Navigating the Seas of Global Trade: Insights into Ocean Freight and Shipping Costs

Did you know that 90% of global trade is transported through ocean freight? At present, there are approximately 20 million shipping containers worldwide, with around 10 million of them being constantly moved on vessels throughout the year. The three largest shipping lines are Maersk Line, Limited , MSC Mediterranean Shipping Company , and 达飞轮船 . While Malaysia used to have a container liner, MISC Group sold its business in 2011 due to high costs and low profitability in the competitive container liner industry.

Nonetheless, Malaysia still plays a regional role through coastal shipping companies like MTT Shipping Sdn. Bhd. , Shin Yang, Harbour-Link Group Berhad , Trans-Coastal Lines Sdn Bhd , and AML Shipping , among others. In total, around 55,000 container ships carried roughly 2 billion metric tons of cargo in 2016, contributing over $200 billion to the global GDP.

Shipping costs form a significant part of logistics for manufacturers and shippers. Whether directly or indirectly, shippers bear the expenses of moving these "lego" boxes around the world. A basic freight quote typically includes sea freight charges, container haulage, forwarding charges, and terminal handling charges from the shipper's premises to the importer's doorstep. In other words, a quotation summarizes the fees charged by a carrier for transporting cargo from Point A to Point B or from origin to destination.

Ocean freight rates usually involve surcharges, fees, adjustment factors, rules, exceptions, and exclusions according to the carrier's tariffs. The rates also vary depending on the type of containers used, such as 20', 40', and Hi Cube GP Containers, Reefer Containers, flat rack Containers, OOG Containers, open top Containers, and more. The container choice depends on the nature of the cargo to be shipped by the shippers.

There are three main elements contributing to the cost of sea freight transportation:

1. Sea freight charges set by the carrier.
2. Costs associated with securing empty containers and container haulage from the shipper's premises to the port of loading or vice versa.
3. Costs associated with terminal handling of goods at the ports of loading or vice versa, as well as the cost of clearing goods, documents, and electronic data interchange fees with customs and other government authorities (if applicable) at the ports.

Another factor influencing the cost of containerized sea freight is whether the goods require a dedicated full container load (FCL) or can be consolidated with other cargo (LCL). Let's take a closer look at both options.

Full Container Load (FCL):

FCL refers to a "Full Container Load." As the name suggests, the shipping line charges a flat fee for a 20' GP container, 40' GP container, or 40' Hi Cube container. The amount varies based on factors such as origin, destination, volume, time of year, and other variables. Unless you have a contract with the shipping line or ship significant volume, you will typically obtain more favorable rates from a freight forwarder who has access to discounted rates through volume agreements.

Large shippers like Panasonic, Top Glove, and Samsung usually negotiate freight rates directly with shipping lines on an annual basis. They can secure special rates due to their high volume and global reach. In such cases, freight forwarders usually provide quotes for local clearance and transport only.

Less than Container Load (LCL):

When you don't have enough cargo to fill a shipping container, LCL is a suitable option. Specialized LCL sea freight consolidators operate services to major ports and gateways worldwide.

Whether you need to ship a full container or less than a container, it is advisable to engage a freight forwarding company to handle the shipment.

Please do contact us for your ocean freight rates anywhere around the world.

Freightway Logistics Solutions, a?Sufi Group Sdn Bhd?of Companies

Setia Alam, Malaysia