In our last post, we looked into the future of container shipping. To fully understand the trend and expectation of its future, we highlighted the history of the container shipping industry and how it has changed other industries for global trade with bringing in low cost shipping options with the introduction of both LCL and FCL freight, which stands for less than container load (LCL) and full container load (FCL) freight cargo.
The possibility of low cost shipping is available via the likes of Twenty-foot Equivalent Units (TEUs) which is the means by which container capacities are measured that allows for large amounts of cargo and goods being shipped across seas, with weekly departures makes trade and movement of goods easy.
FCL Low Cost Shipping
What are FCL shipments, you ask? They are simply “Full Container Loads” of twenty foot or forty foot containers, which allows for large quantities of cargo goods to be transported and the choice for global traders with manufacturing delivery deadlines to other countries. You may also take up this FCL low cost shipping option if you are looking for relocation, as in, if you need to pack up your household items or business items, everything from chairs to desks, and equipment and even vehicles. You can opt between the 20ft and 40ft container based on space required for all your goods. The process will involve a container being sent to the address for loading by the shipper themselves (assistance can be provided by the freight forwarder if required on case-by-case basis).
LCL Low Cost Shipping
So, what are LCL shipments as a low cost shipping option compared to FCL? As we said before, LCL stands for Less than Container Load. It means that that you are have less than a full container load worth of goods. You would rather not opt for a full 20ft/40ft container and pay the fees for the same. Thus, what happens is, you choose the sharing option. Either a 20ft/40ft, will be shared between other shippers/parties and want to put to use this low cost shipping option. The process is different to that of FCL. Where the goods by each shipper need to be handed over to the freight forwarder for what is called consolidation of cargo into the container. It’s a popular choice due to being a low cost shipping option over air freight.
With Transco Cargo, being your global freight forwarding partner, you are able to make the best use of low cost shipping with LCL and FCL freight with ease,. We provide turnkey services from door to door delivery. You can enjoy the benefits of low cost shipping freight solutions with Transco Cargo through our global network of shipping partners and shipping lines.
In the 1960s, there was much upheaval with regards to the container shipping industry, with the United States launching Container Boxes it with also the first purpose built shipping lines meant to carry them across the seas and oceans. That’s when stakeholders in the industry had to rethink their strategy, bringing in new ideas to make the shipping industry bigger and better. Now, the freight industry is going digital, with big data and IoT (internet of Things). Thus, we now look at the future of container shipping from this era.
Global trade was essentially founded in the 1800s with sea freight taking dominion with the various blooming empires in the world and the innovations of the Industrial Revolution. With it, transport costs were reduced and not to mention, with specific countries specialising in various production, global trade was at a peak. However, with the onset of WWI, the Great Depression, and WWII, global trade took a momentary leave of absence but yet, global trade growth picked up right after and steadily growing, especially with the help of container shipping which was introduced in 1956.
With the global trade increasing, the use of container shipping for sea freight has steadily grown as well, with more of a share of the industry taken away from the likes of breakbulk cargo, also referred to as non-containerised cargo. Whilst the growth slowed down during global financial crisis, since 2012 traded goods including non-containerised cargo has steadily increased with the Global Domestic Product (GDP). The containerisation ratio which is the measure of seaboard cargo transported in container has stabilised at 13%, which showcase a positive in the future of container shipping.
However it should be noted that number of trends are causing the multiple of container to trade growth over the GDP growth to slow down. These include the following;
- Growth in Emerging Markets – China’s integration into the global economy contributed greatly to trade growth in manufacturing, and in 2015 it contributed to the four fold increase movement of 20-foot- equivalent units (TEUs) from the year 2000 (from 13 million TEUs to 52 million TEUs), thus something to look forward to in the future of container shipping.
- Changing Manufacturing footprints – With the changes in the manufacturing sector with focus on digital technologies, geographics of where production used to take place are facing new changes. This has caused “reshoring” in certain areas with labour often being replaced by new manufacturing technologies. However, this is also dependent on the country or region in question and not entirely dependent on labour costs.
- Dematerialisation of Demand – With societies and regional economies getting better, the demand for goods is overcome by demand for services, thus you need to look into the regions and how they are approaching dematerialisation and how that will in turn change the future of container shopping due to low demand for goods.
- Uncertainties in Geopolitics and Policy – With changing temperatures in geopolitics and the various policies that have promoted global trade in the past via trade deals and more. However, with many stalling due to politics, the future is dependent on the agenda of the politicos of controlling countries.
Over our last couple of blogs, we focused on going through each and every step in the how goods are internationally shipped from the shipper all the way up to the point of the Destination Port. In This blog, we look at the last few processes involved in the last leg of our guide to sending international shipments.
In our previous blogs, “Guide to International Shipping”, and “International Export Shipping”, we took you through the Shipper, International Shipping Company, Origin Agent, Freight Forwarder, Consolidating Warehouse, Export Port, Shipping Line, Container Line, and the Destination Port. In the final leg to our Guide to Sending International Shipments, we look at the Customs Bonded Warehouse, and the Destination Agent to clarify how these processes, procedures, and players play a role in the grand scheme of sending international shipments. Furthermore, we look at how some countries, “Brokers” are evident and may attempt to swindle you, especially in small shipments.
The Customs Bonded Warehouse
This is the destination warehouse in which the goods imported into the destination country is stored awaiting customs clearance. The processes and procedures of each country vary and you are able to find out what they are via the freight forwarder you opt for. You should be aware about the time that customs clearance takes as well as any other charges associated.
The Destination Agent
This entails the company in the destination country that will handle the customs clearing procedures, along with port transactions, and delivery of the cargo to the destination address. Often, the international shipping company or freight forwarder will handle the proceeding, especially as there may be different import laws and regulations that need to be settled.
A Broker is essentially a person who manages sending international shipments but does nothing else. You must not confuse a Broker with the likes of a Freight Forwarder who may subcontract the Origin Agent or Destination Agent as they are carrying out vital shipping procedures. In many countries, brokers who manage small shipments such as this are considered illegal but there are no means of regulating them. It’s very important to know that a broker has no financial stability and even if they quote you to manage the shipment and whilst the quote may appear to be the lowest out there, you may end up paying higher due to costs that have not been accounted for which may lead to your goods not being released/cleared.
In one of our previous blogs, “A Guide to International Shipping”, we talked about the procedures, processes, and players in the shipping industry from the shipper up to the consolidating warehouse. In this blog, we continue talking about the procedures, processes, and players in international export shipping, from the export port to the destination port.
The Export Port
The Export Port is the physical location where the container filled with export cargo goods is brought. It should be mentioned that it is already loaded and sealed at the consolidating warehouse, and ready to be loaded onto the ship. It should be noted what is of importance is that the export port fees or terminal handling charges, which are normally referred to as either “Origin Port Fees” or “Origin Terminal Handling Charges (OTHC)” are usually included in the shipping quote sent to the shipper for international export shipping. There is usually no charge included that refers to “From Port” as your goods are transferred to the port from a warehouse already loaded into the respective shipping container. Furthermore they have been sealed and cleared by Customs authorities too. Thus, the only charge that may be present between the Warehouse and Export Port would be any transportation cost “from the Warehouse”.
The Shipping Line
The shipping line in international export shipping is the company that owns the ship in which the export cargo will be carried from its port of origin or export port to the destination port. They will in turn issue what is known as a “Master Bill of Lading”, also often referred to as a “Seaway Bill of Lading”. Whilst this process is done unbeknownst to you, it should be noted that there are certain rules and regulations that a shipping line possess which your freight forwarder will handle on your behalf. It should be mentioned that the Shipping Line is often also the Container Line, and they work on a highest priority basis whereby household goods are often considered the lowest priority.
The Container Line
Much like the shipping line, the container line is the company that possesses ownership of the containers that are holding the cargo in the international export shipping. They also rent out containers. The factor of ownership does not matter in your international export shipping process, but it is known to the freight forwarder.
The Destination Port
The Destination Port is the point in which the cargo is unloaded within the destination country. Usually, you as the shipper will not have any dealings with them though you will need to pay them the likes of “Destination Port Fees” or “Destination Terminal Handling Charges” much like that at the Export Port. Often your international export shipping quote will feature this.
What we look for when shopping for an international shipping company is clear but what you ever considered on what NOT to do when you shop for an international shipping company? We are here to help. Based on our industry expertise, Transco Cargo has been around for nearly three decades and thus, knows the ins and outs of international shipping quite well. So here are the things you should avoid when you shop for an international shopping company. Let’s get started!
One of the things to avoid is, shopping based on price. If you are looking for the lowest prices when you shop for an international shipping company, you should keep in mind, you may be opening yourself up to the possibility of getting scammed. Remember the Chinese proverb, “cheap things no good, good things no cheap”? It applies with international shipping as well, whilst you get the lowest quote in the beginning, you may open yourself up to more costs finally as “unforeseen” issues may pop up that will pad your bill substantially. Avoid going through these problems by opting for a reliable and reputable international shipping company such as Transco Cargo.
Make sure you DO opt for the visual survey. Whilst some company may tell you that you will know best, there may be many difficulties that could arise if you aren’t aware of the various industry know-hows like a reputable shipping company would. If you get a visual survey done before a quote, it will be an informed decision without unexpected issues arising. For instance, a visual survey pre-quote will allow us to see the location and the street that the goods will need to be loaded onto the container or truck from. By assessing the cargo that needs shipment, the mode of transport can be decided upon, as well as whether parking permits need to be applied for, and other factors that may need to be factored in based on the size and weight of the cargo for international shipping. Thus, if you come across a company that says they do not need a visual survey, you should hear warning bells. This is especially important to note if you are moving overseas.
Always, make sure you do not skin on the documentation given to you. Whilst international shipping companies are able to handle all your shipping needs, it’s important to read everything and ask questions. We at Transco Cargo are always here to help so that you are well informed.
When you are in the market for international shipping, knowing what to know goes a long way. In this guide to international shipping, we look at the various parties and points that make up the process, the steps and players at each step and more.
The Shipper – This is the person who is carrying out the shipment that is the one with the need to ship, i.e., you! Often you are also referred to as “The Exporter”, as the person who is exporting goods from the origin country, or even “The Importer”, as the person who is importing goods into the destination country. By being “The Shipper” you are accepting responsibility for the legal concerns of the cargo being shipped. This is very important in international shipping as it also includes import duties, paperwork, and any charges that may come up expectantly. You are always advised to know the rules and regulations of the country you are dealing with to avoid any issues, and set aside your budget for unforeseen circumstances or delays.
The International Shipping Company – The shipping company may undertake variety of functions, from overseeing the shipment, whereby the shipper will sign with and whom you will be billed by for the international shipment. In the event of any damages, updates or questions with regards to your cargo for international shipping, you will speak to the International Shipping Company. It should also be noted that, your International Shipping Company will more often than not also be your Origin Agent, Freight Forwarder, or Destination Agent in most cases.
The Origin Agent – The Origin Agent will perform the visual survey whereby they will send a representative to assess the shipment and thereby give you, the Shipper, a quote for the cargo for international shipping. You may also have the Origin Agent pack and load the shipment for international shipping as well. In the case of Transco Cargo, and to make it clear in this Guide to International Shipping, Transco Cargo will be both the International Shipping Company and the Origin Agent for ease and transparency.
The Freight Forwarder – This party will handle and arrange all pertaining to the ocean freight involved in international shipping, and not to mention will also undertake and carry out all export documentation on your behalf, including the Bill of Lading which is the document that lists all information pertaining to the shipment under your name. Transco Cargo will also be the Freight Forwarding to make things clear in this Guide to International Shipping.
The Consolidating Warehouse – In the event that you are not opting for a FCL (full container load) which means that you do not have an exclusive container to hold all your cargo for international shipping. The basis on either opting for FCL or LCL (less than container load) is based on the volume you intend on sending shipping and also the distance between the point of origin and port of origin. In the event your cargo needs to be consolidated, it will be stored in a consolidating warehouse until enough cargo is collected for one shipment. For transparency in this Guide to International Shipping, it should be noted that Transco Cargo also possesses Bonded Warehouses and will be the Consolidating Warehouse party.
If you are sending your shipping to islands, such as the Fiji Islands, the process of shipping is a tad different than what it would be to a country on a continent mainly as it may include ferry transfer from the mainland to the other smaller islands if that is the final destination. If you were take shipping to islands, such as the Fiji Islands, which consists of an archipelago of more than 332 islands, the two main islands of Fiji are Viti Levu (where Port Suva and Lautoka are the major sea ports of Fiji) and Vanua Levu. Nadi and Nausori operate the international airports bringing in air couriers and shipments.
The process is pretty standard with the main ports (be it the maritime ports or terminals at the international airports) that receive incoming shipments. The process thereafter involves domestic shipping and transport method which also include ferry and rail transport and of course road freight and door-step delivery. The Fiji Islands are located in Melanesia in the South Pacific and neighbour the likes France’s New Caledonia, Kermadec, Tonga, Samoas, France’s Wallis and Futuna, and Tuval. With concern to incoming international freight, Nadi which is located in the northwest is the receipient of all international air freight coming into Fiji, whereas Suva and Lautoka operate as the seaports receiving all international sea freight to Fiji, whereby Walu Bay in Suva is the main sea port.
The process of shipping to island of Fiji require due process for customs and regulations, thus they need to be well considered before your freight departs in point of origin. The Fiji Revenue and Customs Authority (FRCA) is the control agency for all customs clearances processes for both imports and exports processing. They set all the procedures in place as well as the tariffs and exemptions are also determined by them. The customs clearance process of shipping to island of Fiji follows the same international standards and shipping documentation which adhere to WCO (World Customs Organisation) concord. Fiji allows freight goods to stay within the wharf for a maximum of 72 prior to customs clearance and whereby demurrage will be set in place by the Ports Authority thereafter.
If you have undertaken due diligence and have all customs clearance documents for your shipment, then the process of shipping to islands of Fiji and customs clearance thereafter should be pretty straightforward. If not, it may take up to two weeks to go through proceedings.
Get yourself a quick quote and get through the process of shipping to island of Fiji with ease when you ship with Transco Cargo for your Australia to Fiji freight and cargo!
If you are a business owner or a company that deals with international (or domestic) commercial freight, there is a good chance that you have heard of the term “Dimensional Weight” before. For those who are new to term, dimensional weight for commercial freight is pricing term used for calculating the estimated weight based on the dimensions of a package (that is, the length, width, and height).
In the past, pricing for commercial freight was calculated based on weight which in turn became unprofitable for freight carriers when freighting low density or lightweight packages against the space that would be occupying in mode of transporting proportion to its actual weight. The shipping industry has since adopted the principle of dimensional weight for commercial freight pricing to ensure that a minimum charge for the cubic space it occupied is levied. In some courier companies, the greater of the actual versus dimensional weight will be levied to maintain a fair policy as well.
Essentially, dimensional weight is a theoretical estimate weight of a cargo package whereby the minimum density is chosen by the respective freight carrier. The fact is that if the package is below the minimum density, then the actual weight in question is irrelevant as the commercial freight rates will then be calculated based on the volume of the package as if it were the chosen density at the bare minimum density specified.
Dimensional weight is also known as volumetric weight or cubed weight, and abbreviated as DIM weight within the industry. The formula for this is (length x width x height)/ (dimensional factor). Shipping factors can be calculated in imperial or metric factors, whereby imperial will be considered in cubic inches per pound (and metric will be considered in cubic centimetres per kg as per the following.
|Imperial Shipping Factors
||Metric Shipping Factors
|· 139 in3/lb = 12 lb/ft3
· 166 in3/lb = 10.4 lb/ft3 – common for IATA shipments
· 194 in3/lb = 8.9 lb/ft3 – common for domestic shipments
· 216 in3/lb = 8.0 lb/ft3
· 225 in3/lb = 7.7 lb/ft3
· 250 in3/lb = 6.9 lb/ft3
|· 5000 cm3/kg = 200 kg/m3
· 6000 cm3/kg = 166.667 kg/m3
· 7000 cm3/kg = 142.857 kg/m3
It should be mentioned that dimensional weight for commercial freight favours cargo shipments that are denser and will penalise those that are lightweight (as you will be required to pay the minimum density weight regardless). The simplest practical example to this factor would be corn kernels versus popcorn; whereby the shipment of corn kernels will be calculated by the gross weight whereby a box of popcorn will be charged by its dimensional weight. This is due to the fact that a box of popcorn will take up more space but not the weight of a vehicle which means that the mode of transport will be underutilised. Shippers can avoid being penalised to avoid being charged the minimum density dimensional weight is by using smaller boxes, compressing the goods, or reducing packing materials for your commercial freight.
When you work with international trade and commercial freight, there are many shipping documents that come under your purview. One such shipping document is referred to as the “Certificate of Origin” which is used to identify the origin of the goods being freighted. Many countries across the globe request for a certificate of origin and is one of the most important international trade documents that not only declares the origin of the goods in question, but also that they have been obtained wholly, produced, manufactured or processed in the country that has been mentioned. A certificate of origin can either be a paper or electronic document and is often abbreviated as “COO” or “C/O” or even known as “Form A”.
A certificate of origin is important as it the origin country will reflect how tariffs, embargo and other trade policies applied on the freight in question. However, as we said before, only some countries require it, and not all exporters will need to undertake it. This is based on the destination of the freighted goods, its nature and the finances. To ensure the validity of a certificate of origin, the exporter is required to sign this shipping document and also countersigned by the local Chamber of Commerce. With concern to a handful of destination countries, the Certificate of Original will also be required to be signed by a consulate.
There is also what is called non-preferential and preferential certificates of origin, whereby the former ensures that the goods do not benefit from any preferential treatment or any bilateral/multilateral free trade agreements. This type is considered the standard certificate of origin which Chambers of Commerce are authorised to issue. However, there are the preferential certificates of origin that will benefit from bilateral/multilateral free trade agreements such as those from the likes of the European Union, ASEAN (Association of Southeast Asian Nations), and NAFTA (North American Free Trade Agreement).
It’s important to remember that country of origin and preferential origin is different from each other. For instance, the EU will decide the (non-preferential) country of origin based on the last stage of the manufacturing process also legally termed ‘last substantial transformation’. The FTA is the determining factor. Furthermore, there are some countries that have deleted customs authorities to issue preferential certificates of origin on behalf of the chamber of commerce, thus goods from the likes of Australia, New Zealand, Sweden and the United Kingdom fall under this lot.
If you are looking to send shipments internationally, then you need to be aware that certain international shipping documents are needed to ensure that customs clearance occurs without a hitch. These includes the likes of the Commercial Invoice(CI), Certificate of Origin (CO), Bill of Lading, and Proforma Invoice, to name a few.
A proforma invoice is essentially used when handling international trade transactions, whereby a quote is drawn up in the format of a Proforma Invoice which allows parties to arrange for financing or to open up a line of credit to facilitate the transaction, or even apply for an import license. The necessary specifications of a Proforma Invoice as part of international shipping documents for shipment include information on the buyer and seller, detailed description of the goods being traded, the Harmonized System of classification for said goods, price, payment terms (expressed as an IncoTerm), delivery details and relevant costs, and currency quoted. It’s vital that the proforma invoice be dated and an expiry date is also included to reduce risk.
A commercial invoice is raised once a Proforma Invoice is sent and the order has been received and goods need to be prepared. A Commercial Invoice will include the details of the entire export and is one of the necessary international shipping documents. The commercial invoice will often have the same information as a proforma invoice with additions such as the order number, purchase order number, or customer reference, and banking/payment information. If you are opting for shipping insurance, that should also be included.
Bill of Lading
There are three bill of lading documents for the different forms of freight; inland, ocean and airway. An Inland Bill of Lading can be raised by the inland carriers which is essentially a contract of carriage between the export and shipper as well as where its destination is. Often, it also acts as a form of receipt of goods. When it comes to international shipping, the inland bill of lading is consigned to the carrier or forwarder who will consign the goods when ready. An ocean Bill of lading is required in the event of ocean freight which acts as a contract of carriage and a title for the cargo. There are two types; a straight bill of lading and negotiable bill of lading (which we will discuss in the coming weeks). An Air Waybill is when goods are shipped internationally by air freight whereby it acts as the contract of carriage between the shipper and carrier.