Customs 101: Modes of Transport Explained: Which type works best?

When it comes to International Shipping and Logistics, choosing the right modes of transport can be a complex problem to tackle. Companies that need to transfer products from point A to point B are often challenged to maximize margins and be efficient.  Lack of expertise and understanding of what it takes to move goods across the world can impact the bottom line.

How do you make that happen? It requires a Global Logistics solution. Global Logistics is a management process that enables a company to get their goods from their source location (from anyplace in the world) to their consumer.

This involves the coordination of acquisition, warehousing, and determining the modes of transport.

Acquisition involves the creation of an overall strategy for procuring goods at the best possible total cost of ownership.

Warehousing may look like a simple decision to store items, but it plays a substantial role in ensuring that the entire supply chain system functions efficiently.

Determining the modes of transport is one aspect of your plan that requires important consideration as it essentially brings your product from one end to the other.

In this article, you’ll learn about the different modes of transport, and which mode may best work for you.

International Modes of Transport

Ocean

ocean modes of transportOcean freight may be a less expensive mode of shipping goods, but the drawback is a longer transit time. In this method, goods are transported via giant ships that traverse regular routes on fixed schedules.

There are three options when shipping goods by ocean:

LCL (less-than-container-load):

Commonly used if you don’t have enough cargo to fill a container. Multiple importers with different freight will be consolidated into one container. Once it gets to the first port, it is unloaded and separated out and then trucked to the final destination.

Other characteristics involve:

  • Small numbers of pallets/skids
  • Loose freight

FCL (full-container-load):

Unlike LCL shipping, FCL means you have the entire container’s space to yourself and no sharing. Partially full FCL shipment is often less expensive to ship because there is none of the consolidating and handling fees associated with loose cargo like in an LCL shipment.

With FCL, you may ship using 20-foot, 40-foot-, 45-foot container or 40-foot high cube containers.

FCL containers may either come as dry or refrigerated, depending on your need. With FCL, you will encounter chassis as a special trailer or undercarriage used to transport ocean containers over the road.

Ro-Ro (roll-on; roll-off):

These are vessels designed to carry wheeled cargo, such as trucks, cars, semi-trailer trucks, trailers, and railroad cars.

Air

air freight modes of transportAir Freight is a critical mode of transport if your supply chain demands speed. This is the fastest way to move your transport but will be costly. One important factor for air freight is that there’s less handling of cargo overall, which makes damage or theft less likely.

When choosing air freight, you may either utilize cargo or passenger baggage.

Cargo:

  • Commercial/Passenger Planes
  • Cargo Planes
  • Truck Interlines
  • Example: Hunting trophies. A shoulder mount of a giraffe, but it is very long and doesn’t fit on a passenger plane.  Only the largest airports in the US will have cargo flights coming into them. Denver does not have any cargo flights, only passenger flights. As a result, when you arrange for Air Freight, it will come via a cargo plane from South Africa but will be unloaded at a port city, and then trucked to the final destination.  One result is that transit time will increase.

Passenger Baggage:

  • Hand-carried bags

Ocean Vs. Air

Ocean Freight:

  • Lower Costs
  • Longer Transit Times
  • More Reliable
  • Higher Risk

Air Freight:

  • Higher Costs
  • Shorter Transit Times
  • Less Reliable
  • Lower Risk

Ocean freight is more reliable because you are guaranteed a spot on the vessel.  For Air Freight, cargo is often shipped on passenger flights (this depends on the size and weight of cargo, and airport of departure and destination) and passenger baggage, mail and military goods take precedence over cargo or freight.  Cargo and freight will get bumped (sometime several days in a row) until there is room on a passenger plane.  One exception is perishables, where you can pay more to guarantee delivery.

If you are worried about something getting damaged, the risk is higher on ocean simply because it changes hands so many more times and more unloading and reloading.

Truck & Railroad

truck and railroad modes of transportRoad transportation uses trucks and is useful for companies who rely on fast delivery for shorter distances. Road transport also has complete door-to-door service and it is one of the more economical means of transport.

Railroad transport becomes dependable in areas that have railway tracks. Unlike road and ocean transport, a railway is less likely to be affected by weather conditions.

However, suppliers and customers may not always be near a freight rail. This may cause extended transit times compared to other methods.

Both truck and railroad take advantage of border crossings. For example, two Canadian railroads come down from Canada into the US.  Trucks can come up from Mexico or down from Canada.  In both instances, the cargo clears at the border.

Courier

courier modes of transportLastly, the courier method uses service providers such as FedEx, UPS, DHL, and the like.  Small parcels are shipped more affordably via courier services vs cargo.  The courier companies have internal departments that clear packages through customs and those fees are typically folded into the price. Courier service works for low value, small parcels that are not subject to other government agency requirements.

There will be numerous options when transporting goods, and the chances are you will utilize more than one method. Understanding your shipment needs and cost structures will be important when planning for the best modes of transport.

Do you need help with your plan? Call 303-365-1000 or email us anytime.

2018-08-13T16:16:46+00:00June 6th, 2018|Commercial Trade, Customs 101, Household Goods|