Businesses of all sizes are involved in transporting goods to and from other parts of the world.The principal methods of transport are: >air>road>sea>rail>post>inland waterways (on the Continent).
Within all these methods, there are many options a choice of road hauliers, many different shipping lines and airlines all offering services.
1.1. Air Freight;The advantages of sending goods by air are speed, cash flow, lower stock levels and insurance premiums and reduced packing requirements .
1.2. There are several types of aircraft which carry freight scheduled airlines, freight aircraft, combis and charter aircraft .
1.3. Air freight is usually carried in the hold of an aircraft, in Unit Load Devices (ULDs), on pallets and loose in freight compartments of aircraft .
1.4. To calculate freight rates, shippers have to calculate the volume (cubic capacity) of the shipment, and compare it to the gross weight. Shippers pay freight on whichever is the greater .
1.5. Express operators have become essential suppliers of overnight freight services in recent years .
1.6. Road freight;There are a number of different types of vehicles for the carriage of freight by road tilt trailers, box trailers, flat trailers, draw-bar trailers and specialised equipment .
1.7. The amount of cargo which can be loaded onto a road vehicle depends on the number of axles, the type of vehicle and the structure of the unit itself .
1.8. Sea Freight Ro -Ro; There is a large choice of Ro-Ro ferries linking Ireland with other parts of Europe, especially via the UK .
1.9. Exporters sending their goods by Ro-Ro can ship full load consignments, part-load consignments or groupage consignments .
1.10.Sea Freight Lo –Lo; Containers are a useful alternative to trailers for freight to other parts of Europe .
1.11. Rail Freight;The advantages of sending goods by rail are an absence of weight limits, environmental benefits and the avoidance of ever more congested roads .
1.12. Intermodal transport is now a viable option for exports; goods are carried in different types of swap bodies, draw-bar trailers or containers .
1.13. Consignments sent by sea are either FCL (full container load) or LCL (less than container load) shipments .
1.14. The majority of sea freight travels in 20 foot or 40 foot containers.
1.15. Transit times by sea depend on the shipping line chosen. Many lines are members of shipping conferences while others remain non-conference or outsider lines .
1.16. There are three main types of surcharges CAF (currency adjustment factor), BAF (bunker adjustment factor) and congestion surcharge .
1.17. Postal services are divided into two those of Letter Post International for letters and very small packages, and those of International .
1.18. Transport costs should be looked at in conjunction with other costs. The choice of a method of transport depends on the type of goods, packing, legal requirements, the location of consignor and consignee, speed required, frequency of service, reliability,terms of delivery and cash flow .
1.19. The choice for a transport supplier is between freight forwarders, both large and small, integrated operators or working directly with carriers as far as this is possible .
1.20. The most logical solution is to divide traffic between a small number of companies with whom one can build up a close working relationship over time .
2.0 Air Freight
2.1 Suitable types of cargo
The quickest method of sending goods to another country is by air. Apart from limitations on the size of individual consignments and on the carriage of dangerous goods (contact IEA for information), there are no goods which cannot be carried by air. There are, however, certain types of cargo which are particularly well suited to air freight. These include fresh fruit and flowers, livestock, perishable goods, fashion goods and newspapers; as well as small, high-value items such as diamonds, jewellery and electronic components. Emergency medical supplies or spare parts for a machine breakdown are also ideal for air freight, as time is the prime consideration.
2.2 Air freight compared to sea freight
The majority of air freight moves from Ireland to destinations outside Europe. Within Europe, particularly Western Europe, most freight moves by road although air freight is an option. So if you are exporting to destinations outside Europe, the two main alternatives are by air or by sea.
The advantage of dispatching goods by air rather than sea are: (a) Speed however, speed comes at a price, and air freight is generally much more expensive thansea freight. The value of the consignment is a vital consideration; high-value products can absorb the higher costs of air freight much more easily than low-value commodities. The price differential between sea and air transport narrows for smaller consignments, and when the consignment weighs less than about 50 kilos there is probably not a great deal to choose in terms of price.(b) Cash flow greater speed means that payment can be demanded far earlier.(c) Stock stock levels can be much lower as the replacement of goods only takes a few days.(d) Insurance for goods in transit, insurance is cheaper when journey times are reduced.(e) Packing requirements for air cargo are generally less onerous than for sea freight. The reason for this is that air freight is far quicker and handling techniques gentler.
2.3 Carriage of freight
2.3.1 Method of carriage
Freight is carried by air in a number of ways:
·The hold of an aircraft which is beneath the passenger floor. This is known as the belly, and is a cavernous area under the passenger deck. The internal dimensions vary from one aircraft to another, but for long distance freight traffic the Boeing 747 is the most popular aircraft. The belly of the 747 can carry motor vehicles, but the internal height is only just over 1.5 metres.
·Unit Load Devices (ULDs) which are special air freight containers or pallets. The containers are made of aluminium, and have been designed to fit snugly into the cargo hold of an aircraft. The containers vary in size, depending on the aircraft for which they have been designed. These containers are often on roller floors. Their advantage is that they offer a high degree of protection to goods. Loading and unloading these containers is very quick.
·Pallets are used. Goods are strapped onto a pallet which is secured by pulling a net tightly over the goods. Pallets come in different sizes depending on the aircraft in use.
·Some cargo can be loaded loose into the freight compartment, although this is now becoming a rarer occurrence.
2.3.2 Types of airlines and aircraft
The structure of the air freight industry is complex. Cargo is carried in three types of aircraft:
·Air freight is carried by scheduled airlines on passenger flights, but the larger airlines also operate a proportion of their fleet as freight-only aircraft.
The operating environment for air freight is changing almost continuously, and one effect is that new schedules and services are introduced every
· Freight aircraft, known colloquially as freighters . Some passenger airlines operate freighters, and there are also a number of airlines which operate only freight aircraft. The trend is now to return to using freighters because the demand for non-stop flights restricts the amount of freight which can be carried on long-haul routes.
·The combi which combines both freight and passengers. The difference between a combi and the ordinary
passenger flight, which also accepts freight, is that on a combi flight, some seats are removed from the passenger cabin, and the
space is taken up by as much as 40 tonnes of freight. The airline can retain operational flexibility as to the exact split between passengers and freight which can vary from flight to flight.
· Charter aircraft are used for larger shipments or to air freight cargo to more remote destinations not served by regular flights. Exporters can, through a freight forwarder, arrange to charter a complete aircraft or part of an aircraft. The choice of aircraft depends on the cargo, the destination and other factors, but most types of aircraft are available for charter.
The practical differences between passenger and cargo aircraft and all cargo aircraft are given in Figure1.
There are many options in air freight as illustrated in Figure 2, where there is a list of possible routes for sending an air freight shipment from Ireland to the USA.
The routings and timetables of aircraft are frequently subject to change. Detailed timetables and schedules of both passenger and cargo flights are available from the airlines by phone or via their websites, or through an air freight forwarder.
Figure 1 Differences Between Passenger and Cargo Aircraft
and All Cargo Aircraft
The differences are:(a) greater capacity of cargo aircraft to accept larger shipments;(b) cargo aircraft can generally accept larger quantities of dangerous goods; some categories of dangerous goods can be shipped on cargo aircraft only ;
© cargo is the absolute priority. On passenger aircraft a sudden rush of passengers can easily result in the freight being left behind or short-shipped.
Figure 2 Air Freight Options from Ireland to the USA
There are various possibilities when planning to send cargo from Ireland to the USA:(a) from an Irish airport with Aer Lingus ;(b) from Dublin or Shannon with an American airline e.g. Continental, Delta;(c) from an Irish airport with a third country airline flying into Ireland and onwards to the USA e.g. Aeroflot;
(d) from an Irish airport to a UK or Continental airport and then onwards to the USA with a UK/Continental/American airline
e.g. Air France, British Airways, KLM;
(e) by road from Ireland to the UK (principally Heathrow) and then onwards to the USA with a UK/Continental/American or other airline;
(f) from Ireland or the Continent with an all cargo airline e.g. Federal Express, DHL, UPS.
2.4 Freight rates for air freight
2.4.1 Determination of rates
Freight rates are normally expressed on a per kilo basis, and for overseas destinations, the rates are expressed in the currency of the exporting country. So, Irish exporters normally receive quotes in Euros. When a country’s currency is not convertible, the US dollar is used. A rate might, therefore, be 2 per kilo, so 100 kilos costs 200.
The factors determining air freight rates are: (a) the type of commodity; (b) the distance; (c) frequency of services; (d) cargo capacity available on the route.
There are four basic types of air freight rates: (a) Specific commodity rate (SCR). An SCR relates to a specific commodity, and is a lower rate than the published standard rate. SCRs are less widely used than ten years ago, but are sometimes available. They exist when there is an established flow of traffic between two countries. For example, there are SCRs for newspapers and magazines leaving Ireland.
(b) Commodity classification rate (CLASS). A CLASS rate applies to a group of commodities, for example, live animals or human remains.
(c) General cargo rate (GCR). A General Cargo Rate applies to all commodities not covered by an SCR or a CLASS rate.
(d) Unit load device (ULD). This rate applies for complete units - either aircraft pallets or containers. (See Para. 2.3.1 Method of carriage.)
Usually a forwarder books a complete ULD, and brings together freight from several customers for the same destination into the same container.
All the regulations about air freight rates appear in a series of three books - The Air Cargo Tariff (known commonly as TACT). The three books are:
- TACT Rules Book;
- TACT Rates Book North America;
- TACT Rates Book Worldwide.
IATA Netherlands Data Publications
PO Box 491170 AA Badhoevedorp Tel: + 31 20 403 7993Fax: +31 20 403 7981E-mail: firstname.lastname@example.orgWebsite: www.iata.org/tact
2.4.2 Weight/volume relationship
The weight/volume relationship is usually 6,000 cubic centimetres to one kilogram for Irish exports. Shippers have to calculate the volume (cubic capacity) of every shipment and then see whether they pay freight on the weight or volume one always pays on the greater. This weight/volume relationship can make the carriage of light, bulky cargo by air especially attractive. An example of how this formula works appears in Figure 3. The conversion factor of 6,000 cubic centimetres to one kilogram is the most commonly used, but many airlines use different conversion factors. It is therefore important to check the conversion factor used by the airline before making these calculations.
Figure 3 Examples of the Weight/Volume Relationship for Air Freight
Consignment 1 Actual weight 6 kilos dimensions 40 x 40 x 45 cms
Volumetric weight is 12 kilos Shipper pays freight on volume (12 kilos) rather than 6 kilos Consignment 2 Actual weight 15 kilos dimensions 40 x 40 x 45 cms
Volumetric weight is 12 kilos
Shipper pays freight on weight (15 kilos) rather than 12 kilos.
>6000 is the weight/volume relationship for most air freight.
2.5 Air freight consolidation
Freight forwarders also organise consolidation services to most destinations. The air freight forwarder brings together goods from several different companies, loads them onto one pallet or into a container, and delivers the unit to the airline. The airline normally charges for the complete unit whereas the forwarder invoices each shipper for a proportion of the total cost plus a margin.
Consolidation rates, shortened frequently to consol. rates, are cheaper than when goods are consigned
Consolidation rates, shortened frequently to consol. rates, are cheaper than when goods are consigned via a forwarder directly to an airline. There are daily consolidations to nearly all the major trading centres around the world. Some forwarders offer consolidation services which use other European airlines, so goods are first taken to the Continent before on-forwarding overseas.
The large freight forwarders, with offices around the country, operate a comprehensive range of export services about which they will be pleased to pass on information. There are also specialised freight forwarders who might deal specifically in more remote or complicated markets, such as South America.T his information can often be obtained by word-of-mouth recommendation or through trade publications. Particularly at Dublin airport, there are freight forwarders established who can assist with all aspects of the shipment booking space, customs formalities, documentation and insurance as well as collection and delivery of the goods. The speed of growth of the market probably means that more and more companies will consign their goods to the air in the years ahead, so it is a method of transport which is well worth allocating the time to investigate.
2.6 Air freight within Europe
2.6.1 Competition with road operators
Within Europe, air freight has lost many of its attractions in recent years. The loss has been particularly severe over the shorter distances to Belgium, the Ruhr area of Germany, Luxembourg, Northern France and the Netherlands. To these destinations, road operators guarantee anything from a 48 to72-hour service. This is often a great deal more reliable than air freight.
Although the airport-to-airport transit time is very rapid, shippers are more interested in the door-to-door transit time, and the road operators can achieve a similar or faster door-to-door transit time than the airlines. Many airlines now despatch goods to the closer destinations by road. This is common practice, and while a shipper might be under the impression that the goods are going to Paris by air, it is possible that they are moving across to France by a road vehicle under contract to the airline.
For the more distant countries within Europe, such as Finland, Greece, Italy or Spain, air freight is still quicker. Remember, however, that a road trailer will travel from Ireland to Northern Italy or Northern Spain within two to three days, and it is not uncommon for air freight to take a similar time from door-to-door.
2.6.2 Use of air freight
While air freight cannot normally be recommended for the shorter journeys, nevertheless emergency shipments should be sent by air. This is the only way of ensuring a same day delivery to, for example, Paris or Frankfurt. Special arrangements to handle such a shipment will have to be made with the freight forwarder.
Another factor influencing the choice between air freight and road is the distance from the consignor and consignee to the relevant airports. If there are no regular flights from the nearest airport, this factor would militate in favour of road. If, however, one of the airports with direct connections is easily accessible, air freight might be the preferred choice.
Some of the European airlines now market a door-to-door delivery service which means that they collect the consignment, arrange all the documentation, despatch the goods and deliver them to the customer overseas in accordance with a pre-determined timetable. The airlines also offer a daily on-board courier facility linking Ireland with most other commercial centres in Europe. The courier accompanies the goods, and this assists in speeding up customs formalities. However, this service is very expensive.
3 Express Operators
3.1 Services offered
In the last twenty years, a new group of companies has established express services throughout the world. Referred to as couriers, integrated operators and express companies, the services they offer have several features in common:
(a) Door-to-door service.
(b) Their strength is the carriage of small packages documents, samples and spare parts althoughthey now also carry larger consignments. Because consignments are travelling by air, the express operators limit the size of any one individual package but not the size of the total consignment. Every operator has a different limit depending on the size of aircraft, but in practical terms, every package should be capable of being manhandled.
(c) Terms of delivery are either ex works or delivered domicile . Thus either the exporter or the customer pays all the charges terms such as FOB and CIF are not favoured.
(d) The pricing is per kilo. The prices charged by the express operators are almost always more expensive than traditional groupage services which are operated by freight forwarders. The express tariffs are easy to understand. Companies which send larger consignments, over 500 kilos, through the express operators, must be prepared to pay the equivalent of the price for a fully loaded trailer. So, dispatching 500 kilos to Paris might cost the exporter as much as if he had booked a full trailer, capable of carrying 24,000kilos, from a traditional freight forwarder. The rate schedules of the express operators include all incidental charges such as customs clearance, and are clearly set out. For example: Collected Dublin, delivered to New York 5 per kilo.A shipment of 20 kilos costs €100.
(e) Many of the larger express operators (DHL, TNT, Federal Express or UPS) have an extensive fleet of aircraft which fly between major cities each night. Many of the express companies organise their operations on a hub and spoke system. This image comes from the wheel of a bicycle which has a central hub, and spokes which link into the hub. For an express operator, the hub is the central depot, e.g. Amsterdam Schipol or London Stansted Airports. Many of the hubs are highly sophisticated computer-controlled sorting centres handling tens of thousands of small packages every day.
(f) Smaller express operators tend to group their traffic into larger lots, and then use the services of their larger competitors.
(g) The express operators work under different conditions of carriage to airlines and freight forwarders .
The conditions of carriage tend to be more restrictive, and offer less compensation than airlines or freight forwarders.
3.2 Popularity of service
The professional presentation of the express companies together with the simplified price structure and the enhanced service levels have led to a rapid growth in demand for their services. Much of the traffic attracted to the express operators was previously carried by the airlines who are now themselves beginning to market competitively-priced services in an effort to regain some of this business
Air freight forwarders, the traditional supporters of the scheduled airlines, are also now entering the door-to-door market as a response to the express operators. Many freight forwarders have launched express services. Operationally, many forwarders are quite competent at organising the delivery of goods within 24 or 48 hours, and they make their services attractive by offering far lower rates than the express companies.
4 Road Freight
4.1 Advantages of the road trailer
With the development of the motorway system, the road trailer has become the most favoured method of moving goods particularly for traffic within Europe. The advantages of the trailer are:
·Goods can be carried on the same unit from door-to-door so reducing the risk of damage.
·Virtually every factory or warehouse in Europe is situated on a road, so trailers can collect and deliver goods anywhere.
4.2 Types of trailer
4.2.1 Tilt trailer
The most popular trailer used for road transport is the tilt trailer often colloquially referred to as a tilt.Its name comes from the tarpaulin cover which encloses the goods, and protects them against the weather. The legal name for this vehicle is a semi-trailer. The main features of a tilt trailer are:(a) The standard length of most tilt trailers travelling in Ireland is 13.6 metres. The external width of tilts is 2.5 metres and height is between 2.2 and 2.5 metres.
(b) In most cases, the tilt and the wooden supports remain fixed to the trailer, as goods can be loaded onto the trailer once the two flaps at the
back of the tilt have been opened.
(c)The tilt unrolls and the wooden supports of the vehicle can also be removed fairly easily. This is very useful when the cargo might be a large
indivisible piece which requires a crane to manoeuvre the goods onto the unit. It also means that, without the wooden supports, goods can
be loaded through the top of the trailer.
(d) The floor of a tilt trailer is made of wood or galvanised steel.
The tilt trailer is ideal for most types of cargo.
4.2.2 Box trailers
A variation of the tilt trailer is the box trailer also known as a box van. The main features are: (a) the carrying unit is a box with solid sides and doors;(b) all sides of the unit are solid, so the goods are well protected, and might require less packing as a result; (c) box trailer can only be loaded through the back doors; (d) as the sides of some units are made of a solid material, the carrying capacity of box trailers is often less than for tilts. This is not normally a problem as the type of goods suitable for box trailers is usually relatively light.
Box trailers are used to transport fragile consignments such as data processing, electrical or electronic equipment.
4.2.3 Flat trailer
A flat trailer, often also referred to as a flat bed trailer or colloquially as flats. The features are: (a) it is a standard trailer which does not have a tilt; (b) goods are transported either totally unprotected or covered with a sheet which is normally filthy.
The sheet provides limited protection against rain, but not nearly the high level of shelter afforded by the tilt trailer. They are used for goods which do not require any great degree of protection.
Flats are used for goods which, because of their size, cannot be loaded onto a standard tilt trailer larger pieces which do not fit a tilt or strong cargo and are not damaged by exposure to weather. Flat trailers should not be used for the transport of goods which are susceptible to damage through the ingress of water or moisture.
4.2.4 Draw-bar trailer
An increasingly popular form of road vehicle within Europe is the draw-bar trailer also known as a road train. The features are: (a) A draw-bar unit is an extended tilt trailer which has been divided into two. The first part of the unit consists of the rigid vehicle and the second part is a trailer. The two parts are linked by a solid coupling device.
(b) The overall draw-bar unit can be as long as 18 metres although users of draw-bar trailers will not notice any difference in the internal structure between a draw-bar unit and a tilt trailer. Within the overall limitation, individual manufacturers will choose how long each part should be for maximum operating efficiency.
The unit can be split in two with the back half hitched to another rigid vehicle for onward movement. Alternatively, the back part of the unit can be dropped for a few hours for goods to be loaded while the front vehicle continues and completes other jobs. The great advantage of all these trailers is the operational flexibility which they provide exporters.
(d) All these types of trailer have retractable legs which can be wound down to support the whole unit. This means that companies which might require a few hours to load or discharge a trailer can request that the trailer is left at their premises.
Draw-bar trailers are suitable for shipping large numbers of small packages, household removals and furniture to the Continent, as in these cases the weight limits are unlikely to be relevant. In addition, plenty of other commodities such as electrical and electronic goods, clothing and textiles are light and the greater capacity of the draw-bar is more relevant than the weight limitation.
Draw-bars have a role to play in the transport of bulky goods and groupage traffic and in other situations where the capacity of a vehicle is more important than the weight. In addition they are ideal for intermodal traffic .
4.2.5 Specialised equipment
From time to time, exporters or importers might require specialised equipment to transport very heavy goods, very light goods, bulk liquids or goods with out-of-gauge dimensions. There are several types of specialised equipment available: (a) Refrigerated semi-trailer used for food and other goods which have to be kept at a controlled temperature.
(b) Step-frame trailer the trailer has a step towards the front of the unit. The wheels are small, so only light goods can be put into the unit. The design of the trailer allows shippers to maximise the carrying capacity of the unit, and this is invaluable if the product is both light and bulky.
Low loader the trailer has a low platform and many wheels, and the vehicle is used primarily for heavy machinery. For heavy machinery, such as production equipment, it is important that the importer has the correct fork lift to offload the machine from the trailer. Generally, forklifts can cope with loads up to 1500 kilos.
(d) Curtain -sider ; the trailer has curtains on both sides of the trailer making it very suitable for loading palletised goods from the side.
(e) Liquid tankers are cylindrical in shape, and are used to transport bulk liquids fuel, chemicals, beer, wine and other products in fluid form.
4.3 Axle weights
The carrying capacity of tilt or flat trailers depends on the number of axles on each trailer. The rules vary throughout the EU, and the weight limits include an allowance for the weight of the trailer and tractor:
·For combined tractor and trailer with five axles, the maximum legal weight allowed in Ireland is 40tons. The tractor and trailer together weigh about 14,000 kilos, so this leaves 26,000 kilos for the goods themselves. This calculation changes in accordance with the precise specification of the unit, so if the weight limit is likely to be critical, one should obtain the precise weight of the units from the carrier.
· There is a new concession for six axle trailers. The weight limit for these vehicles is 41 tonnes. There is no payload advantage for exporters using six axle vehicles, but the greater number of axles over which the load is spread, the less the damage to roads. Thus, it is probable that six axle trailers will benefit from a road tax concession which might make them more competitive than five axle trailers.
· Four axle trailers and tractors are limited to 32,520 kilos, so their carrying capacity is limited to between 18,000 and 20,000 kilos.
·Draw-bar trailers, although longer than any other vehicle, are limited to 35,000 kilos, and this does remove some of the advantages which might be gained from their additional length.
·Swap bodies which travel to and from a rail terminal and travel by rail to the Continent have a special dispensation of 44 tonnes.
Most new trailers have three axles, so are capable of carrying 26,000 kilos older trailers are likely to be of the two axle type. The EU Member
States have a standard weight limit, higher than that of Ireland, of 40,000 kilos.
4.4 Accompanied or unaccompanied trailers
Trailers are shipped either accompanied or unaccompanied. When a trailer travels accompanied, this means that both the trailer and the tractor travel together, and the driver takes the vehicle on and off the ferry. Unaccompanied trailers travel alone, which means that the driver leaves the unit on the quay side, and the shipping companies organise the loading and the unloading of the trailers. This procedure is carried out by using tug masters which are small tractors capable of pulling trailers on and off ships. When the trailer arrives at the destination port, another tractor and driver will collect it and take the unit to its destination.
In general terms, most accompanied trailers are used for journeys to the UK or to Europe where the journey is relatively short. Longer
routes, in either time or distance, tend to be dominated by unaccompanied traffic.
Some companies insist that driver-accompanied operations are more efficient because the presence of a driver at all times ensures a minimum of delay at the ports. A driver can shout (and swear!) while an unaccompanied trailer will not complain if it is left in a corner for a few days. Driver accompanied units are also frequently used in the case of high value cargoes.
4.5 Ro-Ro ferries
Ro-ro ferries have transformed the transport links between Ireland and the rest of Europe. The principle of the Ro-Ro ferry is summed up by the term ro-ro which means roll-on, roll-off. The cab and trailer drives onto the ferry as one unit, and drives off again just like motorists who travel to the Continent on holiday. The goods remain loaded on the trailer throughout the sea crossing.
There are several ro-ro services between Ireland, the UK and France. There are also numerous ro-ro services from the UK to ports from Scandinavia to the Iberian Peninsula.
On many of the passenger routes, some of the sailings are reserved primarily or exclusively for freight. This is of great value to shippers of dangerous goods, live animals and other specialised cargoes . Normally the choice of route will be left to the trailer operator or freight forwarder, and the decision will be taken in the light of operational requirements, the price of the ferry crossing and other factors.
New services begin and others close down at regular intervals; For current information see IMDO website (www.IMDO.IE ).
For RO-RO services from Ireland to the UK and continental Europe, see IEA Services Guide .
4.6 Types of consignment
When goods have to be sent to another part of Europe by road trailer, the shipment can be classified in one of three ways:(a) full load;(b) part load;(c) a groupage shipment.
4.6.2 Full load traffic
A full load occurs when the goods occupy the whole of the trailer which means that the vehicle runs from consignor to consignee entirely for one customer.
A full load shipment cannot be delineated in terms of weight or volume except to state that the trailer space or capacity is occupied by one consignment. If the goods are heavy, the cargo is likely to weigh between 16,000 and 24,000 kilos whereas light goods, such as plastic goods, fill the capacity of the trailer even if the weight of the cargo is negligible.
4.6.3 Part-load traffic
When a substantial proportion of the trailer is taken up by one shipment, the consignment is usually referred to as a part load. A haulier combines between two and five part loads together although there is no firm rule about this. The traffic is all destined for a similar area, and in most cases, a part-load shipment weighs anything from 3,000 kilos to 15,000 kilos.
4.6.4 Groupage traffic
Smaller shipments are normally referred to as groupage cargo. Groupage has traditionally been the preserve of the freight forwarder, although in recent years, hauliers and courier companies have begun to offer similar services. Groupage operators consolidate shipments from several customers, and load them all onto trailers which run to major commercial centres overseas. Here the vehicles are unloaded and each consignment is treated separately again, and final delivery is often made by a local haulier.
There is no typical groupage shipment, but the term covers anything over about 10 kilos in weight up to about 5,000 kilos.
As a rule of thumb, most groupage services tend to depart at the end of a week, as this is when exporters have finished producing the goods. Trailers then travel over a weekend, and can be in most parts of Europe on the Monday or at the latest on Tuesday morning. The advantage of a weekend transit is that the shipper is making use of what is normally dead time rather than moving the goods during the working week when they could be used for production or sale.
4.6.5 Freight rates for road freight
The rates are as follows:(a) Full load shipment if a trailer from Waterford to Paris costs 800, the full load customer could expect to pay about 900 for 20 tons or 45 per 1,000 kilos.
(b) Part-load shipment the part-load shipper with 10 tons will not pay half, but perhaps two-thirds of the selling price (about 580 or 58 per 1,000 kilos).
Groupage shipment the groupage shipper who comes along with 1,000 kilos could expect to pay around 300 which represents 33 % of the cost for perhaps 6 % of the capacity of the trailer. The smaller the consignment, the higher, relatively, becomes the freight charge.
Freight forwarders are enthusiastic promoters of groupage services. Exporters should not be embarrassed about approaching a freight forwarder with a small shipment.
4.6.6 Calculating road freight rates
The weight/volume relationship is three cubic metres to 1,000 kilos for Irish exports. Shippers have to calculate the volume (cubic capacity) of every shipment and then see whether they pay freight on the weight or volume one always pays on the greater. An example of how this formula works appears in Figure 5.
The practice for road freight rates is to be expressed per kilo, and to be rounded up to the nearest 100kilos or the nearest 1,000 kilos. Rounding is always upwards. A typical freight rate is expressed as follows:
Cork/Milan 58 per 100 kilos or 0.3 cbm (cubic metre)In the example of Figure 5, costs of freight Cork/Milan are: Consignment 1 600 kilos @ 58 per 100 kilos6 x 58 = 348Consignment 2 448 kilos rounded up to 500 kilos5 x 58 = 290
Figure 5 Examples of the Weight/Volume Relationship for
Consignment 1 Actual weight 600 kilos dimensions 140 x 120 x 80 cms
Volumetric weight is 448 kilos Shipper pays freight on actual weight (600 kilos) rather than 448 kilos. Consignment 2 Actual weight 400 kilos dimensions 140 x 120 x 80 cms
Shipper pays freight on volumetric weight (448 kilos) rather than 400 kilos
4.7 Short sea container services
Before the arrival of the road trailer, containers were widely used to transport goods between Ireland and the rest of Europe. The trailer then became dominant, and use of the container declined. In recent years, however, the container operators have made an effort to regain their market share.
The main differences between using containers and trailers for traffic within Europe are :(a) Superior protection for the goods as containers have solid sides, which also provide better protection against pilferage.
(b) The majority of containers open at the rear, so loading and unloading can become time consuming. (c) There are many different sizes of containers , so smaller quantities of goods comprise a full load, and can move independently of any other goods.
(d) Transit times for containers used to be slower than trailers, but the difference in transit time between an unaccompanied trailer and a container is now marginal. A driver-accompanied trailer is in most cases likely to be quicker. It is however interesting to note that containers are used to ship un refrigerated butter to the continent every summer, showing the confidence that some shippers have in short sea services.
(e) Containers are favoured on environmental grounds. On the Continent in particular, containers move on canals, rivers and by rail as well as road.
(f) Container traffic is usually much cheaper than trailer traffic.
There are frequent sailings from the ports of:
To Ports in the UK such as:
And also the Continental Ports of:
The short sea operators from Ireland can be seen on IEA Website, Services Guide.
5.1 Íarnród Éireann
Íarnród Éireann provides an alternative way to move containerised and bulk products. Using a combination of rail and road services, freight can be exported to Europe and further afield via the various ports. Rates vary according to size of container, volumes of bulk and palletised traffic.
The advantages of sending goods by rail instead of road are:
·avoidance of road congestion.
For more information on rail services, contact Íarnród Éireann, Tel: 1850 767676. Website: http://www.irishrail.ie/
5.2 Intermodal transport
5.2.1 Method of operation
The method of operation for a typical inter modal shipment is illustrated in Figure 7. The intermodal concept is that the longest part of the international door-to-door journey is on a rail wagon.
There are two main categories of inter modal equipment:(a) swap bodies;(b) containers.
Figure 7 Method of Operation - Dublin to Como (Italy) Via Liverpool with a Swap Body
Stage 1 The swap body travels by road to the point of collection, and, after loading, proceeds to Liverpool Euro terminal by ferry.
Stage 2 The unit is lifted onto a specially-designed rail wagon, and the wagon with swap body travels to Milan rail terminal through the Channel Tunnel. In many cases swap bodies are transferred to other services at some stage during their journey. In this case there would be a transhipment in Wembley, north London.
Stage 3 In Milan, the unit is unloaded and finishes its journey by road.
5.2.2 Swap bodies
Swap bodies (sometimes spelt swop) are further divided into different types trailers and road trains. The French name for swap body caisse mobile is widely used, and refers to several of the specific swap bodies described below.
Swap bodies - trailers
A swap body resembles a standard 13.6 metre trailer. The big difference is that the part of the truck into which the cargo is loaded is detachable from the chassis. It is difficult to distinguish a swap body from a standard 13.6 metre tilt trailer on the road: they look similar, and the latest models have almost the same dimensions. The dimensions vary in accordance with the design and manufacturer of the trailer, and the exact specifications should be checked prior to loading.
In order for these units to be lifted on and off rail wagons, their structure is re-enforced, and this means the payload is slightly less than for standard road trailers. The overall weight limit for swap body trailers is 38,000 kilos which is the Irish weight limit, and 44,000 kilos if the swap body is travelling by road to a rail terminal . Depending on the exact weight of the swap body and the accompanying tractor, shippers should usually be able to load up to 26,000 kilos of cargo. Once again, the precise weight limitation needs to be ascertained before loading.
Swap bodies can generally be loaded from the side as well as from the end, and are suitable for all types of cargo which are conventionally shipped in tilt trailers .
There are other types of swap body suitable for certain categories of traffic: (a) refrigerated swap bodies for temperature-sensitive products; (b) curtain-sided swap bodies for palletised goods.
Most of the intermodal container traffic is shipped to the continent, and the goods are then loaded onto rail wagons for the longer Continental stretch of the journey. The advantage of this method of transport is that the trailers can be sent to a wider variety of Continental ports.
The overall price and frequency has to compare favourably with door-to-door movement by road, and this again means that the Continental stretch of the journey should usually be at least 500 miles.
5.3 Freight terminals
Intermodal services operate from a number of freight terminals in the UK. The important ones for Irish exporters are located in: (a) Liverpool;(b) Manchester.
5.4 How to access rail freight services
There are three Irish companies involved in intermodal services to the UK/Continent.
Intel Ltd. Knocktopher Co Kilkenny Tel: 056 68800 Fax: 056 68849 E-mail email@example.comWebsite: http://www.intelfreight.com/ Navigator Freight Agency45 North Wall Quay Dublin 1 Tel: 01-703 4343 Fax: 01-855 7130 Website: http://www.irishrail.ie/ Quality FreightDublin Port Centre Alexandra Road Dublin 1 Tel: 01-836 6233F ax: 01-836 6061Email: firstname.lastname@example.orgWebsite: http://www.qualityfreight.com/
6. Sea Transport - Overseas
6.1 Advantages and types of vessels
The majority of freight to destinations outside Europe moves by sea. The main advantages of sea freight are:
·almost every type of cargo can travel by sea;
·on the main trade routes there is a wide choice of shipping lines which together provide regular and reliable departures several times each week. Most of the shipping lines operate out of the UK and The Netherlands. The only direct regular services are between Ireland and the Baltic on the one hand and the Mediterranean on the other.
There are three main types of vessel:
(a) Liner vessels, which operate scheduled services between a group of ports. Most liner vessels are now container ships. With the exception of services to Scandinavia and the Mediterranean, liner vessels do not call at Irish ports. Instead smaller vessels called feeders are used to transport the containers from Ireland to the transhipment port.
(b) Tramp ships, which are available to charter for one trip or more. Tramps are predominantly used for the transport of bulk cargoes such as grain, timber or ores and by exporters who have a significant volume of cargo to move at one time. One can also part-charter a tramp, and the ship owner then looks for another consignment to the same area of the world to complete the load.
6.2 Shipping by container
Most cargo is shipped in containers. Containers of different sizes are loaded onto a vessel and unloadedat the port of destination. A container with one load is referred to as a FCL (full container load); an individual part-consignment is referred to as a LCL (less than container load) shipment. LCL is the maritime equivalent of groupage and consolidation.
The advantages of the container are: (a) It allows the exporter and importer to benefit from a door-to-door service. The container is normally
placed at the exporters factory for loading, and from there is taken by road or rail to the port of embarkation. At the end of the journey, the container is delivered to the consignee for unloading.
(b) There is no physical handling of the actual goods, as the whole container is lifted onto and off the vessel. Packing does not need to
be quite so rigorous as for conventional vessels, and this makes the cost of transport more economical.
Containers put the burden of responsibility for loading and unloading the goods onto the consignor and consignee who are more likely
to handle the goods with greater care.
(d) Security is improved, as the container remains sealed throughout the journey except for customs examination. In practical terms,
it is also far more difficult to spirit away a complete container than individual pieces of cargo.
Container services demand the existence of a supporting infrastructure which includes handling equipment and container-carrying lorries which are known as skeletal lorries. Containers are loaded onto skeletals at the port or at the railway yard nearest to the final destination of the goods.
Countries in Europe, North America and most parts of the Far East have invested the enormous sums required in port infrastructure, but this is not the case for all other parts of the world. Certain parts of India, China and Africa are still unsophisticated, and this complicates the operation of container services. Absence of appropriate road equipment in some markets means that containers are unloaded or stripped at the port, and the goods are put onto local lorries for their final delivery. This defeats one of the great objectives of containerisation which is the door-to-door movement concept.
6.2.2 Types of container
In the deep sea trades, containers are often colloquially referred to as boxes. The shipping lines have virtually evolved a standard to the effect that containers are either 20 footers or 40 footers.
Most containers are end loading which means that the doors at one end of the box open, and all cargo has to be loaded or unloaded through these doors. Forklift trucks, used widely for loading and unloading, can easily drive into the containers. The main features of these containers are: (a) The 20ft and 40ft refers to the length of the container, and in most trades shippers can choose only between these two possibilities. (However, there are also 30ft containers and, increasingly more common, the 45ft large volume container.
(b) As a general rule, the internal width of a container is 2.2 metres and the internal height varies between 2.3 and 2.6 metres. Shipping lines have been anxious to maximise the carrying capacity of containers, and more and more containers are now being built with an internal height of 2.6 metres(8ft 6in). When absolute precision is important, it is essential to check with the shipping line or freight forwarder concerned.
Containers are made from a variety of different metals, so some are heavier and some lighter. This is one of the factors which influences their carrying capacity. A more important influence is the weight restrictions on Irish roads, as most containers travel by road between the factory and the port. If the road restrictions limit the weight of the cargo which can be loaded, the solution is to send the container by rail where weight restrictions are limited only by gantry capacity. See Para.10:5.1.The framework of a 40ft container is heavier than that of a 20ft, because more material is used to build the container. This means that in certain cases, 20ft containers can accept a higher payload than 40ft containers, but this again depends on the age and manufacture of the box. As a general rule, 20ft containers can accept between 18,000 and 20,000 kilos of goods and 40ft containers between 20,000 and 24,500 kilos. There are, however, plenty of exceptions to these generalisations, and if the weight limit is of critical importance, consult the shipping line.
6.2.3 Special equipment
Shipping lines are aware of the need to have special types of containers that can carry cargo which is unsuitable for the standard units. Almost inevitably, shipping lines charge a substantial surcharge for specialised equipment, and this reflects the fact that the containers are not so readily available, and require special handling.
184.108.40.206 Flat rack containers
These containers can be used for the shipment of machinery which will not fit into a standard box. The container is the base of the unit with some very short sides. The machine or piece of equipment is not given total protection from the weather, as normally some parts of the machine protrude out of the flat rack. High pieces of equipment often require movement in a flat rack. As well as paying a surcharge for the container, shippers pay for any additional space next to the flat rack which cannot be utilised in the normal way.
220.127.116.11 Open top containers
The name describes these containers. The open top container has no top at all, so its main use is for over-height pieces of equipment. Some shipping companies drape a plastic or canvas sheet over the top of the goods, but this type of cover only provides a minimum of protection.
18.104.22.168 Removable roof containers
The removable roof containers must not be confused with the open top containers. Again, the words describe their role perfectly. The roof of the box can be removed, so that goods can be loaded from overhead. This is very useful for large machines. Once loaded, the roof goes back onto the container, and the shipment is afforded a much higher degree of protection than in an open top container.
22.214.171.124 Refrigerated containers
Refrigerated containers are used for the transport of fresh and perishable goods, mainly foodstuffs. The containers are easily recognisable from the refrigerating unit which is attached to one end of the box. This unit maintains the cargo at a constant temperature throughout the journey which can last several weeks. These units can keep products cool in the tropics, but also warm in severe winter conditions when necessary.
6.3 Conventional cargo
Until the advent of containerisation, most cargo was shipped on conventional vessels. The other widely-used expression for this method of shipment is break bulk. When goods are shipped conventionally or break bulk, it means: (a) The cargo is loaded onto the ship loose. The ship will normally have several holds, and the goods are stowed in these holds or on deck for the journey.
(b) Cargo shipped conventionally requires far stronger packing than if the goods are containerised, particularly if the shipment is being stowed on deck exposed to the weather. Strong packing cases are essential plus additional protection for all delicate and moving parts.
Conventional services to many parts of the world have disappeared. They tend however to exist to less developed countries where the ports do not have the infrastructure to handle containers. So there are conventional liner services to parts of Africa, China and Indonesia as well as remoter destinations, such as islands in the Pacific, where the volume of cargo does not justify investment in container services.
(d) When scheduled conventional services do not run as frequently as container services, shippers might have to wait for between one and two months for a vessel.
(e) Many conventional vessels run by inducement which means that the shipping line runs a service when sufficient cargo is available to justify a departure. Companies who depend on these types of service are normally notified by the shipping company of an impending departure.
(f) Although conventional services are increasingly rare, these types of vessel are appropriate for certain types of cargo which are unsuitable for containers. Out-of-gauge machinery, large indivisible items or long pieces of metal, such as pipes, are more suited to conventional vessels. Conventional vessels allow the shipper to send larger quantities at one time.
6.4 Transit times
Shipment by sea is slow, even though in recent years the speed of ships has increased considerably. Shipping links with major markets, such as the USA, the Middle East and the Far East, are excellent. Typical transit times are given in Figure 8.
Every ship adheres to a timetable, and usually call at several Continental/UK ports to discharge and collect cargo ports on each trip. As previously mentioned most container traffic must first be shipped to a UK or Continental port on smaller vessels called feeder ships.
The most important ports for deep-sea traffic are:
>Felixstowe;>Liverpool;>Thamesport;>Tilbury;>Southampton;>Antwerp; >Zeebrugge;>Rotterdam;>Le Havre.
Allowance must be added to the transit time to take into account any waiting time for the vessel. The door-to-door transit time is considerably longer than the port-to-port times advertised, and if time is critical, it is important to calculate the period required realistically. It may be necessary to allow up to a weeks transit time. The Deep Sea Line will be able to advise on this. The choice of feeder operator will be made by the Deep Sea Line based on suitability of sailing and other factors.
There are several feeder companies operating to the UK and the Continent out of:
The Irish Exporters Association publish an annual guide to shipping services from Ireland as part of their export services guide. Details are also available on their website at http://www.irishexporters.ie/
Figure 8 Transit Times Ireland/Other Parts of the World
Ireland/North America (East coast)=10 to 16 days
Ireland/North America (West coast)=25 to 28 days
Ireland/North America (Gulf)=18 to 20 days
Ireland/Far East (Singapore)=22 to 27 days
Ireland/Far East (Hong Kong)=25 to 30 days
Ireland/Middle East=20 to 25 days
Ireland/South Africa)=20 to 25 days
Ireland/West Africa)=20 to 25 days
Ireland/Australia)=36 to 40 days
5.6 Freight rates for sea freight
5.6.1 General points
When shipping a FCL, the forwarder or shipping line quotes a rate in Euros, US dollars or another currency to cover the sea freight. Through rates are also available, and these include:
·movement from collection point to Irish port;
·loading charge at the Irish port;
·Irish export formalities and documentation charges;
·feeder charge to trans-shipment port;
·unloading and reloading charge at trans-shipment port;
·unloading charge at port of destination;
·delivery to consignee.
Shipping a 40 foot container FCL is always more expensive than shipping a 20 foot FCL as it occupies more space on the vessel. In most cases, the 40 foot price will be double the 20 foot price, but on certain routes, the 40 foot rate might only be one and a half or one and three quarters the 20 foot price or in some cases more than double the 20 foot rate. These differences arise because every shipping line has to match its containers to demand.
5.6.2 Principal surcharges
On almost every service, the freight rate is subject to at least one surcharge, often two and sometimes more. These are three principal surcharges:(a) CAF currency adjustment surcharge. The justification for the currency surcharge is that shippinglines revenue is expressed in US dollars, but many of their expenses are incurred in local currencies around the world. In addition, their income, although initially quoted in dollars, is then translated into local currencies for settlement by their customers. Exchange rates change all the time, and the CAF takes account of these movements.
(b) BAF Bunker adjustment factor. The BAF surcharge is related to the cost of bunkering or oil which is one of the most critical costs for all shipping lines. The price of oil changes frequently and the BAF surcharge follows these fluctuations.
Congestion surcharge; This is intended to cover the additional costs incurred by a vessel when it is discharging at a congested port. The ship is delayed, and running costs are high even when the ship stands at anchor. Congestion surcharges are normally levied as a flat amount per container.
From time to time shipping lines introduce a war risk surcharge. This is intended to compensate the line for the higher insurance premiums which are payable when vessels are operating in a dangerous part of the world.
The surcharges change, often weekly, and cannot be forecast in advance. The surcharges, however, do move both upwards and downwards, and it is not uncommon for a negative CAF surcharge to apply.
This means that the freight rate is reduced by the amount of the surcharge.
5.6.3 Understanding a surcharge
The existence of a surcharge does complicate the calculation of a freight rate. The method of calculatinga surcharge is in Figure 9.
Surcharges usually relate to the base rate not the accumulated total. In the example, the price ofUS$2,110 only applies until such time as any of the surcharges change. This might happen at any time and the calculation will have to be redone with the new figures.
Figure 9 Calculating Surcharges
Ocean freight is US$ 2,000 plus 5 per cent BAF, CAF at minus 2 per cent and a congestion surcharge ofUS$ 50.
Base rate=US$ 2,000
>BAF surcharge +5% of US$ 2,000 =US$ 100
>CAF surcharge -2% of US$ 2,000= US$ 40
>Congestion surcharge=US$ 50
5.6.4 LCL traffic
LCL applies to any size of shipment from a few kilos up to 15,000 kilos. There are LCL services linking Ireland with most industrial centres overseas, so sending a small package by sea does not present any real problem.
LCL services operate in the same way as trailer groupage services with other parts of Europe . Shipments are assembled in strategically-located depots around the country, and then loaded into one container which is sealed and delivered to the quayside for onward movement by sea. Upon arrival, the procedure is repeated so the container is unloaded on the quayside or in a central depot, and goods are then cleared of customs and delivered to the consignee.
Sea freight rates for LCL cargo are always expressed in terms of the weight-to-measurement ratio. For sea freight this ratio is 1 cubic metre (cbm) equalling 1 metric ton (1,000 kilos). An example is given in Figure 10).
Figure 10 Calculating a Sea Freight Rate
Rate quoted as $100 w/m. This means that every 1,000 kilos or 1 cbm will cost $100.
Example 1; A shipment 2m x 2m x 1m gross weight 5,000 kilos >Total measurement 2m x 2m x 1m = 4 cbm weight equivalent4,000 kilos gross weight 5,000 kilos>Freight rate based on weight 5,000 kilos @ $100 per 1,000 kilos
Cost of freight $500
Example 2 ;A shipment 2m x 2m x 1m gross weight 2,000 kilos>Total measurement 2m x 2m x 1m = 4 cbm weight equivalent>4,000 kilos gross weight 2,000 kilos>Freight rate based on volume 4,000 kilos @ $100 per 1,000 kilos
Cost of freight $400
Many shipping lines round up freight to the nearest 1,000 kilos, so if the chargeable weight is, forexample, 4500 kilos, the invoice will be based on 5000 kilos.
Most sea freight rates are expressed in US Dollars, and the dollars are converted into Euros at the rate applicable on the day of sailing.
5.6.5 NVOCC services
In order to personalise and market their consolidation services, many freight forwarders operate Non-vessel Owning Common Carrier services abbreviated to NVOCC. The features of an NVOCC service are:
·A freight forwarder markets a consolidation service under a particular name, and every document, bill of lading and invoice refers to this
· The shipping line appearing on the documentation does not exist, and the forwarder hands the cargo onto a shipping line. Yet, to protect its own position, the freight forwarder wants to control the shipment, issue its own documents and despatch consolidation boxes.
· Many large, reputable and well-established freight forwarders have been NVOCC operators for many years, and using their services does not expose companies to any real risk. More care should betaken with other NVOCC operators whose financial standing might not be so proven.
6.1 Services offered
An Post should be regarded as another option for international distribution. Services can be divided into two:
·Letter Post letters and small packages up to two kilos in weight;
·An Post Special Delivery Service (SDS) small packages up to 30kgs in weight.
The advantages of using the postal services for distribution are: (a) Worldwide service.(b) Easy access either deliver to the local post office or for larger quantities of mail or parcels, SDS can collect, usually free of charge.
Simple tariffs countries are divided into zones, and the price to anywhere in the country is identical. Delivery to a remote part of the country costs no more than delivery to a major commercial centre.
Some of the services, such as EMS International provide a computerised tracking service.
7. Inland Waterways
Inland waterways are widely used for the movement of freight on the Continent via a well developed network of rivers and canals.
Irish exporters access the Continental inland waterway network by using Ro-Ro ferries (see Para.10:4.5) or short sea operators (see Para. 10:4.7) to the Continent, and then transhipment onto inland waterway.
7.1 Containerised cargo
Many short sea containers (see Para. 10:4.7) move on the Continent by inland waterway. There are scheduled services between Rotterdam (Netherlands) using the River Rhine as the link to the industrial heartland of Germany. Containers are shipped from Ireland to Rotterdam, and are then transhipped onto smaller vessels which carry them down the Rhine. This method of transport is suitable for a wide range of manufactured goods although it is unlikely to be as rapid as direct trailer movement.
7.2 Advantages of inland waterways
(a) Environmental benefits; (b) avoidance of congested road and the driving restrictions; (c) economical when measured against the alternatives of road and rail.
7.3 Disadvantages of inland waterways
(a) Generally slightly slower than direct road transport;(b) the other disadvantages of inland waterways are the same as those that apply to container
movement (see Para. 10:4.7).
8 Selecting a Method of Transport
Freight costs are an important component of selling costs, and most exporters scrutinize freight quotations and invoices to see how these costs can be reduced. International transport is a very competitive industry with hundreds of freight forwarders, hauliers, shipping lines and airlines chasing after every kilo of freight.
The best way of looking at transport costs is to examine them in conjunction with other costs. This allows every company to make choices. The result of these choices might be to spend more money on transport in order to save far more substantial sums in other areas. Transport is not an isolated item of expenditure; it affects every other aspect of the business, and every transport decision taken should be examined in the light of its ramifications on the other parts of the business.
Sometimes transport costs can rise, but this may allow an adjustment in other expenses. This might happen with a company which switches from sea to air, but is then able to reduce its stock levels held overseas.
The word often used to describe the science of transport is logistics which combines all these elements transport, storage and information systems in an overall strategy. In fact, the decision on the most appropriate method of transport depends on a number of factors.
8.2 Type of goods
This is a major consideration, and there are a few basic observations:
·Low-value goods are more likely to go by sea than by air.
·The same is the case for heavier consignments.
·The size of the cargo might dictate the method of transport, e.g. diamonds travel by air as the freight cost is irrelevant for the small size of the goods.
Large pieces of equipment might not be appropriate for air freight, as aircraft have size and weight limitations.
·Maximise the capacity of the available unit. If a consignment can use the full capacity of a 20 foot container, this is preferable to half filling a
12 metre tilt trailer.
Packing costs must be examined in conjunction with transport costs. Again there are a few general observations:
·Despatch by air or road requires less packing than does a despatch by sea, so higher freight charges might be outweighed by savings in packing costs.
·Even when sending goods by sea, there is still, on many routes, the choice between a containerised service and a conventional one. Conventional shipment requires a greater degree of packing.
· Some goods are quite unsuitable for containerisation, and this too will influence the choice of despatch.
8.4 Legal requirements
The transport of many products is governed by legal requirements, either national or international. The different types of legal regulations and their effect are summarised: (a) Dangerous goods :
(i) Some types of goods cannot be shipped by air under any circumstances while others are restricted to cargo flights only. Airlines restrict the quantity of any particular substance which can be shipped on one aircraft. These restrictions might force the transfer of freight from air to another method of transport.
(ii) Many ports have restrictions on dangerous goods, and these might dictate the routeing. (iii) for English channel traffic, trailers with hazardous goods are often only accepted on freight only vessels, and might be prevented from using the Channel Tunnel.
(b) Weight limits freight movements by road are affected by numerous statutory controls which limit lorry weights. For example, a shipper faced with a large consignment of over 24,000 or 25,000 kilos might opt to move the goods by sea rather than road.
Drivers hours weekend driving is restricted, particularly in many countries on the Continent. For these markets, it is much more difficult to arrange the delivery of goods on a Monday morning. In such a situation, the trader might have to consider sending some of the freight by air or perhaps trying to persuade its customer to accept delivery on a Tuesday.
8.5 Location of consignor and consignee
The exact location of the consignor and consignee influences the choice of transport.
Consignors and consignees who are situated near airports are more likely to favour air freight. Similarly,a trade located near a port is more likely to be drawn to road transport to take goods across to the Continent.
In many cases the type of cargo determines the speed of transport. For example:
·High-value goods, such as medical equipment, computer parts and spare parts for machinery, tend to travel by air.
·Fresh fruit, vegetables and flowers must also be sent by air freight over longer distances, as they might otherwise arrive in unsaleable condition. Without air freight, much of this trade could not take place.
·If delivery is late, exporters have to consider how they can compensate for lost time.
There are additional choices which can be made even within the same mode of transport: (a) shipping lines have different schedules depending on their ports of call and the actual speed of their ships, so companies which decide to send goods by sea must also choose between the shipping lines on the basis of speed;
(b) with road freight, shippers can charter a whole van or trailer on a door-to-door basis even for a small shipment if the delivery is very time sensitive;
With airfreight, there is the choice of direct or indirect flights.
Frequency of service can dictate the choice of road operator, shipping line or airline. This is particularly important for components involved in just-in-time manufacturing processes. In addition, more frequent departures might lead to a lower level of stocks. For example, many Irish manufacturers who supply Continental electronics companies need a daily departure.
Speed and frequency are of no value without reliability:
·services must depart and arrive in accordance with the advertised schedule;
·the service must be equally reliable where documentation is concerned, as exporters must be certain of receiving the relevant documents from their nominated carriers in good order and as soon as possible.
8.9 Terms of delivery
If goods are sold by an Irish exporter on an ex works, free on board or free carrier basis the transport decision has largely been abrogated in favour of the customer overseas who will normally dictate the method of transport and the carrier.
However, although ex works, FOB and free carrier cargo becomes the responsibility of the consignee, the nature of the sales contract can result in the exporter facing increased costs. For example, if under an FOB contract, the exporter located near Limerick is asked to use a vessel which calls in at Dublin, it is the exporter who has to pay for the increased costs of inland haulage.
8.10 Letters of credit
Many goods exported overseas are sold against a letter of credit (see Chapter 5, Methods of export payment), opened by the importer. Under a letter of credit:(a) Reliability is critical. The terms of the letter of credit must be followed strictly. If the letter of credit states shipment before 30thOctober, and the shipper chooses a line which sails on the following day, it is best either to select another line or to attempt to persuade the customer to amend the terms of the letter of credit.
(b) The overseas customer imposes conditions which are decisive in deciding the method of transport.
This can even be the case when goods are sold on a CFR basis when the shipper should have the choice of method and carrier. Yet, if the letter of credit nominates shipment via XYZ Line, the exporter can either comply or try to have the terms of the letter of credit amended by the importer.
8.11 Cash flow
One of the other major influences on the choice of transport mode is cash flow, which influences every exporter. The division of responsibility, within firms, between transport and finance departments means that this key factor is often ignored.
The importance of cash flow arises because:(a) Overseas importers normally do not pay for goods until after they have been delivered. Goods sent by sea to the Far East will take about five weeks to reach their destination. If a customer has agreed to pay 30 days after the arrival of the goods, the Irish supplier will be paid approximately two months after the goods have been despatched. If the same shipment is sent by air, the transit time is normally three to four days followed by the 30-day period. In this case, the Irish supplier receives payment within about five weeks, which is four weeks earlier than if the shipment is sent by sea. The four-week saving becomes particularly relevant for companies which finance their export sales by borrowing money from the banks. The amount of interest paid has to be set against any additional freight sums incurred by sending the consignment by air instead of by sea. In the example given, the exporter saves four weeks bank interest if the goods are sent by air. The air freight charge is inevitably higher than the sea freight cost, and the exporter can compare the saving in bank interest and charges against the additional freight payable .If the interest charges exceed the freight costs, it might be a good idea to send the consignment by air. If the additional freight charges are higher than the interest costs, this favours shipment by sea.
(b) For accountancy purposes, one must regard goods in transit as stock. The higher the stock level, the greater the drain on working capital, so quicker transit times will result in a better utilisation of cash resources.
© Some companies can reduce the numbers of their distributors and warehouses overseas by using more rapid transport.
The distribution decision must be part of an overall business strategy.
·This might dictate a more expensive method of despatch to satisfy customers requirements. Customer satisfaction is as important as the financial aspects.
·Distribution has an impact on every part of a companys activities, and it is extremely important that every decision is taken in the light of its effect on the financial strength and marketing strategy of a company.
·Linking distribution to the business strategy can have a positive effect on profitability satisfied customers are likely to re-order, and satisfied customers might be more willing to pay slightly higher prices for a high-level service.
9:10 Choosing a Transport Supplier
9.1Use of a freight forwarder
Many exporters look outside for advice on transport. This is a role which freight forwarders are pleased to fulfill. There are several advantages of using a freight forwarder:
·Expertise forwarders are up-to-date with changes in freight rates, surcharges and shipping or airline schedules. They are also aware of new options which become available to any particular market as well as any special conditions which restrict access to a destination. Acting on the instructions of the customer, the forwarder will make a few enquiries, and then recommend a particular shipping line or routeing.
· Contacts overseas forwarders have established links with forwarders overseas or might have their own subsidiaries.
·Comprehensive service forwarders provide a comprehensive service including collection, delivery, handling, transhipment and customs formalities. Exporters can hand over the responsibility for the transport of the goods to a forwarder who can also arrange warehousing, packing and insurance, if required.
· EDI links increasingly forwarders have the ability to trace consignments throughout their journey. Recently, some forwarders allow their customers to track their own shipments via the forwarders website.
· Flexibility the forwarder is very flexible and can switch a shipment from one mode to another.
There are alternatives to using a freight forwarder: (a) Integrated operators can also supply a wide range of logistics services based on their own extensive network of daily flights and linked road transport. Well established, they offer consignment tracking and an ever-widening range of services.
(b) It is quite feasible to approach a carrier directly, obtain a quotation and then book the freight.
(i) For a road consignment, approach a road haulier directly.
(ii) For a sea shipment, approach a shipping line directly. This is easier for a FCL shipment; some lines do not accept LCL shipments except via a freight forwarder.
(iii) For an air freight shipment, the procedure is not quite so easy, and it is possible that the airline will ask you to book the freight through a forwarder, particularly if the consignment is small and appropriate for a consolidation service.
9.2 How to choose a transport supplier
9.2.1 Larger companies
The advantages of the larger companies are: (a) they are more likely to operate their own services to most popular destinations in the world; (b) larger companies have far more options; (c) they have more sophisticated IT systems which can be linked directly with their regular customers; (d) they are more likely to have subsidiary companies and reliable agents around the world, and consignments remain within their network at all times.
9.2.2 Smaller companies
The advantages of the smaller companies are: (a) they provide a highly personalised service; (b) some small companies have an in-depth knowledge of a particular market; (c) they are more flexible and entrepreneurial than their larger competitors.
9.2.3 Factors to consider
The factors to consider when choosing transport suppliers are: (a) The reputation of the company. This can be checked by requesting the names of a few of its customers.
(b) The financial standing of the company. (c) For freight forwarders and couriers, membership of their respective trade associations can generally
be regarded as positive. For freight forwarders, the trade association is the Irish International Freight Association who may be contacted at:
IIFA Merchamp House ,Vernon Avenue,Clontarf ,Dublin 3 Tel: 01 833 1429 Fax: 01 853 2268 E-mail: email@example.com
(d) The type of goods some carriers specialise in certain commodities.(e) The preferred method of transport.(f) The most popular destinations, so
the operator chosen is strong in that area.
9.2.4 Division of traffic
The result of this analysis is usually the division of traffic between several carriers. The reasons for this are:
·Division of the financial risk. If one carrier has a problem, existing relationships with others can help overcome the crisis.
·Carriers are specialised, and no one organisation can serve all destinations, different frequencies and varying sizes of consignments.
Thus a typical company might divide traffic on the following basis: (a) urgent documentation and samples destined for around the world integrated or express operator or courier;
(b) consignments travelling by air with a required transit time of between three and five days an air freight forwarder;
Consignments travelling by sea around the world a freight forwarder involved with sea freight or the shipping line direct;
(d) consignments travelling by road to the Continent a freight forwarder with a good European network or an express operator.
This division is one idea; it is not necessary to have four different firms as some firms are capable of carrying out more than one of these functions. In addition, it is always possible to switch suppliers, although there is great value in building up a close relationship with a small number of suppliers.
10. Summary of Key Points
1. The advantages of sending goods by air are speed, cash flow, lower stock levels and insurance premiums and reduced packing
2. There are several types of aircraft which carry freight scheduled airlines, freight aircraft, combis and charter aircraft .
3. Air freight is usually carried in the hold of an aircraft, in Unit Load Devices (ULDs), on pallets and loose in freight compartments of
4. To calculate freight rates, shippers have to calculate the volume (cubic capacity) of the shipment, and compare it to the gross weight.
Shippers pay freight on whichever is the greater .
5. Express operators have become essential suppliers of overnight freight services in recent years .
6. There are a number of different types of vehicles for the carriage of freight by road tilt trailers, box trailers, flat trailers, draw-bar trailers
and specialised equipment .
7. The amount of cargo which can be loaded onto a road vehicle depends on the number of axles, the type of vehicle and the structure of the
unit itself .
8. There is a large choice of Ro-Ro ferries linking Ireland with other parts of Europe, especially via the UK .
9. Exporters sending their goods by road can ship full load consignments, part-load consignments or groupage consignments .
10. Containers are a useful alternative to trailers for road freight to other parts of Europe .
11. The advantages of sending goods by rail are an absence of weight limits, environmental benefits and the avoidance of ever more congested
12. Intermodal transport is now a viable option for exports; goods are carried in different types of swap bodies, draw-bar trailers or containers .
13. Consignments sent by sea are either FCL (full container load) or LCL (less than container load) shipments .
14. The majority of sea freight travels in 20 foot or 40 foot containers.15. Transit times by sea depend on the shipping line
chosen. Many lines are members of shipping conferences while others remain non-conference or outsider lines .
16. There are three main types of surcharges CAF (currency adjustment factor), BAF (bunker adjustment factor) and congestion
17. Postal services are divided into two those of Letter Post International for letters and very small packages, and those of SDS International .
18. Transport costs should be looked at in conjunction with other costs. The choice of a method of transport depends on the type of goods, packing, legal requirements, the location of consignor and consignee, speed required, frequency of service, reliability,terms of delivery
and cash flow .
19. The choice for a transport supplier is between freight forwarders, both large and small, integrated operators or working directly with carriers
as far as this is possible .
20. The most logical solution is to divide traffic between a small number of companies with whom one can build up a close working relationship
over time .