Sea freight is still unbeatable

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Sea is still one of the most popular methods of transporting cargo, whether General or oversized. It's not an exaggeration to say that not much has changed in this area since Egyptians and Phoenicians. When it comes to transporting large and heavy shipments over long distances, Sea is still quite often the cheapest option. Therefore ships will still compete with Rail, Trucks and other transportation modes for many years to come.

Centuries have passed, people have made many technological breakthroughs, but still when calculating the cost of transport per kilogram of cargo (depending on the route and the shipment type), seas and oceans are still the most profitable mode of transport. International trade by sea accounts for over 75% of the total turnover of the global trade. What is more, specialists foresee that the vast majority of goods in international trade, the ever changing global market, and finally the large sums of money invested in vessels and infrastructure (ports, canals, etc.), guarantee that the popularity of sea freight will remain intact in the foreseeable future.

Costs of sea freight

Small enterprises to Multinational companies choose ships because they know that the vast majority of goods suitable for container transport can be moved in closed, sealed containers. These are widely used in sea freight.  They are known as TEU’s (twenty foot equivalent) with the length of 20, 40 or even 45 feet, which when stacked on decks of cargo ships (or in the Hold, below decks) can be compared to building structures using LEGO blocks. Some ships can transport more than 18,000 such containers per voyage.

Regularly planned voyages, during which large quantities of the goods can be transported, greatly reduce the operational costs. Even if the costs which a company must cover include loading, delivery of goods to the port, port charges, and finally unloading, sea freight is still one of the most advantageous when it comes to transport of oversized cargo over large distances.

Freight charges depend on many factors like fuel prices, availability of ship capacity, country of origin and type of goods, their destination and even the political situation in a particular part of the globe. The total cost of the operation can also be influenced by the human factor. Therefore the calculation of this kind of transport is based on many variables. In the period when fuel prices are moderate, the cost of  transport by sea is relatively comparable to air freight. This allows customers to change the delivery method depending on the transit time allowed and market requirements. There is also a possibility to combine sea and air freight (SEA-AIR), which allows for cost optimisation using those two completely different forms of transport while optimising the transit time as well.

Barriers for the development of sea freight

When asked about barriers facing the development of sea freight, experts often talk about limitations of transport capacities on the market, usually imposed by ship owners and operators. This happens when some routes are not profitable enough and vessels connections are shut down. Specialists point out that such practices stifle competition and increase rates. The consequence is also reaching and even exceeding the limits of port capacities and congestion of access roads. This is also visible in the construction of larger and larger sea vessels. Many of which cannot even enter into small and mid size ports, even in developed countries (such as the UK).

Another challenge, yet being the consequence of noble reasons, is ecology. Nowadays ports and ships go through very strict audits. PCS inspections are always carried out in accordance with local regulations binding for a particular country. Additional investments costing millions of dollars relate to stricter emissions (exhaust fumes from oil burning ) brought in during the recent years.

Another problem is also insufficient capacity. Ports struggle with the lack of land for further development. This happens mainly because lands around ports are developed more densely or due to lack of investment in infrastructure. Also not all ports can accept ships of all sizes. Large vessels often must reload cargo to smaller ships in order to deliver it to the destination. This element also significantly increases the cost of transport operations. Another issue is the political situation in many countries which can promote the development of transport or hinder it severely.

Good years

The condition of sea freight mirrors the economic development of a country. In 2017 many Polish ports noted an increase in loaded cargo to 21,225 m tons of goods, i.e. 9% more than in 2016. Increased traffic was noted in ports of Gdynia, Szczecin and Świnoujście.*  There was also a surge in transit cargo and passenger traffic. It can be clearly stated that transportation by sea supplies and supports industry, feeds the country and promotes growth to the whole population.

*Source: stat.gov.pl/obszary-tematyczne/transport-i-lacznosc/transport/gospodarka-morska-w-polsce-w-2016-roku,7,14.html

23.04.2018
Anthony Ranson

Anthony Ranson

Head of Sea & Air

He has over 25 years of High level management experience in international Freight Forwarding & logistics companies, the last 15 years more specifically in 3 & 4 PL Global Logistics. Anthony Ranson’s tasks in the Raben Group include the strategic development of the company’s Sea & Air business.

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