Selecting the right carrier is one of the most important logistics decisions you can make when it comes to your business. Selecting the wrong carrier can cause a nightmare filled with wasted time, wasted money, and angry customers.
Before you choose a carrier it’s important to set priorities. You want to make sure that you clearly identify which transportation factors are most important to you. When you’re aware of what your most pressing needs are, it will be easier to select the right carrier.
However, please note that your priorities may change. Supply chains are dynamic in that you may need to choose a different carrier based on changes in your business or external factors such as seasonality, international regulations, or market demand. It’s important to always keep this in mind before you make a decision.
Transit time is a top priority for most companies. Shipping via ocean can take an unnecessarily long time (weeks or months) if you’re uncertain about what you’re doing. When selecting a carrier, it’s important to calculate their Estimated Transit Time (ETT). This is the time between the Estimated Time of Arrival (ETA) to the destination and the Estimated Time of Departure (ETD) from the origin. You’ll want to select a carrier whose ETT fits the needs of your supply chain.
It’s also important to take a carrier’s equipment under consideration. For example, many ocean carriers practice slow steaming. This is a procedure in which cargo ships will operate at a speed that’s significantly less than their maximum. Pioneered by Maersk Lines in 2009 – 2010, slow steaming reduces a ship’s speed to 14 – 18 kts (26 – 33 km/h; 16 – 21 mph). Operating at speeds under 18 kts is referred to as super slow steaming.
Carriers do this to lower their fuel costs because less fuel is consumed when ships operate at a slower pace. This saves the carrier money but it increases the ETT of your shipment. Slow steaming can lead to an additional 7 days on Asia-Europe trips and 4-7 days on trans-Pacific moves.
Price is high on the priority list for most businesses. At the end of the day, every business must consider its bottom line and budget before making a decision. Ocean carriers typically price by the size of your shipment. If you’re shipping less than container load (LCL), the price is usually determined by cubic meters. You’ll want to check with your prospective carriers to determine which ones will be most cost-efficient.
When shipping long distances across borders it’s important to take other charges into account as well. Make sure that you’re aware of whether you’re shipping Freight On Board (FOB) or Cost, Insurance, and Freight (CIF). This will change your cost and liability dramatically. You’ll also want to take into account other charges such as customs examination fees, General Rate Increases (GRI), and more.
A ship being off schedule is not uncommon. For most businesses, a load that’s a few days late isn’t going to do much harm. However, for businesses in some industries it may be costly. Ocean carriers operate on weekly schedules. So, if a ship misses a cutoff at a seaport, it may mean that your shipment will be delayed for quite awhile.
Timing is important but so is the safety of your cargo. When you choose a carrier you’re trusting that company with thousands (sometimes millions) of dollars worth of your product. Accidents do happen and some incidents are unavoidable (inclement weather, war, etc.). However, you’ll want to make sure that the carrier you choose has an exemplary safety record and up-to-date insurance. If reliable transit is high on your priorities list, you’ll want to do your homework before you choose a carrier.
Routing plays a major role in the ETT and overall price of your shipment. For example, if you’re shipping from China to the US, you can go through the Panama Canal or the Suez Canal. Which do you choose? The Suez Canal has lower tolls which could benefit your bottom line. However, the recent expansion of the Panama Canal could reduce the ETT of your shipment.
Transshipments are another factor that can add time and money to your shipment. A transshipment is when a load is taken to an intermediate destination (or several) before reaching its final destination, which if missed can delay your shipment a week. You’ll want to take this into account when choosing your route and carrier.
There are many factors that should be considered when you’re choosing an ocean carrier. The perfect carrier doesn’t exist. The right carrier for your shipment will depend on several factors, including the ones above, and may change from shipment to shipment. Above all else, make sure that you prioritize what’s important to you and do your research, so you can make an educated, informed decision.