International ocean shipments are one of the most popular methods to export perishable goods globally. This mode of transport has been prevalent since ancient times. From the Phoenicians, one of the earliest maritime civilizations around 2000 B.C., to the launch of advanced shipping containers in the mid-20th century, ocean freight has facilitated the world of international trade.
Due to its increasing demand, maritime shipping serves the fruitful purpose of exporting all kinds of perishable goods, such as fruits, vegetables, dairy , poultry, and milk products. International ocean freight shipping has motivated both importers and exporters to expand their businesses to an international standard.
What is Ocean Freight?
The exporters and importers use ocean freight to ship goods through sea routes. This freight carries out large quantities or bulk orders of perishable goods that are packed in sturdy containers and transported between nations.
The most commonly used shipping containers to transport perishable goods are specialized reefer or refrigerated containers. These smart containers come with temperature monitor control to keep intact the perishable goods that are being exported overseas. In addition, the refrigerated containers predict any kind of unforeseen accidents or hazards during transit.
Why is Ocean Freight important?
Ocean freight has several advantages in international trade:
Cost-effective: Shipping perishable goods through the ocean route is one of the perfect choices for exporters. This facilitates supply chain management in perishable exports and offers competitive solutions for the end consumer.
Heavy and Small Shipments : Ocean Shipping is not limited to only heavy cargo; it also enables the shipping of multiple smaller shipments that can be easily stuffed into a container. In such cases, sea freight implies a cost-effective strategy.
Reduced Accident Rates : With the rising demand for maritime transport, safety precautions have been introduced, as a result of which fatalities have drastically dropped in the coming years. The vessels have been designed to withstand rigorous weather conditions and other hazardous situations.
Environment Friendly : Ocean freight is the most environmentally friendly mode of transport to carry perishable goods, which helps boost your export industry brand name and reputation.
Eco-Friendly: Ocean shipping is also eco-friendly; the production of CO2 emissions, or the method’s ‘carbon footprint’, is much lower as compared to other modes of transport.
How does International Ocean Freight work?
The process for ocean freight is usually as follows:
Step 1: An agreement between a buyer and a seller is made between two different countries. Under an agreed-upon incoterm , both nations will conduct a trade transaction that decides ownership, risk transfer, and, most importantly, who will bear the shipping process and transportation costs.
Step 2 : The perishable goods should be packed as per international shipping norms.
Step 3: The next step is booking ocean freight, and for that, you need a reliable freight forwarder's services. With the help of a freight forwarder, the exporter can book a container (FCL or LCL) that suits the product's needs and budget.
Step 4: The perishable goods need to be shipped from the supplier's factory to the port of the supplier’s country. In this case, the exporter can get help from a freight forwarder.
Step 5 : Keep your marine insurance ready before dispatching the shipment.
Step 6: Your perishable cargo is loaded in a full container load (FCL) or a less container load based on the quantity and requirements of the trade transaction.
Step 7 - After the bill of lading is issued by the ocean carrier, the perishable goods are loaded onto the vessel. It is a crucial document that acts as a contract between the shipper and the carrier, which includes all important details of the transaction and holds the title to the goods.
Step 8 : The perishable shipment is verified by the customs officials once the goods are loaded at the port.
Step 9: After the customs clearance, the goods are processed for transport.
Step 10 : Once the goods reach the intended destination, the process of import customs clearance is required, along with paying applicable tariff duties or rates.
Step 11 : Lastly, the perishable cargo must be transported from the port to the buyer’s location, which can also be arranged with a freight forwarder’s help.
The prime factor influencing cost is whether the shipper chooses an FCL or LCL container.
FCL shipment
Full Container Loads (FCL) are designed for large shipments. This container is allotted to carry out a single shipment, which enables the exporter to face fewer risks and improve safety measures throughout the entire journey. Freight forwarders provide the best competitive deal on FCL shipments.
LCL shipment
Less than Container Load (LCL) is best suited for small shipments. This container shipment saves both money and time.
The shipping process includes other charges:
- Inland transit charges: shipping costs for the arrival of the goods at the end port
- Ocean freight: This is the base rate for ocean freight. For LCL, the cost is calculated depending on the weight (in tons) or volume (in cubic meters) of the cargo, whichever is higher, multiplied by the shipping line's base rate. For FCL, the base rate depends on the container capacity.
- Documentation charges: The charges include the cost of all the essential documents required for verification and the customs clearing process.
- Terminal charges: The depot charges for managing and maintaining goods at the port terminal.
- FCL and LCL fees: charge for the container you choose to export or import your perishable goods.
- Customs value: includes the cost of customs clearance proceedings.
- Security charges: the security cost of your perishable goods against damage and risk factors.
- Insurance: cost of marine insurance to safeguard the perishable cargo.
- Duties and taxes: Customs clearance charges and specific country duties are required to be paid by the dealing parties according to the distribution of duties.
- BAF (Bunker Adjustment Factor): This includes the fuel cost charged by shipping lines to adjust the cost fluctuations.
- CAF (Currency Adjustment Factor): This includes the cost of the shipping lines to manage currency exchange rate changes.
- Delivery fees at the depot
These costs and freight charges are supported by the buyer or seller depending on the incoterm agreement that they have chosen to conduct their transaction.
The different incoterms methods in the international ocean shipping
Incoterms are generally used to conduct international trade in ocean shipping to ensure that the shipping bill is organized properly between the buyer and seller and to decide who will bear the cost of the shipping process and transportation.
These are the most commonly used incoterms when transporting perishable goods by sea, as follows:
Free On Board (FOB Value): The seller is responsible for delivering goods to the port of destination, and after that, the rest needs to be carried out by the buyer. This implies that the buyer needs to bear ocean freight costs.
FAS Value: This value has a similar approach to FOB Value. Only a single factor is different in FAS: the buyer is responsible for loading the goods at the cargo port.
CFR Value: Under CFR, the seller is responsible for bearing the cost of ocean freight up to the destination port but will not get insurance.
CIF Value: Both the CIF and CFR have the same concept. This means the seller bears the cost of ocean freight. The only thing that differentiates him is that under CIF, he obtains insurance.
Conclusion
International ocean freight is an integral component of global trade, which involves the transportation of perishable goods across international waters. This shipping process requires meticulous planning and collaboration with freight forwarders, verification of goods through customs clearance agents , and adherence to various regulations, including currency exchange and fuel rates.
Citrus Freight provides competitive ocean freight options for the exporters and the importers. The reliable shipping containers do a brilliant job of shipping your perishable goods from one country to another, ensuring complete safety and maintaining international standards.
