An Introduction to Ocean Shipping

Ocean shipping means freight that you are sending internationally – across seas. If you hope to expand your business to an international market and start selling to a global market, then this is something you’re going to have to manage. In order to sell abroad, you need to be confident and comfortable in sending items overseas and dealing with all the related lingo and logistics. This post will serve as a good starting point and will help to set you on the right track to becoming an expert.

There are many INCO (International Commercial) terms that define where ownership changes hands when being shipped

An Introduction to Ocean Shipping

The Basics

Freight Forwarding: If you need to handle international shipping, then the easiest option for most companies is to use freight forwarding. Freight forwarding basically means using a contractor who will deal with carriers on your behalf (multiple carriers potentially if it’s going a long way), as well as using customs brokers for you. We go more in-depth about freight forwarders in this post:

INCO Terms: There are many INCO (International Commercial) terms that define where ownership changes hands when being shipped.  This is important to define clearly because when the boat sinks to the bottom of the ocean, it needs to be well defined whose goods those were (and who should have insurance before that happens).  The most common term used is FOB (Free on Board), which says that the seller is responsible for loading the goods onto the boat (and covering the necessary expenses to make that happen), then the buyer takes ownership when the boat is loaded.   Another common term used is ExWorks, which means the buyer is responsible for all shipment charges and picks the goods up directly from the factory.  Be sure to account for these terms when you get quotes as an FOB quote means the seller is covering some shipping costs that an ExWorks quote will not cover.  

You can see our post on INCO terms for the full list:

Types of Ocean Shipping: That said, not all freight will be transported by container ships and this might not necessarily be the best option for you. Roll-on/roll-off (ro-ro) vessels for instance will carry vehicles allowing trucks and vans to carry your goods overseas and reducing some of the logistical challenges and potentially allowing you to keep a closer eye on your goods. General cargo ships meanwhile carry cargo of all types, while bulk carriers are for unpackaged goods. You also get tankers of course for liquids and gasses, though that is unlikely to apply.

Sea vs. Air: Generally ocean shipping will be cheaper than air shipping, but not always.  Each product is different in weight and volume, and those define the real differences, but usually air shipping will be cheaper if you have less than about 8 master cartons and ocean shipping will be cheaper if you have more than 15.  The reason is that with ocean shipping there are associated document fees that add a large fixed cost for any shipment that goes by ocean that can be more than the total air shipment cost until you reach larger quantities.  It’s also good to know that from China, an economical air shipment takes 5-7 days whereas ocean shipping generally takes between 4-6 weeks door-to-door depending on customs clearance.  

Ultimately, much of this should likely be handled by your forwarder and if you have complex shipments to send internationally, then it’s advisable that you do take advantage of their services. That said, it is useful and very important to understand these basics so that you are better able to discuss your options and understand your risks.

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