Sea freight is the movement of goods (freight) by seagoing vessels or ships. It is the most common type of logistics transport. Essentially, 90% of the international trade volume is transported overseas. This had been as a resultant effect of many advantages retained over other modes of transport. Through its vast impact on our livelihood from the foods we eat, clothes we wear, the shoes at our feet, mobile phones for communication, the coffee we drink on the train to the appliance we use in our homes, the books we read through to the cars we drive, even the fuel for the cars, sea freight continue to supply whiles the world shops.
Hence, it becomes easy to witness or experience its impact on our daily lives.
Not only is it more cost-effective than either land or air freight, but it is also ideal for transporting bulky and heavy goods. To further emphasize its prudent, sea freight is suitable for products with longer lead times or less urgent. On the contrary, the movement of cargo by Sea or ocean has a longer lead time or delivery time. In addition, bad weather can ruin predetermined schedules, and sometimes problematic to monitor the exact location when goods are in transit.
ACTORS IN SEA FREIGHT
The actors in Sea freight include; shipping lines, container lines, freight forwarders, customs brokers, warehousing facilities (consolidation, bonded & non-bonded), and terminal operators, among others.
The shipping line is the Company that operates (owned or leased) ships on which cargoes are transported between the Port of load and Port of discharge. In other words, a company whose main line of business is ownership and operation of ships. Examples include Maersk line, Ocean Network Express (ONE), COSCO Shipping, Mediterranean Shipping Company (MSC), CMA CGM, Evergreen, Yang Ming, and Hapag Lloyd.
The container line is the Company that owns the containers in which the goods or cargo are stowed or stuffed. This is a dedicated company that is into shipping container manufacturing. Chinese companies occupy an 85% share of global shipping container manufacturing. China International Marine Container Group Company Limited (CIMC), Singamas container Holdings Limited, COSCO Shipping, Daikin transportation and Refrigeration Systems, China Eastern Containers (CEC), CXIC Group Containers Company Limited, and Maersk Container Industry, among others, are all examples of global giant container manufacturers. Often, the shipping line and the container line are the same Company. However, there are shipping lines that manufacture their containers for global container shipping. Such shipping lines include COSCO Shipping, Hapag Lloyd, and Maersk line, among others. Thus, the intersection line of business.
A freight forwarder is a company or individual that organizes the export and import of goods. They contract with one or more carrier(s) and arrange the intermodal shipment of the cargo to its destination. They are the exporter’s or the shipper’s primary point of contact during the export process. Even though they do not move goods themselves, they play the role of an expert in the logistics network to ensure that cross-border intermodal transport goes through without a glitch. Due to their expert role, they classically review the commercial invoice, packing list, export declaration, bill of lading, sea waybill, and other documents required by the carrier or country of export, import, and transshipment. Freight forwarders advise shippers on the “best” (thus, cheapest, quickest, or safest, depending on the shipper’s priorities) route to take, mode of transport, packaging, insurance, and security issues. Freight forwarders are occasionally known as “forwarding agents,” “non-vessel operating common carriers” (NVOCCs), or merely as “forwarders.”
A Customs broker advises an exporter on the requirements to export goods to their country of destination, as well as on the formalities to follow for customs clearance. Unlike a destination agent, a customs broker only gives advice and does not perform any formalities themselves. Unfortunately, customs brokers are recurrently unlicensed. As such, it is essential to carefully confirm the quality of the services they offer and what they include in their prices.
TYPES OF SHIPS AND CARGO
A ship is the primary mode of transport under Sea or ocean freight, and we are served by over 61,000 ships docking at 6000 ports worldwide. The type of ship used depends on the type of cargo transported.
Container ships are used for containerized cargo, which boasts a system of cell blocks designed to handle intermodal, self-styled shipping containers, or ISO containers. Containerized cargoes have numerous advantages over other forms of cargo. For instance, they can be transported more easily intermodally, and high protection of cargo during transit facilitates efficiency in cargo handling. They can be transported as Full Container Load (FCL), meaning that the whole container is intended for one consignee or Less than Container Load (LCL), which also means in practice as the entire container is designed for more than one consignee.
Tanker ships or liquid bulk carriers are used for liquid bulk such as oil, water, wine, or chemicals. They come in many different sizes, with the giant tankers weighing several tons. These ships transport hundreds of thousands of crude oil and other significant liquid bulk from the production site to the consumption location. Precisely, from low demanding areas to high demanding areas. They are characterized by a common feature of pipelines and valves crisscrossing on their belly connecting to various segments of the tank under deck.
Roll-on Roll-off (RORO) ships are mostly for vehicles or cargoes that are already on wheels. It is safer and much faster to simply drive cars onto ships than use cranes to hoist them up into a cargo hold. Once the vehicles are aboard, they are braced to the ship’s deck to keep them from moving while the ship is at Sea. In the transportation of heavy construction and mining equipment, RORO ships have proven to be the most suitable type of ship to be deployed.
A dry Bulk carrier is a type of ship used to carriage dry bulk or large unpackaged cargoes such as coal, ore, grain, cocoa, sugar, bauxite, magnesium, clinker, sand, and other similar loose products. They are made of different types based on their cargo-carrying capacity. The various types include mini-bulk carriers whose carrying capacity is under 10,000 dwt, Handysize or Handymax, Supermax and Ultramax with carrying capacity of 40,000 to about 67,000 dwt, Panamax and Post-Panamax carrying 60,000 to 110, 000 dwt and lastly, capsize which has a cargo carrying capacity up to 400,000 dwt. Note dwt is the abbreviated form of the deadweight ton.
General cargo ships are ships that are used to carry or transport dry breakbulk cargoes such as chemicals, food, furniture, footwear, and garment. This type of ship was more predominant in the ’90s when many workforces were employed for loading and discharging cargo. The evolution of containerization became a threat to its dominance and has gradually faded.
Per the official definition of passengers, ships are ships that carry more than 12 passengers. As such, these include ships of many different ranges and sizes, going from small yachts to massive cruise and holiday ships. Occasionally, some passenger ships can be used to carry loose cargo.
Documents used in sea freight
As a common feature of international transport, there is a need or requirement to complete several specific documents in a sea freight shipment. The filling out of most of these documents is not done or completed by shippers themselves. The expert knowledge and experience of freight forwarders take care of most of them, while the shipping line issues others. Nonetheless, it is a virtuous idea for shippers to know and understand the documents that are involved in the export/import process. As such, if they are called upon to review and/or confirm their accuracy, they will have the capacity to do so. Here, the focus will be on only the key ones.
Shipping Instructions: The shipping instructions are the sea freight documents that shippers use to furnish their shipping lines and/or freight forwarders with the utmost details of their goods; here, the shipper indicates instructions for the shipment. The timing for setting out the instruction is normally soon after the initial booking, thus, when the shipping line has confirmed the date and ship on which the cargo will sail. Even though shipping instructions are habitually given simply utilizing telephone conversation and, as such, are not a “document” per se. Hence, it is recommended that it is always a good idea to confirm everything in writing. It is therefore imperative for shippers to note that providing clear and detailed shipping instructions is crucial. Any mistake in the shipping instructions could lead to mistakes by the freight forwarder or the shipping line, which could compromise the intended purpose of the entire shipment.
Master Bill of Lading(House Bill of Lading): A document issued by a carrier, or its agent, to the shipper as a contract of carriage of goods. A bill of lading serves three purposes: It is a confirmation that the carrier has received the goods for shipment, provides evidence of a contract of carriage, and serves as a document of title to the goods. The B/L specifies the named person or delivery of the goods per the instructor’s instructions or the terms of the delivery of the goods to the bill of lading holder. Shippers are issued with a Master Bill of Lading (MBL) by the shipping line if they are exporting goods as an FCL, breakbulk, or bulk shipment, or with a House Bill of Lading (HBL) by the freight forwarder or NVOCC if they are exporting shippers’ goods as a non-containerized or LCL shipment.
Note that while MBLs and HBLs are both technically title documents, the ownership of HBLs is, in practice, very difficult to transfer. Bill of lading can be of different types depending on the sales contract between the consignor and the consignee. Examples of Bill of lading include; bearer B/L, Order B/L, Named B/L, Straight B/L, Clean B/L, and Combine transport B/L among others. Generally, the basic information contains in a Bill of Lading includes the following items:
(1) Name, mark, package of the cargo, or numbers, weight or volume, transporting specification of nature of the dangerous cargo
(2) Carrier’s name and operating place
(3) Ship’s name
(4) Shipper’s name
(5) Consignee’s name
(6) port of shipment and time for accepting cargo
(7) Port of discharge
(8) Place for receiving and delivering cargo added in the multimodal transportation B/L
(9) Time, place, and numbers of issuing B/L
(10) Payment for freight
(11) Signature of the carrier or agent, copies should be stamped ‘copy –non –negotiable.’
(12) Qualified by suitable any remarks about defective order or condition
(13) Number of original bills of lading issued in the set;
(14) Terms of contract (back)
Sea Waybill: Interestingly seaway bill fulfills the same practical functions as a bill of lading, which confuses many people. However, the sea waybill does not confer any title to the goods. In other words, a seaway bill is not a document of title to claim ownership or cargo delivery, which is the most momentous feature of a bill of lading. As such, it is quicker and easier to use. Sea Waybills are often used if there is a well-established trading relationship between a buyer and a seller or in transactions in which ownership does not change hands, such as between different divisions of a single company.
Clearance Documents: After the shipper has provided the shipping instructions, the freight forwarder handles the shipment arrangements on their behalf. The clearance documents are a set of mandatory documents that will facilitate the clearance (approval) of the shipment. This includes the port entry document, wharfage fee approval document, commercial invoice, packing list, cargo manifest, customs, and other regulatory approval documents, as well as any special declarations for products such as dangerous goods and perishable items. In the case of a dangerous “Dangerous Goods, note or declaration” – DGN/D will be required. Note that the documents listed above are not the constant set of documents needed in every shipment; documents will vary depending on the type of consignment and the countries involved.
So, you see, there is a lot at stake in sea freight, and if the world was a heart, sea freight is the arteries. With the Sea occupying 70% of the earth, the enormous impact of sea freight should not pull a surprise. Its resilience to disruptions and environmental uncertainties is proven to be astonishing. Imagine there was no sea freight during the covid-19 pandemic. When millions of services were switched off, sea or ocean freight kept moving the things we love using. When sea freight hiatus, the world stops moving.
If you think this is hype, the Evergreen-Ever Given blockage of the Suez Canal is the indication. The disruptions in global supply chains are more than enough to discuss further. An estimated $400 million wealth of cargo was delayed per hour for 5 days of blockage and 4 days for clearing backlogs when a choke point that facilitates only 15% of global trade was halted. In fact, according to Jan Hoffman, chief trade and logistics branch of UNCTAD, the EVERGREEN EVER GIVEN blockage in the Suez Canal is between $2,195,224,130 and 3,658,706,890 cost to trade only without follow-up to logistics, insurance, repair, emission among others.
Sea freight makes the world go; it facilitates trade flows, fuels business growth, and the building economy.