Tilde Publishing and DistributionISBN: 978-0-7346-0817-8

Import/ExportMapping International Trade for

Australian Business

Sea Freight

Sea Freight

• Approximately 80 percent of the world’s freight is shipped on ocean vessels.

• There are three main ways of transporting goods via sea freight:– liquid or dry bulk– break-bulk– Containerisation

Sea Freight

• Containers come in a number of different configurations and different types:– General purpose (GP) or dry containers– Open top containers– Dry bulk containers– Flat rack containers– Tank containers– Insulated containers– Refrigerated containers (reefers)

Sea Freight

Container sizes

Sea Freight• Container capacity refers to the total available space inside

the container and is expressed as a cubic dimension.• The rating of a container refers to the total maximum gross

weight of a container including the weight of the container itself and its contents.

• The tare mass of a container refers to the weight of an empty container.

• Payload refers to the maximum weight of the product (payload) that can be packed into a container including packaging, dunnage and other securement devices.

Sea Freight

• All containers have a unique identification code number to enable the container and its contents to be identified and tracked.

Sea Freight• LCL (less than a container load) refers to a containerised

shipment where the contents of a container are destined for more than one consignee.

• FCL (full container load) is used to describe a containerised shipment where the entire contents of the container are intended for one consignee.

• CFS (Container freight station) refers to the delivery or receipt of loose (uncontainerised) cargo at a premises used to pack or unpack containers.

• CY (Container yard) refers to the delivery or receipt of a whole container (FCL) at the forwarder’s or carrier’s or consignee’s premises.

Sea Freight• Some of the main general rules to follow when

packing containers include:– The weight of the cargo should be distributed evenly in the

container.– Heavier packages should not be loaded above lighter

packages.– Liquids should not be loaded above non-liquids.– Soft packages should not be loaded adjacent to sharp

objects or packages with protrusions.– Cargo in the container must be adequately secured and

dunnage must be used to prevent movement of goods in the containerises.

Sea Freight• Consignees are allowed a limited period of time

to arrange for clearance, delivery, unpack and return of empty containers.

• A charge known as demurrage is applied to containers for each day they are held beyond the allowed period.

• The alternative for shippers and consignees to pack and unpack containers themselves is to have this service provided for them by their freight forwarders.

Sea Freight• The three main types (and levels) of containerised

shipping services are: – A conference service provides the benefits of more frequent

sailing schedules and greater flexibility and choices of departure dates via the alliance of a number of carriers that operate on the same routes.

– A non-conference service is one that is provided by an individual carrier who operates independently and uses only their own vessels

– A transhipment service is where containers are loaded on a vessel and shipped to an intermediate port where they are unloaded and transferred to another vessel that then transports the containers to their port of destination.

Sea Freight• Sea freight rates vary according to a number of different

factors that could include:– the type and level of service required, e.g. conference, non-

conference, transhipment, direct;– the intended destination;– the nature of the cargo, e.g. specific commodity, general cargo;– the type of container required, e.g. reefer, high cube , flat rack,

etc.;– the weight and volume of the cargo;– the anticipated future volumes; – whether the freight cost will be prepaid at the origin or

collected at the destination.

Sea Freight• There are two broad classifications for freight

rate purposes:– The specific commodity rate applies to specific

cargo moving between specified ports that has been classified and listed as eligible for a special lower freight rate.

– The general cargo rate applies to a wide range of mixed products and is the one that normally applies to cargo that is not covered by a Specific Commodity Rate.

Sea Freight• The freight adjustments most commonly

used for sea freight include:– Currency adjustment factor (CAF)– Bunker adjustment factor (BAF)– Equipment imbalance surcharge (EIS)– Peak season surcharge (PSS)

• A range of other charges generally associated with services rendered at the origin and destination ports can also apply.

Sea Freight• Rates for FCL shipments are applied as a rate

per container (box rate).• Rates for LCL shipments are applied either to

the weight of the cargo as a rate per tonne (1,000 kg), or to the measure of the cargo as a rate per cubic metre depending on which of the two is the greater. This rate is referred to as the weight or measure (W/M) rate.

Sea Freight• The principle transport document used for sea freight

is the bill of lading (B/L). It has three main functions:– It serves as a receipt from the carrier for the goods.– It serves as evidence of the contract of carriage between

the carrier and the shipper.– It serves as a document of title for the goods.

• A shipper’s letter of instruction (SLI) is a document that is completed by the exporter and supplied to either the freight forwarder or shipping line, which provides all the necessary details of the shipment and the instructions and requirements of the exporter.