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Freight shipping: What is it and how does it work?

Freight shipping is a crucial part of international trade. In this blog, learn about freight shipping rates, modes, benefits, entities involved, required documents and shipping rates.

Logistics are a crucial part of every business, even more in international trade. Whether the product is being sold in a store or on an e-commerce platform, they are all transported from manufacturing units to the final destination. This entire process involves various steps, and one of them is freight shipping. When a package is heavier and larger than the standard package sent through the courier or parcel service, it is shipped through freight services. When two parties are involved in a trade, they often deal with massive bulk products that are big in size and heavy in weight. This cargo is commonly transported by trucks, trains, ships and aircraft.

What is freight?

Freight is any cargo moved from one location to another and does not qualify for parcel or courier shipping. Unlike packages that get delivered to home through couriers, which are smaller in size, freights are relatively heavier and bigger. They need bigger vehicles to deliver to the destination. The parameters that qualify a package as freight can vary from carrier to carrier. However, usually, a package that weighs more than 150 pounds, 108 inches long or 160 inches in length and girth is considered freight.

What is freight shipping?

Freight shipping is the collection of different modes of transportation used to deliver large shipments or freight. It plays a crucial role in international shipping, where a combination of multiple modes of transport are used. For example, if an importer from the USA buys goods from an Indian exporter – goods will be shipped through a ship or an aircraft to reach the port in the USA. From there, a train or truck will deliver it to the final destination. Unlike package delivery, these shipments do not only use small trucks. As large shipments are involved in this mode of shipping, they often use semi-trucks or similar modes of transport to deliver cargo¹.

What are the different modes of freight shipping?

Businesses involved in international trade rely on shipping modes to ensure safe and timely delivery of goods. As each business is different, its shipping needs are also different. The type, weight, size and urgency to deliver can also impact the decision of which shipping mode needs to be chosen. Following are the different modes of shipping²:

Less than truckload (LTL)

Less than Truckload or LTL is the preferred shipment method for small shipments, which do not require an entire trailer. Although this shipment mode is cheaper than others, it takes additional delivery time as they need to load and unload other shipments from different businesses. Choosing LTL is suitable for shipments between 150 to 15000 pounds.

Full truckload

A full truckload mode is when shipments are in bulk and weigh more than 15,000 pounds. Full truckload mode is private shipping, meaning you will not share truck space with other shipments. This ensures fast delivery and a low risk of damage.

Partial truckload

A partial truckload is similar to LTL. In this shipping mode, shipment space is shared with other businesses, but the shipment is larger than it is in LTL. That means the number of businesses sharing is lower, which reduces delivery time and risk of damages than LTL.

Air

Aircrafts are the fastest and most direct way to deliver shipments from the source to the destination. As shipments sent through this mode are expensive, businesses often reserve air freight only for packages that need fast delivery and are in small sizes.

Sea transport

Ships offer low shipping prices and can cover long routes, often across continents — 80% of goods shipped around the world travel by cargo ships.

Rail

Trains are the preferred shipping mode if the shipment is not on a tight deadline. It effectively takes shipments closer to the destination, where they are loaded onto trucks for last-mile delivery.

Intermodal

The shipping mode that uses multiple modes of transport is known as intermodal shipping. It can combine different modes like air, ocean and ground. In most cases, it requires various modes of transportation to keep shipping cost minimal.

Expedited

When shipment is on a tight timeline, expedited shipping ensures timely delivery of goods. Expedited shipping commonly uses planes and trucks. The exporter needs to pay premium fares for different delivery speeds.

Benefits of freight shipping

Freight shipping can be suitable for exporters as it ensures fast and safe delivery of bulk and large shipments. Following are some of the benefits of freight shipping²:

Coverage for a range of shipments

This shipping can accommodate different kinds of shipments in varying shapes and sizes. These are mainly placed on pallets, so they can accommodate different kinds of goods without damaging them.

Cost effective

Transporting large shipments across borders can be expensive. This is when freight shipping can be valuable. It is one of the most cost-effective ways to ship larger shipments, especially through trains and ships. If you use LTL, you can significantly reduce transportation costs.

Reliable way of transportation

It is a reliable way to ship larger goods and ensure they are delivered on the decided date, which further helps to reach other distribution KPIs. This shipping follows a fixed schedule to transport goods by grouping the destinations from a similar area and following a consistent deadline.

Factors that affect freight shipping rates

Shipping rates greatly influence the profitability of the business. The shipping cost can also affect the overall price of the product. Therefore, the exporters must ensure that the shipping cost isn't affecting the bottom line. The following are the factors that can affect the shipping rates.

Delivery time

Delivery time can significantly affect the shipping rates. High-priority rush shipments cost more than the ones that move slower. The earlier delivery date increases the shipping rate.

Distance

The total distance the shipment needs to travel to get delivered can also affect the shipping rates. An international shipment across the ocean can be more expensive than one between two cities in one region.

Shipping mode

This type of shipping can consist of various shipping modes such as ships, planes, trains, trucks, etc. The shipping modes used for the shipping can affect the shipping rate. Air shipping is more expensive, while ocean freight is cheaper than other modes.

Weight

The weight of shipments can impact the final shipping rate. A large load is heavier and consumes more space than another shipment.

Size

Like shipment weight, the size of the shipment also impacts shipping rate. If the shipment acquires more space on the truck than others, it will add to the cost.

Weather

Weather can impact shipping time and cost. Heavy rain, snow storms or bad weather at the ocean can delay your shipment, which can affect the cost.

How to calculate freight shipping costs?

Exporters or sellers pay shipping costs to ship goods through freight. If it is one shipment, then the cost is calculated on the volume and weight of the shipment. If there are multiple shipments, then packaging and shipping mode are considered for calculations. For rail and sea transport, the container size and factors like FCL and LCL are considered in price calculations. Most shipping containers come in 20-inches size. Quotations from the carrier and above-mentioned factors can help in calculating shipping costs. It is also good to compare prices of different carriers to get the best deal3.

How to ship freight?

Once you decide to use freight shipping, the next step is to prepare for the shipping process. Here are some of the steps involved⁴:

1. Prepare and obtain necessary documents inducing the ones required by the carrier.
2. Choose a palette that is right for the cargo and is not damaged.
3. Evaluate goods for any damage, replace damaged goods and make a note of minor damages.
4. When using the palette, stack cargo vertically, aligning it with the palette. Make sure that the shipment is not hanging over the edges. Use protective padding wherever necessary.
5. Use bands and straps to secure the cargo.
6. Create labels that include destination address and contents and place them on the cargo.
7. Move the shipment to the first point where the carrier can pick it up.
8. Take a picture of each palette for your reference.

Different certificates and documents required for freight shipping

Shipping your cargo involves verifying its origin, destination, content, weight, size and many other factors. Following are some of documents and certificates required5:

· Packing list
· Commercial invoice
· Bill of Lading and Sea waybill
· Export/Import Customs Declaration
· Air or rail waybill
· Arrival notice
· Importer security filing
· Letter of Credit
· Certificate of Origin (COO)
· Production Certificate
· Vessel Certificate
· Phytosanitary Certificate

Entities involved in freight shipping

Various government and non-government bodies, organizations and individuals are involved in the shipping process:

· Shipper/exporter
· Consignee
· Notify party
· Freight forwarder
· Port agent
· Carrier
· Ministry of Ports, Shipping and Waterways
· Customs authorities
· Directorate General of Shipping, Mumbai
· Indian Ports Association
· Shipping Corporation of India, Mumbai

Freight shipping is a network of various shipping modes like trucks, trains, ships and planes that help to deliver larger shipments internationally. It is important for exporters to plan and be prepared with documents and packaging to ensure fast and safe delivery.

Hassle-free international shipping with Amazon FBA

Shipping internationally can be a complex process, especially for exporters starting new operations. Safe and timely deliveries impact profitability, brand authority and customer loyalty. With its e-commerce exports program, Amazon enables Indian sellers and exporters with the entire export process including international logistics. With Fulfillment by Amazon (FBA), sellers can send their shipments to Amazon fulfillment centers. Amazon then handles storage, packaging and delivery on your behalf.

To support you for hassle-free logistics, Amazon has also launched SEND, enabling you to ship directly to international fulfillment centers at competitive prices. All you have to do is book, pay and track shipments without any hassles from India to the world.

Explore Amazon SEND

Frequently Asked Questions

What is the difference between freight and shipping?

Freight is the product or goods that are being transported – a term used for commercial transportation of goods through air, sea or ground. On the other hand, shipping is the process of transporting goods.

What is the difference between parcel and freight?

Parcels are small packages with a weight of less than 150 pounds. Freights are much heavier and can weigh several thousand pounds.

What is the cheapest way to ship freight?

Ocean freight is considered as one of the cheapest ways to ship larger shipments.

What is freight forwarding?

It is the process of planning and organizing coordinated movement of shipments across international borders on behalf of shippers.

What is the difference between freight and transportation?

Freights are the goods being transported, while transportation is the process of transporting goods from source to destination.

How long does freight shipping take?

The time required for shipping freights can depend on factors like shipping mode, distance, route, season, and size and weight of the goods. Following are the approximate estimates of shipping times required for various shipping modes:
· Express: 1 to 3 days
· Air shipping: 5 to 10 days
· Sea shipping: 20- 45 days

What is the difference between cargo and freight?

Although the terms cargo and freight are mostly used interchangeably, freight is the products being transported. Cargo refers to the goods transported internationally through air providers or ships.

Published on December 30, 2022.

Sources:
1. https://www.fedex.com/en-us/shipping/freight.html
2. https://www.netsuite.com/portal/resource/articles/inventory-management/freight.shtml
3. https://www.searates.com/about/lcl-less-container-load-international-freight-shipment
4. https://www.twill.net/knowledge-hub/logistics-know-how/important-shipping-documents
5. https://www.icontainers.com/us/2014/05/08/parties-involved-shipping-overseas/
6. https://www.thomasnet.com/articles/services/freight-vs-shipping/
7. https://www.fulfillrite.com/blog/what-is-the-difference-between-parcel-and-freight/
8. https://dfreight.org/blog/what-is-the-cheapest-shipping-method-in-2022/
9. https://www.cafworldwide.com/blog/what-is-freight-forwarding
10. https://www.freightos.com/freight-resources/transit-time-calculator/
11. https://blog.anderinger.com/blog/what-is-the-difference-between-cargo-and-freight

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