Ask Trade Ocean
We hope that our frequently asked questions will provide some clarity on the exciting shipping sector.
1. What is the difference between Customs Clearing & Freight Forwarding?
- Customs clearing is the process of completing Customs formalities necessary to allow goods to be imported or exported to or from a country. This includes payment of all legislated taxes (Customs and VAT) as well as fulfillment of the requirements of other government departments such as Agriculture Forestry & Fisheries, Health, Trade & Industry and Transport (Maritime and Aviation).
- Freight Forwarding is a service provided by specialist Logistics Service Providers (Freight Forwarders) for arranging importing or exporting of goods by Sea, Air or Land on behalf of their customers, from point of origin to final destination. Freight Forwarders use established relationships with Air, Sea and Land Carriers to ensure the best trade-off between speed, reliability and cost whilst fulfilling customer requirements.
2. Any advice for first time shippers?
- Consider taking all risks door to door insurance cover for the full replacement value of you shipment.
- Prepare the shipping container for extreme conditions whilst in transit.
Cargo is subjected to numerous mechanical and climatic stresses during transit, such as variations in temperature, humidity, acceleration, tilting, slamming, condensation and corrosion.
- Aircraft cargo area temperatures typically fluctuate between plus 50º C on the ground to minus 40º C at cruising altitude.
- Even in maritime transport acceleration forces of 1 g are not unusual. This is the equivalent of a car accelerating from 0 to 100 kilometers per hour in 3 seconds.
- Acceleration forces during maritime transport can be quadrupled as result of shortcomings in packing and securing.
- The pitching effect near the stern or bow of a 300 meter long container ship results in containers covering a distance of 29 meters during a single cycle.
- A rolling angle of 30º at sea in heavy weather is not unusual
- Even in moderate seas most ships have a rolling period (movement side to side) of 10 seconds which equals 8640 cycles per day.
- Freight charges are based on either actual mass or a volumetric ratio. Pack contents tightly within the box or crate to avoid paying for empty space.
- Ensure boxes are marked with waterproof ink including shipper and consignee names and addresses.
- Costs may be lower on some Carriers to the same destination but there is invariable a trade off in transit times and reliability.
3. What minimum information will Trade Ocean need in order to provide an estimate for exporting my goods?
- - The total weight and dimensions of the cargo
- - The commodity
- - The pickup address
- - The delivery address
- - The shipping terms
4. What documentation will Trade Ocean need to clear my goods?
- - A commercial Invoice from the supplier.
- - A copy of the transport document (bill of lading or airway bill)
5. How do I register to become an importer?
- - Complete a DA185/Importer application from SARS
6. How do I register to become an exporter?
- - Complete the DA185/Exporter application from SARS
7. How long will the customs clearance process take?
- - Anywhere from 5 minutes to 2 working days, depending on the cargo and various other variable factors.
8. Should I insure my cargo?
- Yes. All Carriers trade under limited liability conditions and may not entertain claims for loss or damage irrespective of the cause. Under certain conditions you may even be compelled by maritime law to contribute to salvage costs of cargo other than yours that has been jettisoned at sea in the interest of the safety of the ship.
9. How can I prevent delays and ensure a smooth process of my shipment ?
- Ensure payment is made to your supplier early enough to avoid delays in obtaining Bill of Lading release.
- Ensure that your overseas supplier, or if you are the supplier for an export, creates all required documents correctly and sends to the destination in time to ensure customs clearing and payment of cargo dues do not delay collection of your shipment at Port of discharge.
10. How best can one save money on air freight?
- Choose a Groupage Service if available. Transit times may be longer but costs are lower as your shipment is grouped with others in order to share the benefit of a lower rate.
- Ensure contents of boxes are packed without any space wastage. Airfreight charges are based on actual mass or a volumetric ratio, whichever is the higher.
11. What are volumetric charges for Air and Sea carriage?
- Airline charges are based on shipment actual mass or a volumetric charge of 6000 cubic centimeters equals 1 kilogram, whichever is the higher.
- Shipping Lines less than container load (LCL) charges are based on metric tons or cubic meters, whichever is the higher.
12. Is it more cost-effective to import by sea or air?
- The most cost effective mode of transport depends on the actual mass, and volume of a shipment. Small shipments, typically below 100 kilograms, tend to be less costly by air. The value of a shipment also influences overall cost due to the increased cost of capital for longer transit periods when shipped by sea.
13. What is the maximum size of a shipment that can be sent by air freight?
- This depends on the airline selected and the type of aircraft they operate on the route required.
- A rule of thumb is about 300 x 200 x 150 centimetres
Please contact Trade Ocean to discuss your shipment.
14. Are there commodities that cannot be shipped by air freight?
- Yes, some items may endanger the safety of an aircraft or persons on board. The air transportation of dangerous materials can either be forbidden or restricted. Examples of such commodities are: Hazardous, flammable, dangerous chemicals and explosive materials.
15. What are the typical transit times by air and sea?
- Air freight
- Airport to airport is 3-5 days on average.
- Door to door varies, depends on customs clearing delays, estimated as 5-7 days.
- Sea freight
- Port to port, based on direct sailings, average of 18-26 days
- Door to door, dependant on customs clearing delays, average of 30-38 days total.
16. Where does Trade Ocean ship to?
- Trade Ocean is a member of a Global Network that spans 309 cities in 119 countries. Please contact Trade Ocean for any specific destination that you may want to ship to.
17. Can Trade Ocean ship my goods door to door?
- Yes, we are able to arrange pickup at origin and delivery at destination through our network of 596 offices in 309 cities.
18. Can cargo get released without presentation of an original Bill of Lading?
- Yes, a telex release of the Bill of lading can be arranged by the shipper. The shipper surrenders the Original Bill of Lading back to the Shipping Line at origin who advises their destination office to release the shipment to the consignee.
- A second option is for the shipper to arrange an Express Bill of Lading with the Shipping Line at origin. No original is issued, just a copy Bill of Lading is handed over to the shipper once the shipment is on board. The shipment is then released immediately upon arrival at destination. No further document needs to be surrendered by the importer.
19. What are Trade Ocean’s terms and conditions?
- Our terms and conditions comply with best practice within our industry.
Click here to download a pdf version of our terms.
20. Do Trade Ocean handle personal and household effects?
- Trade Ocean does not handle personal and household effects. We would recommend that you contract a company which specialises in the handling of personal or household effects.
21. What can a good forwarding agent like Trade Ocean do for me?
- A good Forwarding Agent will take ownership of your consignment from point of pickup to final delivery, provide you with advice that is in your best interest, take corrective action if there are any changes to planned transit and keep you updated on shipment progress.
- Activities that your Forwarding Agent should be taking care of include:
- Advise you of estimated costs, service options and any statute requirements.
- Arranging pick up.
- Arrange all export formalities.
- Ensure your shipment is booked on the first available departure.
- Monitor shipment progress.
- Ensure customs formalities are completed accurately, timeously and that correct duties are accounted for.
- Payment of all cargo dues and customs duties.
- Arranging customs examinations and other releases that may be required from all government departments.
22. What Inco terms do I need to know?
- Inco terms are a pre-defined set of eleven International contract terms published by the International Chamber of Commerce. These terms help traders avoid costly misunderstandings by clarifying the costs, tasks and risks involved in the delivery of goods from sellers to buyers. For details see www.iccwb.org. These rules define at what point in transit ownership, and therefore risk, of goods transfers to the buyer. Trade Ocean is able to assist you with advice on which purchasing option would be best for your business.
23. What does the term FOB mean?
- FOB is an abbreviation for the Incoterm “Free On Board”. It is a purchasing rule used for goods transported by sea or inland waterway. It means that the seller delivers the goods on board the vessel or procures the goods if already so delivered. The risk of loss or damage to the goods passes when the goods are on board the vessel and the buyer bears all costs from that moment on.
24. What does the term CIF mean?
- CIF is an abbreviation for the Incoterm: Cost, Insurance and Freight. It is a purchasing rule used for goods transported by sea or inland waterway. It means that the seller delivers the goods on board the vessel or procures the goods if already so delivered. The risk of loss or damage to the goods passes when the goods are on board the vessel. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination. The seller also contracts for insurance cover against the buyer’s risk of loss or damage during the carriage. The buyer should note that under CIF the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, he will need either to agree as much expressly with the seller or to make his own extra insurance arrangements.
25. What are the most common shipping terms?
- Currency Adjustment Factor (CAF):
Although the unit of currency used for a sea freight rate is normally the US$, the ship’s costs will be incurred in any of a range of currencies dependant on the trade route, ownership or nationality of the vessel or vessel’s owner.
The Carrier therefore raises a positive or negative CAF fee to adjust any anticipated imbalances in currency exchange. CAF is usually expressed as a percentage of the basic freight rate.
It is far easier for the Carrier to advertise the surcharge in this way than to re-write the many different rates they may have offered various people.
- Congestion Surcharge:
Surcharge on ocean freight rate for mooring fees in the port if it is “congested”.
Generally a fixed rate per TEU or W/M
- TEU (Twenty foot Equivalent Unit):
This term is used in sea freight containerized trades. The expression 'TEU' is used when describing the length of a container. It means 'twenty-foot equivalent unit' the reference is to the length of a standard 20 foot ISO container.
The ISO (International Standards Organization) which first determined the standard dimensions for containers is based in New York. Consequently, the standard sizes that they settled on are all given in imperial measurements and not metric ones. Note then that a 'twenty-foot' container is often incorrectly given its nearest metric length of 6 meters (The true metric length of a 20 foot container is 6,096 meters).
So, a standard length 20ft or 6m container is one TEU. Using the same formula then, a 12m or forty-foot container is equal to two TEU’s.
- Weight / Measure (W/M):
Closely connected to the concept of a Freight Tonne, W/M is used in connection with sea freight (and sometimes road freight) rates. If a freight rate is given at $85 W/M it means that the freight will be charged at $85 per unit of weight (one unit being 1000kgs) or unit of measurement (one unit being 1 cubic meter), whichever yields the higher revenue to the Carrier.
Normally the minimum charge will be for one freight tonne (in our example: $85.00). Some trades involve ‘split’ rates, for example $85w / $110m. This indicates that the Carrier will charge $85 per unit of weight or $110 per unit of measurement, whichever yields the greater.
In sea freight, the word demurrage is used under two conditions. One for charges that arise as a consequence of a delay to a chartered ship, the second relates to charges that arise as a consequence to a delay in returning equipment – normally containers.
When a vessel is chartered, the agreement will allow a period for loading and discharge.
If the vessel is not loaded or discharged by the end of this period, a demurrage charge is raised.
The concept of demurrage has been transferred to containerization. When a full container is delivered to the Seller (for loading) or the Buyer (for discharging), they need to complete their task within a set period of time. If the period is exceeded, then a demurrage charge (normally raised “per day or part thereof”) is levied. The demurrage charges raised are normally very high. This is to discourage the use of containers as cheap storage where if it was more cost-effective to leave the cargo on demurrage than to unpack the cargo and incur storage charges.
- General Average (GA):
In maritime law a sea journey is considered a joint venture between those who have an interest (buyers or sellers) in the cargo and the Carrier. If the voyage succeeds (i.e. arrives safely) all will profit. If the voyage fails (e.g. the ship sinks) all will lose.
If cargo or property is intentionally sacrificed to help avoid a real threat (or peril) that the vessel faces, the party who has suffered the loss will be compensated by the parties who have benefited by the sacrifice.
The compensation is based on the interest (value) that any one party has in relationship to the whole value of the joint venture.
This payment is the General Average Contribution. A General Average Act or Action, is when cargo is destroyed or damaged in the process of saving the venture as opposed to a General Average Sacrifice, which would involve the jettison of cargo, for the benefit of the venture as a whole.
FCL = Full Container Load is a standard twenty or forty foot sea freight container that is loaded/sealed and unloaded at the risk and account of the shipper or consignee.
LCL = Less than Container Load is a shipping term for cargo that is insufficient either in quantity or in weight to be transported economically in a standard shipping container (FCL)
In general, a full container load attracts lower freight rates than an equivalent weight of loose (break bulk) cargo.
As a general rule, if you want to ship volumes less than 14-15 cubic meters (about half the volume of a full 20 foot container) it would be more economical to ship as LCL.
Trade Ocean can assist you to make the cost comparisons.
- Marine Insurance:
In the context of international trade, the term ‘marine insurance’ refers to all forms of transport and not just sea or waterborne transport. Thus cargo moving by air may be covered under a Marine Insurance contract.
Many importers and exporters are under the impression that if they suffer a loss or damage of their shipment that the Carrier or Agent will make good the loss.
This is however not the case as Carriers and Agents worldwide operate under limited liability clauses in their contract of carriage (Bill of Lading or Airwaybill).
In many countries such limitations of liability is also legislated.
It is therefore important to have marine insurance cover in place when shipping as the owners of the goods may find themselves out of pocket should a loss occur if not insured.
Insurance is a contractual agreement between the insured and the underwriter whereby the underwriter offers to indemnify the insured against certain specified risks or events.
It is the intention of the agreement that the insured will be placed in the same position that they would have been in had the loss or damage not arisen i.e. they will be financially compensated for lost goods to the value of those goods and any additional charges that they may have incurred in the movement of the goods prior to the loss.
It is often overlooked, that the nature of the agreement is contractual and that as a consequence there are many things that the insured has to achieve in order to keep the contract valid. These include using adequate packing, proper carriers, and secure transfer of information. Above all else, the insured must act reasonably and honour their side of the contract.
All insurance contract types have some exclusions. Importers and exporters are urged to familiarize themselves with such clauses in their insurance contract in order to avoid any surprises, should a claim arise.
- Overstay and Storage:
- Overstay is the process of moving un-cleared sea freight containers into a customs bonded/authorized depot for storage purposes until the Consignee or his Agent is able to customs clear the container(s) and take delivery. This is generally done after the expiry of the standard free days offered at the port of discharge. This is arranged by the shipping line concerned.
- Storage is the charge that is levied by either the port (if cargo is not cleared after the respective free days at the port) or by the shipping line if the cargo goes into overstay and is stored at a depot.
- Merchant Haulage / Carrier Haulage:
In containerized sea freight, the Carrier may offer an inland service. This is to say that they may offer transport options prior to the port or subsequent to the port. This allows exporters and importers to obtain a single transport document for an extended portion of the journey – which may be the entire door to door movement.
If the inland movement is by road, this service is called “Carrier Haulage” (or any variation of haulage e.g. cartage or trucking).
Where the Exporter (shipper) or Importer (consignee) choose to use their own transport or contractor to effect this movement, this is called Merchant Haulage.
This can be cost-effective and it can give exporters additional time to load, or importers a quicker transit time – however, these benefits are not without risk.
The risks of Merchant Haulage are firstly one of operational timing. The Carrier will set a time limit on the period the Merchant is allowed to take the unit, load or unload it, and return it to the Carrier. Often the point of handover must also be the point of return which creates the complication of travelling great distances with an unprofitable empty container.
The second risk is that the Merchant is accountable for the equipment and this is a risk frequently overlooked by the merchant when taking insurance cover.
For example, if the container was lost or destroyed whilst in the Merchant’s care, the Carrier would have every right to seek compensation for the loss, and the Merchant may not have insured the return leg of the container.
- Terminal Handling Charge (THC):
This term is used in containerized Sea freight to describe the charges raised by the Port of Arrival or Discharge to lift the container onto or off the vessel. The cost normally embraces movement within the harbour to get the container to or from the ‘stack’. The ‘stack’ is literally the place where the containers are stacked during their period in the harbour and it is common for different vessels to have different stacks.
It is not common for the THC at origin or destination to be included in the actual ocean freight charges, although it might be possible to arrange this. The reason for this is that Ocean Freight is generally charged out in US $ whereas the THC cost would be incurred in a local currency.
Should you want us to expand on any of these questions or need additional insight, please contact us now.