Tag Archives: ocean shipping

What Is Ocean LCL Shipping?

International shipping comes in different shapes and forms. Shippers can choose the most suitable transportation mode for their shipment depending on what they need: quick transit or cost-savings. Air shipping will offer fast transit times, but it will come at a cost. Ocean shipping will be significantly slower, but at the same time, much friendlier-priced.

ocean lcl shipping

After the introduction of a shipping container idea at the beginning of the 20th century, ocean shipping became a very convenient and cost-efficient way to handle international shipping. Today, shipping containers come in a few sizes, 20ft being the smallest. A regular 20ft container offers about 33 cbm (cubic meters) of internal capacity.

 

What is Ocean LCL Shipping?

Often, shippers do not have enough freight to fill the whole container. In this case, the trucking industry offers LTL (Less than Truckload) instead of the full truckload. What about ocean freight? Are shippers doomed to pay for the whole container, even if they don’t use all available space?

Nope! Luckily, freight forwarders offer LCL (Less than Container Load) and consolidate multiple shipments in one container. Ocean LCL shipping allows shippers to move smaller shipments without having to pay for the whole container. Although LCL will usually be more expensive per cubic meter compared to FCL (Full Container Load), it will usually be more cost efficient for shipments up to 15 cbm.

What are the advantages and disadvantages of LCL?

Just like anything else, LCL might have some disadvantages which accompany the benefit of cost savings. There might be delays with shipment consolidation at the origin terminal, as well as at customs in case there are issues with other freight in the container due to incorrect paperwork, etc. Technically, the risk of freight damage is higher as well.

However, the benefits outweigh the drawbacks most of the time. Ocean LCL shipping is the most cost-efficient mode for small international shipments compared to FCL or pricey air shipping. Most small and mid-size businesses that are unable to fill the whole container prefer LCL for their international shipping needs.

Are you shipping internationally and think that LCL might be a way to go? Our expertise and an extensive network of freight forwarders let us get the best rates for your freight. Contact us for a quote to see if LCL is the right choice for your next international shipment!

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3 Ways Megaships Provide Opportunities for U.S. Ports

Efficiency in the international cargo transportation network is a critical factor for the health of the global economy. It’s no secret that U.S. ports lack in efficiency, capacity, and technology compared to Asian and European ports, especially since the arrival of megaships. 

Megaships, the largest of which can hold up to 20,000 TEUs, have created congestion at U.S. ports, and they’ve revealed deeper problems with American container transportation infrastructure.

What’s Wrong with U.S. Ports?

There are many challenges that create congestion and inefficiency at U.S. ports, but major problems include:

  • Labor productivity issues
  • Unexpected surges in cargo volumes
  • Disruptions in surface transportation
  • Unreliable schedules of rail and over-the-road (OTR) carriers loading/unloading containers
  • Shortages of equipment
  • Vessel operators’ schedule and reliability
  • Shortage of container storage space

As Asian countries increase their export volume as well as the efficiency of their ports, they are more and more likely to send megaships to the U.S. These megaships will continue to exacerbate the problems mentioned above.

The entire container shipping industry operates on slim margins. For ocean carriers, fuel is the main operating cost. Between 1998 and 2013, the cost of fuel rose 790% while the cost of container shipping dropped 20%. Ocean carriers face extreme pressure from consumers to keep shipping costs low, and using megaships is one of the only ways to avoid price increases.

Are there Efficiency Opportunities?

With that in mind, megaships are a trend that won’t go away. In fact, they will only get bigger. U.S. ports are not prepared to handle this kind of volume of containers at one time. But, with some operational changes, these megaships present big opportunities for efficiency at U.S. ports and beyond.

There are 3 main ways megaships enable efficiency at U.S. ports:

Sorting and Storage

With larger vessels, containers must be handled in high concentrated volumes, as opposed to a steady flow of containers from several small vessels. Typically, this causes problems at ports, but it is an opportunity for efficiency too. When freight is all grouped together it is easier to sort and store. For example, for export goods, the complexity of matching export cargo with the correct ship is reduced, saving loading time and improving operational efficiency.

Operational Productivity

The speed and size of the workforce required to load, unload and store containers is a huge part of port efficiency. At U.S. ports, megaships allow for higher crane density and productivity – crane operators spend much less time moving between vessels to load/unload freight and therefore increase the container volume capacity of a single port. Also, with fewer vessels, which create a higher density of cranes, less supervision and buffer operational capacity is needed, saving on labor costs.

Surface Transportation

Megaships create higher concentrations of cargo volume, which allows for collaboration and synergies in surface transportation. Ocean carriers regularly participate in vessel-sharing in order to reap the full benefits of megaships. With their combined shipment information, they can collaborate to improve shipment speed, reduce overall costs and also improve port efficiency. For example, cargo that is sharing a vessel can also share rail space after unloading at the port, allowing cargo containers to be moved more quickly and efficiently through the port. This same concept can extend to freight that is moving inbound to the port – containers can be consolidated into one shipment for easier sorting and storage.

Megaships represent a major problem for U.S. ports. Current port operations are not prepared for the high concentration of freight volume that larger vessels create. However, with some planning and a few operational tweaks, megaships also present an opportunity to improve efficiency.

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Ocean Capacity: Bad News for Commodities Shipping

The Chinese economy drives demand for freight on the seas, and its economy’s existing weakness is weighing on the global shipping industry. Ocean shipping is necessary to the global economy, but shippers are experiencing somewhat of a crisis: low demand and surplus shipping vessels for hire. China’s slow economy is reducing demand for commodities like coal and iron ore, which affects dry bulk ocean transport.

The dry bulk shipping downturn began in 2008, after the beginning of the US financial crisis, and got worse in 2015 as the Chinese economy weakened. 2009 was the worst year on record for container shipping: the industry lost $20 billion.

Then, as Chinese business picked up, shipping companies ordered huge vessels in anticipation of demand from China and its stable, growing economy. But, that anticipated growth never came, and in 2014, shipping companies had huge ocean transport fleets but only a small demand for goods.

In 2015, there were a record number of ocean vessels, the same year the Chinese economy, the world’s second largest, grew at its slowest rate in 25 years. Since the second half of 2015, there has been even less demand for dry bulk goods in China. The Chinese economy remains way below economic expectations, said Symeon Pariaros, chief administrative officer of Euroseas.

Shipping brokers estimate 690 dry bulk ships, or about 7% of the global fleet, are sitting idle. The idling vessels are proof of the falling demand for commodities in China.

The Baltic Dry Index (BDI) tracks shipping rates for major bulk commodities across multiple shipping routes. The BDI made history with more record lows than any other year in its 30-year history. In December 2015, the BDI fell to an all-time low of 471 points.

It’s predicted that demand in 2016 will continue to drop in the amount of coal, grain, iron ore and other bulk commodities shipped. Vessel supply growth is expected to outpace demand growth in 2016 by more than 2% which is likely to keep freight rates low, specifically for dry bulk and container ships.

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