Basic Modes of International Transportation

Introduction

Transport and distribution are key considerations when planning for international trade.
Choosing the right mode of transport is essential to ensure your import or export operation
is efficient and cost-effective.

There are four ways of importing and exporting - road, rail, air and sea - although you
may need to use more than one type of transport. When making your choices, you will
also need to decide whether to handle logistics by yourself, or outsource the work to a
freight forwarder.

International transportation can be a complex mode of serious shipping or it can be a

simple way of moving the cargo from point A to point B. In the end, transportation is to
bring your product from one end to the other in the most cost efficient way and in a timely
manner. Most companies prefer to deal with logistic companies who can offer
combinations of shipping methods. As an importer, depending on your industry needs,
you may require different methods of cargo transportation.

Dealing with a single logistic company who can offer ground, air and ocean transportation
can save you money and provide additional value-added supply chain services.

What are the different modes of transportation and which service is more suitable for your
business?

It is all depends how urgently you need your cargo or what is your buying volume.

Assessing your transport needs for international trade

Your choices for international transport and distribution include road, rail, air and sea.

Various factors will influence your decision on which type of transport to use - including
your business’ requirements, the destination country, and the type of goods you are
importing or exporting.

Ask yourself the following questions:

 What do you want to distribute? Size and weight will affect the cost.
 How quickly does the product need to reach its destination? This will affect which
type of delivery service you use and the cost - sending goods by air is quicker but
significantly more expensive than by sea.
 How would transport costs impact on your overheads?
 Where do the goods need to go? For example, Europe has a large rail and inland
waterway network, but you may encounter problems if the destination is
especially remote.
  How valuable are the goods? Get quotes from insurance brokers before deciding
on the appropriate insurance level.
 Do your customers have any special requirements?

Consider all the methods of transport available. You should aim to balance service
quality, cost, organisation and time. You will often use more than one mode of transport.

AIR FREIGHT:

It is the fastest way to ship your cargo but it is costly. Air freight is your best option for
time sensitive cargo. As an importer when you are in a rush to bring your cargo to its final
destination, air freight is the fastest and most secure way. Using a 3-4 day transit time air
carrier service is always less costly then direct air carriers. Ask your logistics partner to
offer you several air cargo carrier options. Based on your need choosing a longer transit
time air carrier option can save you money.

OCEAN FREIGHT:

There are 2 ways of shipping ocean; FCL(Full Container Load) or LCL (Less Than
Container Load)

FULL CONTAINER LOAD OCEAN FREIGHT:

It is the most efficient way to ship your cargo. Commonly used container sizes are 20STD,
40STD and 40HC. There are also numerous types of ocean containers used for
international ocean freight transportation, including 45HC. open top, flat racks etc. Based
on your volume and type of product, your logistics partner can suggest what type of
container will be more suitable and cost saving for you.

LESS THAN CONTAINER LOAD OCEAN FREIGHT:

It is commonly used if you don’t have enough cargo to fill a container load. You pay only
for the space used in the container. Typically LCL rate is calculated by volume but not
by weight. Always discuss with your logistics partner if you need LCL or FCL service.
There is always a breaking point where LCL or FCL shipment might be more cost savings
for you. Once you ship LCL you share the containers with other importers and there are
more add on costs since the container needs to go CFS (Container Freight Station) to be
split. Shipping the container with a little bit empty space but as FCL might be cheaper
then sharing with others as LCL.
OCEAN + RAIL:

It is always better to transport cargo to the location that is as close to the ultimate
destination as possible. Sometimes you might need to use a combination of services.
Using rail service in addition to ocean freight service will cost more then using solely
ocean freight.

Using road transport for international trade

Road transport can be the most flexible option for your international business, especially
within the EU. The motorway network is good and crossing national borders is usually
quick and efficient.

Other advantages:

 relatively low cost

 extensive road networks - scheduled delivery days and next day delivery services
are a viable option
 you can schedule transport to suit you and you can track the location of goods
 consignments can be secure and private

But there are also risks for road transport:

 long distances overland can take more time

 there can be traffic delays and breakdowns
 there is the risk of goods being damaged, especially over long distances
 toll charges are high in some countries
 some countries have different road and traffic regulations

You can either use your own vehicles, or a carrier. If you operate your own vehicles, you
will need to consider licences, fuel costs, regulations, driver training and tax.

Different types of carrier, include:

 Couriers - specialise in the speedy and secure delivery of small goods and
packages. Hauliers - will collect goods from your premises and deliver them by
road.
 Freight forwarders - consolidate shipments and have a detailed knowledge of the
rules and regulations that your business must comply Consider your requirements
carefully before making your choice.

Goods-in-transit insurance can protect you if goods are lost or damaged when transported.
Road haulage falls under the Convention des Marchandises Routiers (CMR) which sets
out conditions for transporting goods by road. This gives basic cover, but it’s advisable
to take out extra insurance.
The international transport of dangerous goods by road is subject to international
legislation, in particular the European Agreement on the International Carriage of
Dangerous Goods by Road (ADR). Drivers of vehicles carrying dangerous goods must
hold an ADR training certificate in handling dangerous goods. All commercial vehicles
that carry dangerous goods must pass the ADR test, with some also having to be built to
special standards.

The following classes of goods are defined as dangerous:

 corrosive substances
 explosive substances and articles
 flammable liquids and solids
 gases
 oxidizing substances
 radioactive substances
 toxic substances

Using sea transport for international trade

If your business needs to transport large quantities but there is no pressure to deliver
quickly, shipping by sea may be suitable.

Other advantages include:

 you can ship large volumes at low costs - a freight forwarder can consolidate
consignments to reduce costs
 shipping containers can also be used for further transportation by road or rail

However, there are also risks for sea transport:

 shipping by sea can be slower than other transport modes and bad weather can
add further delays
 routes and timetables are usually inflexible
 tracking your goods’ progress is difficult
 you have to pay port duties and taxes
 further transportation overland will be needed to reach the final destination
 basic freight rates are subject to fuel and currency surcharges

Protect your consignments with insurance. Under the maritime transport conventions you
automatically have limited insurance cover under the Hague-Visby and Hamburg rules.
However, it’s advisable to get additional insurance, such as general cargo insurance.

Documents

All your consignments must be accompanied by either a Bill of Lading or Sea Waybill.
These documents clearly set out who the consignment owner is and the terms of the
contract of carriage.

When exporting to a new customer, use a Bill of Lading. This allows you to retain
ownership of the goods until you release them to your customer. It is risky to release the
goods before full payment is made unless you know your customer’s creditworthiness.
Bills of Lading give you documentary security and more control over your consignments.

Sea Waybills are less costly but do not offer the same security of payment. You should
only use them when you know the creditworthiness of the business you’re shipping to, or
when you have built up a good relationship with them. If you ship dangerous goods, you
must complete a dangerous goods declaration which includes the Dangerous Goods Note.
In most cases this will be in addition to the maritime transport document that should
accompany your shipments.

Using rail transport for international trade

Rail transport is a cost-effective and efficient way to move your goods. It offers you the
following advantages:

 fast rail links throughout Europe

 it is environmentally friendly compared with other transport modes

However, there are also risks for rail transport:

 routes and timetables available can be inflexible, especially in remote regions

 rail transport can be more expensive than road transport
 mechanical failure or industrial action can disrupt services
 further transportation may be needed from a rail depot to the final destination,
adding to costs and affecting delivery schedules

Using air transport for international trade

Air transport offers numerous advantages for international trade, depending on your
requirements. It can:

 deliver items quickly over long distances

 give you high levels of security for sensitive items
 be used for a range of goods

However, you should consider the following issues:

 air transport can involve higher costs than other options, and is not suitable for all
goods
 flights are subject to delay or cancellation
 you will need to pay taxes at each airport you use
 fuel and currency surcharges will usually be added to freight costs
 further transportation may be needed from the destination airport to the final
destination

Make sure that the routes and timetables available for air transport suit your requirements.