This map of shipping
routes illustrates the relative density of commercial shipping in the world's oceans.
Freight transport is the physical process of transporting commodities and merchandise goods and cargo. The term shipping originally referred to transport by sea, but is extended in American English to refer to transport by land or air (International English: "carriage") as well. "Logistics", a term borrowed from the military environment, is also fashionably used in the same sense.
Modes of shipment
Land or "ground" shipping can be by train or by truck (International English: lorry). In air and sea shipments, ground transport is required to take the cargo from its place of origin to the airport or seaport and then to its destination because it is not always possible to establish a production facility near ports due to the limited coastlines of countries. Ground transport is typically more affordable than air, but more expensive than sea transport, especially in developing countries, where inland infrastructure may not be efficient.
Shipment of cargo by trucks, directly from the shipper's place to the destination, is known as a door to door shipment and more formally as multimodal transport. Trucks and trains make deliveries to sea and airports where cargo is moved in bulk.
Much shipping is done by actual ships. An individual nation's fleet and the people that crew it are referred to as its merchant navy or merchant marine. Merchant shipping is the lifeblood of the world economy, carrying 90% of international trade with 102,194 commercial ships worldwide. On rivers and canals, barges are often used to carry bulk cargo.
Cargo was transported by air in specialized cargo aircraft and in the luggage compartments of passenger aircraft. Air freight is typically the fastest mode for long distance freight transport, but also the most expensive.
Intermodal freight transport refers to shipments that involve more than one mode. More specifically it usually refers to the use of intermodal shipping containers that are easily transferred between ship, rail and truck.
Terms of shipment
Common trading terms used in shipping goods internationally include:
- Free on board (FOB)-the exporter delivers the goods at the specified location (and on board the vessel). Costs paid by the exporter include load, lash, secure and stow the cargo, including securing cargo not to move in the ships hold, protecting the cargo from contact with the double bottom to prevent slipping, and protection against damage from condensation. For example, "FOB JNPT" means that the exporter delivers the goods to the Jawahar lal Nehru Port, India, and pays for the cargo to be loaded and secured on the ship. This term also declares that where the responsibility of shipper ends and that of buyer starts. The exporter is bound to deliver the goods at his cost and expense. In this case, the freight and other expenses for outbound traffic are borne by the importer.
- Carriage and freight (now known in the US as "cost and freight")(C&F, CFR, CNF): Insurance is payable by the importer, and the exporter pays all expenses incurred in transporting the cargo from its place of origin to the port/airport and ocean freight/air freight to the port/airport of destination. For example, C&F Los Angeles (the exporter pays the ocean shipping/air freight costs to Los Angeles). most of the governments ask their exporters to trade on these terms to promote their exports worldwide such as India and China. Many of the shipping carriers (such as UPS, DHL, FedEx) offer guarantees on their delivery times. These are known as GSR guarantees or "guaranteed service refunds"; if the parcels are not delivered on time, the customer is entitled to a refund.
- Carriage, insurance and freight (now known in the US as "cost, insurance and freight")(CIF): Insurance and freight are all paid by the exporter to the specified location. For example, at CIF Los Angeles, the exporter pays the ocean shipping/air freight costs to Los Angeles including the insurance of cargo. This also states that responsibility of the shipper ends at the Los Angeles port.
- The term "best way" generally implies that the shipper will choose the carrier who offers the lowest rate (to the shipper) for the shipment. In some cases, however, other factors, such as better insurance or faster transit time will cause the shipper to choose an option other than the lowest bidder.