Sea freight: five persistent misconceptions

Sea freight is the backbone of international trade, and at first glance it seems simple: you load goods into a container, put it on a ship, and the shipment goes to its final destination. But those who look further into the complex world of ocean freight quickly discover that there are many misconceptions that can cost companies dearly. Here are five common misconceptions about sea freight that it is better to avoid as a shipper. 1. ‘There are always enough containers available’ Many companies assume that containers are always easy to find. The idea is simple: if you want to ship goods, you arrange for a container. But in reality, container availability is often limited and depends on several factors, such as region, season and market demand. There are various container sizes, such as 20-foot, 40-foot and 45-foot containers, as well as specialised types such as reefers (refrigerated containers) and open-top containers. Not every container is suitable for every cargo, and shipping companies sometimes impose strict conditions on the use of their containers. In addition, shipping companies often strategically shift containers to routes with higher demand, such as between East Asia and Europe, which can lead to shortages on less popular routes. 2. ‘Tracking always provides real-time insight’ In today’s day and age, it seems obvious that you can track all your shipments in real time, just as you can with a parcel for home delivery. With sea freight, however, this is more complicated. Although technologies such as GPS and RFID have improved shipment tracking, tracking is not always completely accurate or real-time. Often, tracking systems provide only a snapshot of the container’s location, and there are delays in updates, especially when the container is on the open sea or arriving at remote ports. This can be problematic, especially for companies that rely on just-in-time deliveries. 3. ‘The price of sea freight is determined by transport costs’ Many companies think that sea freight rates are mainly based on direct costs such as fuel, labour and maintenance. In reality, other factors play a major role in pricing. Sea freight rates are strongly influenced by supply and demand on specific routes. On popular routes, such as from China to Europe, demand is often much higher than on return routes, resulting in significant price differences. For instance, transporting a container from China to Europe can be three to four times more expensive than the same container on the return route. Seasonal peaks, economic conditions and fluctuations in the market also influence rates significantly. 4. ‘All ports operate the same’ It may seem logical that ports operate the same way worldwide, but the reality is different. The organisation, infrastructure and efficiency of ports can vary greatly depending on their location and type of port. For example, the port of Rotterdam operates with sophisticated deep-sea terminals that are open 24/7, while some ports in the United States have limited opening hours and are often closed on weekends. These differences can lead to delays and higher costs. Ownership structures also vary by country: in the Netherlands, ports are often private companies with public shareholders, while ports in Germany and France are state-owned. 5. ‘Everyone gets the same freight rate’ There is a persistent misconception that every shipper pays the same freight rate. In reality, rates can vary widely, depending on the relationship with the shipping company, the volume of shipments and the method of booking. Shipping companies often distinguish between large customers with long-term contracts and occasional customers booking through the spot market. Large customers, the so-called ‘space-fillers’, usually get lower rates because of their fixed volumes and long-term cooperation. Smaller shippers, who book occasionally, usually pay higher rates and are more often subject to surcharges, such as fuel surcharges and congestion surcharges. Conclusion Sea freight may seem simple, but reality is often complex and full of nuances. Misconceptions about container availability, port operations and transparency of tracking information can lead to delays, higher costs and logistics headaches. By having a better understanding of these five common misconceptions, companies can optimise their sea freight strategies, cut costs and respond more effectively to the challenges of international trade.

What are the Incoterms® 2020 rules?

International trade is complex, and it is important that both buyer and seller know exactly who is responsible for what part of the transportation process. This is where the Incoterms® rules play an essential role. In this blog, we explain what the 11 Incoterms® 2020 rules mean and how they can help you make clear agreements about responsibilities and costs. What are Incoterms®? Incoterms® (International Commercial Terms) are standardized trade terms used worldwide in international sales and purchase agreements. These rules determine who bears the costs and risks, who is responsible for transportation, and who deals with issues such as customs clearance and insurance. The rules provide clarity between buyer and seller and help avoid misunderstandings or disputes. The 11 Incoterms® 2020 rules As of 2020, there are 11 Incoterms® rules. These are divided into two groups: rules specific to sea and inland waterway transport, and rules suitable for all forms of transport. Below is an overview of all Incoterms® so you can make an informed choice for your logistics processes. EXW (Ex Works)With EXW, the buyer assumes virtually all responsibility. The seller makes the goods available at their location (such as a factory or warehouse), after which the buyer is responsible for transportation, export formalities, and all risks. This is the Incoterm that requires the buyer to do most of the work. FCA (Free Carrier) – Freight-free to carrierFCA offers a slightly better balance between buyer and seller. The seller is responsible for delivering the goods to a carrier, usually chosen by the buyer. Once the goods are turned over to the carrier, the risk passes to the buyer. FAS (Free Alongside Ship) – Vrachtvrij langszij schipBij FAS levert de verkoper de goederen naast het schip in de haven van verzending. Vanaf dat moment is de koper verantwoordelijk voor het laden van de goederen en alle kosten en risico’s die daarbij komen kijken. FOB (Free On Board) – Freight free on boardFOB is a commonly used Incoterm for ocean transportation. The seller bears the costs and risks until the goods are loaded aboard the vessel. From then on, responsibility lies with the buyer, including transportation and insurance. CPT (Carriage Paid To) – Freight paid up toWith CPT, the seller pays the cost of transportation up to an agreed destination. However, the risk passes to the buyer as soon as the goods are handed over to the carrier. This means that the buyer is responsible from then on, even if the seller pays for further transportation. CIP (Carriage and Insurance Paid To) – Freight and insurance paid up toSimilar to CPT, but here the seller also pays for minimum insurance for the goods in transit. This provides additional protection for the buyer, which is particularly important for long shipping chains or expensive goods. CFR (Cost and Freight) – Cost and freightUnder CFR, the seller pays the cost of transportation to the destination, but the buyer bears the risk once the goods are loaded aboard the ship. This means that if something goes wrong en route, the buyer is responsible, even if the seller has paid for the transportation. CIF (Cost, Insurance and Freight) – Cost, insurance and freightLike CFR, but with an important difference: the seller also pays for minimum insurance for the goods in transit. This provides the buyer with additional security in sea transport. DAP (Delivered At Place) – Delivered at destinationWith DAP, the seller delivers the goods to an agreed location, and the buyer is responsible for unloading the goods. The risk remains with the seller until the goods arrive at the destination. DPU (Delivered at Place Unloaded) – Delivered at destination and unloadedDPU is the only Incoterm where the seller is responsible for unloading the goods at the agreed location. This is convenient for buyers who do not have the means to arrange unloading themselves. The seller bears the risk until the goods are unloaded. DDP (Delivered Duty Paid) – Delivered Duty PaidDDP is the most comprehensive Incoterm for the buyer. The seller bears all costs and risks, including customs clearance and import duties, until the goods arrive at the agreed location. This is the easiest option for the buyer, but it brings additional responsibilities for the seller. Why do Incoterms® matter? Incoterms® provide clear agreements between buyer and seller so that both parties know exactly who is responsible for what part of the transportation process. This prevents misunderstandings and helps to avoid problems if something goes wrong en route. At Van der Helm Logistics, we very often work with Incoterms® rules because they ensure a structured and transparent logistics process. Depending on your specific shipment and destination, we help you choose the right Incoterm, so you always know where you stand. Conclusion Whether you transport goods by sea, land, air or rail, choosing the right Incoterms® rule is essential for a smooth logistics process. At Van der Helm Logistics, we understand that each customer has unique needs and are happy to help you make the right choices so that your logistics operations always run smoothly. Want to learn more about how we can support you in choosing the right Incoterms® for your shipments? Contact us today and let our experts help you.