be anticipated to remain in the range of 130 to 150 miles.
In 2015, the first freight train carrying ISO freight containers from China arrived in the Port of Rotterdam in 18 days, when the normal transit time is about 44 days at sea. The movement of containerized freight by rail from China to logistics hubs in Europe has seen as a significant step in the development of trade between the two continents.
If you can set up an effective planning, rail is a comparatively quick mode of transport taking only 20 days to China. In addition, moving by rail also has the advantage of all containers being transported to the location in one go, while being environmentally friendly as a trains release less CO2 than a plane.
Key benefits of rail freight include
- Reliable transit times and schedules
- Railroads are the most efficient form of land transportation. One train can haul the equivalent of over 400 trucks
- Fast and cost-effective deliveries over long distances. Typically over 500 miles
- Traditionally, rail has a strong safety record.
- Helps in alleviating road congestion, thus lowering emissions
Road freight is one of the most popular modes of transportation. It is commonly used in continents such as Europe, Africa, and North America. Because it is a single customs document process it is a smooth movement of cargo across various states and countries.
Road freight provides several advantages over other modes of transportation such as
- Quick and scheduled delivery
- Local, over border, long or short haul deliveries even in rural areas
- Flexible service
- Saving in Packing Cost compared to other modes
- Track and trace of cargo and truck
- Complete door-to-door service and it is one of the more economical means of transport
However, truck transportation is limited to what it can carry by the size of the vehicles used and by size and weight restrictions. Road transportation can also be easily affected by weather, road conditions and traffic.
Another option that freight forwarders specialise in is multimodal solutions – the use of several modes of transport.
Multimodal is the arrangement of several forms of transportation such as sea, road and rail which will allow the customer to cost and time-effectively manage deliveries from start-to-end, ensuring optimal treatment and proficiency.
Cross region rail network combined with truck can offer savings of up to 65% in comparison to air freight costs while offering transit times of up to 40% faster than standard ocean freight.
Sea-Air is another example of multimodal transport. The service is considered less expensive than air and quicker than ocean service. The alternative resolution to air or ocean, Sea-Air offers the worldwide transportation industry time and cost savings as well as eco-friendliness.
Sometimes using this mode of transport helps to avoid demurrage fees.
Key benefits of multimodal transport include
- Cargo can be moved to any part of the world using multiple modes of transport
- Reduces the distance for the goods between the manufacturer and consumer
- Customers can deal with one entity to handle all modes of transport under one document
- Efficient and cost-effective delivery options
What mode of transportation should you use?
There are various choices for transporting your cargo, and there may not be one solution for your transportation needs. Each mode of transport has its pros and cons. Prioritising your needs, and comparing costs is important when planning your shipment and choosing the best mode of transport.