Shipping forms the base of international trade. The exchange of products and ideas around the globe opens up new markets for merchants. Through shipping, countries are connected to one another and economies thrive, mutually benefitting all trade partners. These past couple of years saw how an unexpected threat disrupted this symbiotic relationship: the Covid-19 virus.
This article at a glance:
The shipping industry was shaken by the 2020/2021 global container shortage brought on by the Covid-19 pandemic. As businesses grappled to meet surging demands, exporters questioned their shipping choices: air, train, or sea cargo would reach consumers the fastest? We will cover how to decide on a shipping method, and if e-freight forwarders could be the solution for shipping for exporters.
The 2020 / 2021 Global Container Shortage
The Covid-19 pandemic sparked the global shortage of shipping containers, which ultimately affected the trade supply chain. This container shortage inflated shipping and container costs and increased companies' delay times.
Due to lockdown measures, factories stalled all operations, lowering the demand for shipping which translated into sending out fewer container ships. Lesser deployment of vessels meant that many empty containers sent out earlier were not being collected.
Other preventive Covid-19 transmission measures like quarantines and more frequent testing for crewmembers prevented sea travel between certain regions completely. Containers piled up at cargo ports and inland depots while consumers in lockdown drove shipping demands up as they had very little or no access to services.
For example, in the U.K., CEO of Hexstone Group, Ian Doherty shared that the company faced six to eight weeks of delay for shipping to the Far East, even though their products were ready for pickup. He further shared that shipping costs increased due to congestion charges at ports such at Felixstowe. Congestion at the port happened as there were backlogs of shipments to be cleared.
Addressing the Container Shortage Problem
To circumvent this shipping shortage crisis, shipping giant Hapag-Lloyd employed solutions such as speeding up (25% faster) container refilling and emptying times, considering the use of older containers and turning off reefer containers to store dry goods dispatched to reefer demand locations. Meanwhile Cainiao, Alibaba Group's logistics company, launched its own container booking service altogether to help reduce the backlog of empty containers.
Freight forwarders are the intermediaries between the client (exporter or trader) and various shipping companies. Moving goods worldwide or interstate involve many players, laws and requirements. Freight forwarders handle that for their clients, and also help them bid for the fastest, most cost-efficient and reliable transportation operator to guarantee the safe and timely delivery of their goods.
An e-freight forwarder is the paperless and digitized version of freight forwarding — essentially an automated online freight management service. Traditionally, Excel spreadsheets and email were used to manage freight forwarding.
In India, according to Statista, total container traffic in 2020 was 146 million metric tons. 9,990 twenty-foot equivalent units of containers were transacted at major Indian ports last year.
Transport, FreightMango, Freightify, Freightwalla, Cogoport and Shipwaves are among the e-freight forwarders that serve this Indian market and beyond.
E-freight forwarders help merchants smooth out their logistics from India and other parts of the world by:
- Offering access to integrated cargo insurance and financing options.
- Providing rate management, instant quotes, tracking, and other customer engagement tools.
- Running an ocean freight marketplace.
- Improving the logistics services customer experience for shippers.
Choosing the Right Means of Shipping Export Goods
Even the reliable freight liners are facing a disruption in service. Is your current export method the best means to ship your cargo? Do you have a plan B in case of service disruptions? Let us now go through all the possible means of shipping to export goods.
Air Cargo, Train or Seaway?
|Type of Goods||High-value goods||Large goods and raw materials||Large and heavy goods|
|Prices||Most expensive||Low costs||Low costs|
|Transit Time||8 hours – 7 days||7–10 days||20–45 days|
|Environmental Impact||Highest carbon footprint||Low carbon footprint||Lowest carbon footprint|
When deciding between the different shipping methods for your exports, these are some of the factors that determine your choice:
Size, Weight, Volume and Type of Goods
The size, weight, volume and the type of goods that you export directs the type of shipping that you would employ to ship and deliver your goods. Air (and land) shipping is best suited for valuable, fragile, light, and smaller cargo while train and seaway shippings are better for large, heavy, and more durable goods.
Perhaps the main determinant in deciding the option of shipping are the costs. Shipping, customs, destination and warehousing fees are among the fees associated with export. Ensure that you factor that in and ask for a fair and comprehensive quote from your shipping company. Cargo by air is the most expensive delivery method, due to its fast speed of delivery.
Airlines bill by chargeable weight, that is the Actual Weight (Gross Weight) or the Volumetric (also called Volume or Dimensional) Weight of the shipment, whichever is the greater. Ocean carriers generally charge per container and rail and road shipping by distance travelled.
Other factors that may determine your shipping method include the urgency and frequency of your shipping, and whether you could track your goods while they are on the road (or on the sea, or in the sky).
Exporting by Road
Alternatively, you could export your goods by road. It is a cost-effective delivery method which could even venture into rural areas; door-to-door delivery is possible by road shipping. Truck deliveries are easy to schedule and you could save on additional packing costs (more packing is needed to secure goods for air and sea shipping). However, the disadvantage is that the size and weight of the goods delivered are limited to the capacity of the land vehicle. Furthermore, weather, traffic and road conditions also dictate delivery times.
Of course, you do not have to opt for a pure air, ocean or rail shipping option. You could combine the means of shipping employed in a multimodal solution — where more than one mode of transport is used. Oftentimes, combining different modes of transportation reduces shipment costs and increases the care and efficiency of handling your goods. Consumer-facing, the multimodal method is less complicated for consumers as they deal with a single entity which handles all the different modes of shipping, rather than needing to liaise with multiple delivery partners.
Along China’s Silk Road for example, DHL, Geodis, UPS and DB Schenker all offer multimodal solutions, boosting the cross-region rail network’s connectivity with trucks. UPS stated that the rail-truck multimodal delivery method is 65% cheaper than air freight serving the same route, and 40% faster in transit times compared to sea shipping.
There is no shipping method superior to another; you might even have similar goods transported using different modes of delivery — depending on your needs and budget at the time of export. Each shipping option has its own pros and cons. Understanding your needs and shipments is crucial in managing and orchestrating shipping across the globe. Partner with us at Silverbird for all your international business payments and transfers needs; trade is our language.
Author: Syahirah Aiman
Illustration: Kate Faldina