Tb-ImportExport-PPT-Chapter9 - Tilde Publishing and Distribution

Mapping International Trade for
Australian Business
Sea Freight
Tilde Publishing and Distribution
ISBN: 978-0-7346-0817-8
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
• 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
– 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
– 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
– 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.

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