In this blog post, we've rounded up some of the most interesting and exciting facts about containers. Hope you like it!
1. Only about half of the containers are owned by shipping lines. The rest are leased, usually for 1 to 10 years.
2.Once an ISO tank has been labelled for food, it cannot be used for other types of goods. The same goes for ISO tanks marked as chemicals. This is to prevent contamination risks.
3.Once an ISO tank is marked as a chemical, the type of chemical it can transportnext depends on the three chemicals it has previously transported.
4. Maersk is the only shippingcompany with GPS on reefer containers. All 270,000.
5. Reefer containers don't generate cold air, they just keep the temperature! They cannot return to their original temperature.
6. About 97% of the containers are made in China. This is due to lower labor costs. Also, it is easier to produce containers close to where most products in the world are produced.
7. With proper maintenance, a container can last about 30 years - maybe more! 40ft containers tend to last longer than 20ft containers. This is because, unlike 20-foot containers, they are usually not packed within their weight limit.
Why you should choose FOB over CIF when importing from China
Significance of choosing a CIF
Under CIF, the buyer takes ownership of the goods only at the port of destination. The seller is responsible for cost and shipping, and the transfer of title takes place at the port of destination. This is usually subject to a third person, usually a customs agent whose consignee is listed on the bill of lading.
This means that the agent, not the buyer, has the legal right to claim against the goods. The agent will then ask the buyer to pay for the destination, including customs clearance, taxes, etc.
Many novice buyers find this option particularly advantageous because they are relatively not responsible for the goods - logistically and financially. Also, Chinese suppliers often offer lower prices if buyers agree to CIF Incoterms.
Why are you so obsessed with CIF?
As you can imagine, there is a problem with choosing a CIF. This is a pretty bad practice for importsfrom China. Here are some features of CIF incoterm:
Prices for purchasing items under CIF are very low and competitive - often much lower than under FOB incoterms.
You usually don't know about item management as this is handled by the seller.
You are also often unaware that the consignee on the bill of lading is listed as the clearing agent (at destination), not yourself. (This applies to MBL or Carrier B/L)
After the goods arrive at the port of destination, certain decisions made by the agent may result in you having to pay five times the actual required fee. In addition to the arrival fee that every importer should pay above, you run the risk of ending up having to pay more. These include handling fees, exit fees, entry fees, etc. - basically the agent's concept of "own" to drive up prices, or unexpected surcharges on standard fees such as terminal fees.
Plus, having control over merchandise means they have better control over time. This means they may be in their favor - waiting for your item to arrive before notifying you. This will incur additional charges because you do not have enough time to schedule the delivery. This results in delays and additional charges that you must pay and settle before picking up your shipment.
FOB or CIF: Investigate Before Choosing
Common practices include an agreement between the destination agent and the seller to set a low price for the item being sold. This is to lure you before the destination inflates the cost, and then divide that profit among them. This has happened quite a bit with products imported from China, and such cases have been on the rise in recent years, especially in Latin America.
FOB works well for LCL as profit margins tend to be lower. As a result, this gives sellers and agents more power to drive up prices. If you're considering choosing a CIF Incoterm, you should ask yourself if it's really worth exposing yourself to such a risk at a low cost.
Advantages of choosing FOB over CIF
Unless you are dealing with a seller or agent you can trust, or have an agreement to list yourself as the consignee on the bill of lading, it is best to choose FOB Incoterm to avoid risk. FOB Incoterm provides features that CIF Incoterm does not. The responsibility for paying, contracting and managing the goods rests with you, the buyer.
Although it requires some extra effort on your part compared to a CIF, it is much less risky as you get immediate clarity on the costs involved. That said, problems like delays and unexpected extra costs can be avoided with good planning.
FOB also has the following advantages:
By controlling the agents involved, the buyer is able to exert pressure to lower the commercial price.
By minimising costs, it enables buyers to obtain tax benefits, such as a reduced VAT burden.
FOB also allows buyers to get better insurance prices, as you'll be looking for deals that cover most of your logistics. Unlike CIF, CIF only covers the movement of goods from the port of destination to the buyer's facility.
FOB or CIF: Considerations
One thing to keep in mind when choosing FOB is that complications can arise if the supplier refuses to work with the shippingcompany of your choice. Suppliers sometimes receive certain rebates for using specific freight forwarders and may therefore be reluctant to work with other consignees. This is a fairly common question. Therefore, the consignee should be prepared to put pressure on the shipper to help the freight forwarder smooth the process.
In short, new importers should not commit to CIF Incoterm unless you are familiar with seller practices. This is especially true when dealing with products imported from China. It is always recommended to use the services of afreight forwarder and choose FOB Incoterm when the situation allows. This is to avoid unpleasant surprises when the goods arrive. If you have any questions about choosing FOB or CIF, please feel free to contact our sales experts atTJ chinafreight!
In general, if all goes well, LCL shipping will not take longer than FCL shippingin terms of transit time. It might even be faster if you're lucky enough to make sure the remaining space is right for your cargo at the last minute.
Shared Containers, Shared Responsibility
However, you may experience delays while waiting for other shippers to group their shipments and have them ready. Also, in the event of any paperwork errors, delays are likely to occur as the entire container may be held by customs. While you don't want to be held back by someone else's mistakes, you should make sure your shipments are ready on time and that your documents are filled out correctly and accurately.
Auxiliary port
Another possible delay issue is if you're shipping to a lesser-known port. Most international trade routes offer frequent and fixed sailing dates. But sending your cargo to a secondary port means you may have to wait a few weeks for your next sailing date, and then have to wait even more for a local feeder to transportyour cargo from the main port.
Delays are not uncommon if your shipment is through transhipment and/or multimodal transport. As mentioned above, your cargo may need to be unloaded and transferred to another container or wait for other cargo to be loaded into your container. As for multimodal transport, more logistics are required as your cargo needs to be transferred from the deconsolidation port to the inland terminal and onwards.
Things to remember:
LCL pricing depends on the volume of the shipment, not the weight. It only becomes a problem when weight becomes a factor when it is too heavy and is being trucked to and/or out of port. Here is a video on how to calculate LCL shipment volume to guide you.
Motor vehicles cannot be transported by LCL.
Depending on your item, country of origin and destination, additional documents and certificates may be required.
Your shipment may be damaged in transit if other shipments are not properly packaged. Other factors including severe weather at sea can also cause damage to the cargo. Transshipment and intermodal transportcan lead to a higher risk of damage to your cargoas it passes through more hands. That said, be sure to pack your shipment properly to prevent damage from possible rough handling.
In ocean shipping, there are two main forms of containerized cargo - Less than Container Load and Full Container Load. As their names suggest, LCL deals with goods that take up less than the entire space of a full container, meaning a container must be shared, whereas FCL simply means owning a full container on its own.
To learn more about these two different types of containers, read our pages on LCL Shipping and FCL Shipping.
LCL Shipping: How It Works
Also known as "LCL", LCL shipping essentially refers to combining various goods in a single container. Since this involves sharing a container, it's a bit more complicated logically and requires more and better coordination to make sure everything runs smoothly and according to plan.
Book LCL
When you decide to ship LCL, you need to provide the freight forwarderwith the dimensions and weight of your shipment. Documents and forms such as bills of lading, commercial invoices, cargo packing lists, etc. must also be completed and submitted. Depending on your cargo type and destination port, additional documentation may be required.
Get your item ready
LCL shipments are usually shipped on a fixed schedule, weekly or bi-weekly, depending on the destination port, so timing is critical. The grouping of LCL goods is carried out in one warehouse, called the Consolidated Warehouse of Origin.
Your freight forwardercan arrange for your shipment to be picked up, which is more common practice. Alternatively, you can also ship the goods to the consolidator warehouse yourself. But remember, if you choose the latter, your shipment needs to arrive fully prepared, packed and ready to load. If you prepare the shipment yourself, be sure to read our guide on how to calculate the volume of a LCL shipment using Tetris.
Whichever method you choose, please note that your shipment must have enough time to reach the warehouse. If the warehouse is located/close to the port of departure, the deadline for your cargo to arrive at the consolidation warehouse is usually 7 days before the sailing date. It depends on the location of the warehouse. For inland warehouses, the deadline will be earlier given that it takes more time to get the container to port.
This is to allow sufficient time for all LCL loads in the container to be properly LCL. Please give us our article on how to properly prepare a LCL shipment to guide you.
Transshipment to port
Once the LCL container is packed and ready, it is shipped to the port of departure as specified in the contract/booking. Port deadlines for containers are usually around three days before the sailing date. After the combined cargo arrives at the port, it is transferred to the shipping company and then shipped to the port of destination.
Transport
If you're shipping to a secondary port, your LCL cargo may be unloaded at a transshipment point, where it's either shipped to another container or waits for more cargo to fill the container before continuing on to its final destination.
In layman's terms, this is similar to what happens with your luggage when you're in transit at the airport. It needs to be unloaded from the plane you landed on and transferred to your next flight.
Reach the destination
After the LCL container arrives at the destination port, it is taken over by the destination agent of the freight forwarder. He/she will collect the containers and deliver them to a warehouse called a destination de-packing warehouse. There, the cargo in the container is broken up into individual LCL loads.
Receive your item
At this time, the consignee can go to the warehouse to pick up the goods. Alternatively, you can have an agent handle the shipment to the consignee, in which case your item will be transferred from the destination unpacking warehouse to the final destination warehousebefore it is delivered to you.
One of the most important concepts in ocean freightthat many exporters don't know is the carrier's return window. The return window is the allotted time set by the carrier during which a container must arrive at the terminal in order to be loaded onto the departing vessel.
Carriers typically set a four-day return window, although this may change as circumstances change. Narrow shipping return windows are one of the biggest reasons for delivery/pickup problems in the U.S. because many importers don't realize there's only one small window for your container to reach the terminal.
Why is there a return window?
Each carrier is granted a limited time to store its containers in port before sailing. In order to regulate time and space and avoid carrier storage fees, many carriers often set what is called an "earliest return date".
The earliest return date is the first day the shipper's container can arrive at the terminal. Any earlier, the carrier incurs charges that may be passed on to the shipper. Therefore, the latest date your container needs to arrive at the terminal in time for loading is called the cut-off date.
Back to the window timeline and how it works
Suppose that Terminal X allows Carrier Y a total of 7 days of free time to store its containers before its vessel sails. Carrier Y's ship's sailing date has been set to Sunday, so Carrier Y may set the earliest return date for the container to return to the terminal to be Monday. Returning the container early will result in a storage fee being charged by the terminal. Your container also needs to arrive at the terminal in time for loading, which means that carrier Y may set a deadline on Thursday. This means that you, the shipper, are granted a Monday to Thursday return window to ship your loaded container to port without any additional cost.
Many carriers allow containers about 4 days of free time outside the port. This means that you can pull a container out of port for loading as early as last Thursday, given that the earliest return date is Monday. This is called pre-pulling.
A free trade zone is a type of Special Economic Zone (SEZ), which refers to an economic zone that is exempt from trade-related charges such as duties and taxes.
In these regions, goods manufactured, stored and handled are subject to different customspreferences. They often receive relief and incentives to encourage investment.
Here is the OECD definition of a free trade area:
"Countries that generally remove tariff and non-tariff trade barriers among member countries but have no common trade policy for non-member countries"
-Organisation for Economic Co-operation and Development (OECD)
The benefits of a free trade zone include:
Promote trade and business opportunities
Reduce logistics costs
Reduce red tape and bureaucracy
Increase foreign exchange earnings
Create job opportunies
Attract investment
History of Free Trade Zones
To understand the history of free trade zones, we must look at the general category: Special Economic Zones (SEZs).
There are many different variations of the term SEZ. But they are all built for the same purpose.
The first SEZs are simply called "free zones" and are designated areas, usually adjacent to seaports, airports or between two or more countries. These started in the 1960s and started growing exponentially in the 1980s.
Today, there are more than 5,400 SEZs around the world. Of these, 1,000 were established within the past five years. Experts expect more than 500 new special economic zones to be established in the next few years.
North American Free Trade Agreement (NAFTA)
EU single market
African Continental Free Trade Area (AfCFTA)
Association of Southeast Asian Nations Free Trade Area (AFTA)
Bordered by Oman and Saudi Arabia, the United Arab Emirates has become a beacon for development and trade on the Arabian Peninsula. It shares waters in the west and north with Qatar and Iran, respectively. The United Arab Emirates is made up of seven states, including Abu Dhabi, Dubai, Sharjah, Ajman, Ras Al Khaimah, Fujairah and Umm Al Quwain. Located in the northern part of the Strait of Hormuz, the country is a strategic country for sea container transportation and trade.
1. Jebel Ali Port (Dubai)
Jebel Ali is the largest man-made port in the world and the largest container port between Singapore and Rotterdam. The port offers the international shipping industry access to a market of 1.5 billion people, as it is the gateway between the Western Hemisphere and the Far East. As one of the most important and modern ports in the region, the port is equipped with state-of-the-art facilities to meet regional and international shipping needs in and around the Arabian Sea.
2. Mina Zayed Port (Abu Dhabi)
The Mina Zayed Port in Abu Dhabi is often just called Zayed Port. It is located at the northeastern end of the city of Abu Dhabi, which is not only the capital of the United Arab Emirates, but also the financial, communication and transportation center of the UAE.
3. Mina Rashid Port (Dubai)
Mina Rashid Port is another man-made port in the Emirate of Dubai, located on the southern coast of the vast Arabian Gulf. The port's location in the heart of the city makes it ideal for passenger operations, although it also handles its fair share of cargo.
The port has received the prestigious ISO-9002 certification as well as the Safety Excellence Certificate from IMS (International Maritime Security). As the only port in the Middle East to receive this recognition and certification, Port Rashid is highly regarded in the global cruise tourism industry. The 2 million-square-meter Mina Rashid Cruise terminal can handle seven of the largest cruise ships simultaneously, each with a capacity of 25,000 passengers. Due to its competence and professionalism, the port has been named the world's leading cruise port in the Middle East at the World Travel Awards for seven consecutive years.
4. Mina Khalid Port (Sharjah)
Also known as Khalid Port, this port is also located in the center of Sharjah. It is the first port in the region to have a container terminal, a free trade terminal and a ro-ro cargo terminal. It pioneered an area that other ports such as Jebel Ali and Zayed Ports followed and expanded upon.
The Port of Mina Khalid has 12 berths for handling general cargo as well as refrigerated, bulk, dry and liquid cargoes. It has two cold storages on the quay side and is also equipped with marine and oil support. The port is undergoing several key construction works that will further modernize its facilities. These include the construction of dhow dock facilities and new berths in the breakwater reclamation area.
5. Khor Fakkhan Port (Sharjah)
The port is also in Sharjah, under the same management as the Mina Khalid port. This is the only natural deep-water harbour in the region, unlike other fully man-made harbours. As one of the main container ports in the United Arab Emirates, this port sees a lot of traffic from the Indian Ocean front. Its location outside the volatile Strait of Hormuz makes this port an obvious choice for large east-west transshipments into the UAE's hinterland.
With more than 1,500 countertop manufacturers in the U.S., the fragmented nature of the market leaves manufacturers without significant resources or leverage when it comes to shipping. Also, the nature of the product, especially the long size, makes shippingunattractive for many carriers, resulting in surcharges and penalty rates.
Countertop Manufacturer Industry Definition
Countertop manufacturing primarily cuts, shapes and finishes kitchen and bathroom countertops. Countertops are made from a variety of materials including: wood, plastic laminate, stone, faux marble, ceramic and concrete. The industry does not include countertops constructed on site by building contractors.
Key Industry Insights:
The market size was over $89 billion in 2019 and is expected to grow at an annual rate of approximately 2.8% to over $111 billion by 2027.
Material innovations, namely various artificial stone and artificial marble products, and the use of recycled materials such as glass are exploding. Unique, architecturally significant countertops are driving higher prices and profits for manufacturers.
Innovations in manufacturing technology, especially 3D printing, have simultaneously produced unique one-off products, reducing manufacturing labor, shortening manufacturing time and increasing profits.
Growing interest and investment in refurbishment and remodeling is driving the industry's growth above new construction. New construction is expected to remain strong due to the imbalance between U.S. housing starts and households over the past five years.
Durable laminate countertops make up the largest portion of installed countertops in the U.S., and demand will be strong even as engineered and natural stone grow in popularity.
Concerns about natural radiation (i.e. radon) from natural granite and its high purchase price will hinder the growth of engineered and farmed products.
Residential demand will continue to be the primary use market.
Logistics considerations for countertop manufacturing
Shipping costs are serious business for many countertop manufacturers. Smart, growing countertop manufacturers are using experts to help them gain a competitive advantage in shipping.
Shipping countertops presents some unique challenges:
Size - Most countertops are long and narrow. Small package shippers such as UPS and Fedex limit the total size of packages they will handle and charge exorbitant surcharges before rejecting package sizes. For the past few years, less-than-truckload (less-than-truckload) carriers have been using surcharges to block shipments over 8 feet.
Packaging - Packaging countertops to withstand shipping environments require proper design and judicious use of packaging materials
Weight/Density - Depending on the material, the countertop may or may not be heavy. But because of their size, countertops rarely fit in the cargo configuration most carriers need.
The destination-home delivery trend is driving the need for more and more countertop deliveries directly to the installation site. For trucking companies, these mostly "one-off" residential deliveries are less efficient than comprehensive deliveries to stores or warehouses.
Damaged - Countertops, especially when packaged improperly, are prone to damage, resulting in unhappy customers, delays and additional costs.
1. Understand the reasons for poor on-time performance
There are a variety of factors that can affect shippingtimes, both within and outside of your control. Everything from road construction to poor planning can lead to delays. As the shipping industry becomes more volatile, external risks increase. That's why it's important to work with a logistics professional to help ensure everything within your control is properly managed. For example, understanding how and when to implement short-term shipping fixes and how to handle the supply chain is critical to staying on track. TJ chinafreightcan help!
2. Learn about transportation
There are many ways to ship products from point A to point B. In order to deliver your product on time, it's important to understand what's going on between these points. Truck loading, air freight, trains, cargo ships… the list of options available is extensive. Knowing what to use and when to use it is the key to maximizing efficiency. It is also helpful to understand the strengths and weaknesses of different industries and how they work together.
3. Simplify your supply chain
Improving supply chains involves identifying weaknesses and identifying alternatives. For example, complex supply chains tend to drive higher levels of customization and complexity among manufacturing partners. By diversifying your customer base, you won't be as interdependent as other companies. More successful supply chain tips can be found here.
Your LTL shipping partner is here to help you, but they won't be able to help unless they know the full story. Hiring an LTL freight brokerage is a smart move for your shipping needs, especially if you are on the same page as the broker. At TJ chinafreight, we strive to get things right the first time.
There are many industry terms in the logistics world! We've put together this short logistics glossary to help you familiarize yourself with some common terms and concepts you may encounter.
3PL: Sourcing and arranging many services on behalf of clients, from shipping to warehousing and everything in between. Learn more here.
Bullwhip Effect: Companies must constantly predict what customers want to buy. Without a crystal ball, they must make forecasts based on other factors such as industry trends, supply chain structure and inventory. The bullwhip effect is a term used to describe when this complex transport process is disrupted. Learn more here.
Digital Freight Brokers: Digital freight brokers connect shippers and freight companies through mobile apps or online marketplaces. Learn more here.
Double brokerage: Double brokerage occurs when a freight broker accepts cargo and then hands it to another freight broker without telling the client. Learn more here.
Expedited Shipping: Expedited shipping is a faster method than standard shipping. Typically, expedited shipments do not stop anywhere between the pickup location and the delivery location, resulting in shorter transit times. Learn more here.
Freight Broker: A person or company that oversees efficient shipping and handling logistics. Learn more here.
Cargo Insurance: Gives you extra protection in the event of loss or damage to your cargo. Learn more here.
HAZMAT Shipping: Shippingof hazardous materials. Transporting hazardous materials (HAZMAT) includes not only highly toxic chemicals and nuclear waste. Hazardous items include nail polish, perfume, batteries, and even hairspray. Learn more here.
Inbound Freight: Refers to raw materials and raw materials entering a business from suppliers or suppliers. Learn more here.
Incoterms: Colloquially, Incoterms are just a way of clarifying the roles and responsibilities of those involved in the shipping process. Learn more here.
Industry 4.0: Industry 4.0, also known as the Fourth Industrial Revolution, is the continuous automation of traditional manufacturing and industrial practices using modern smart technologies. Smart factories, 3D printing and smart sensors are just a few examples. Learn more here.
LTL Shipping: Less than full truckload, or "LTL" in industry slang, is a cost-effective alternative for smaller shipments that cannot be fully filled with trucks. Learn more here.
NMFC codes: In the shipping world, the National Motor Freight Classification or NMFC codes are used to help define and regulate products. In LTL shipping. NMFC codes are an industry-wide method of defining shipping rates. Learn more here.
Outbound Freight: Refers to the shipment of finished goods from a business to a customer or distribution channel. Learn more here.
Package Shipping: Package shipping is the shipment of boxed items weighing 100-150 pounds or less, depending on the carrier. These are smaller packages that can be easily moved by a person without assistance. Learn more here.
Transportation Management System (TMS): Global research and consulting firm Gartner defines a Transportation Management System or TMS as a solution "for planning shipments, grading shipments and shopping across all modes, selecting the right route and carrier, and Manage shipping orders and payments." Learn more here.
Full truckload: Full truckload is when the shipper pre-orders a full truck or tractor trailer. The idea is to load the tractor trailer to full capacity. Truck loads are usually picked up at one location and dropped off at another, usually without any stops along the way. Learn more here.
Supplier Verification: Supplier verification is the process of confirming that a supplier is a legitimate entity. Learn more here.
Customodal designs, executes and optimizes transportation logistics programs for businesses of all sizes to support client strategies and enhance client competitive advantage. Carrier negotiation, shipment execution, track and trace, waybill audits, performance scorecards and supply chain visibility are all part of Customodal's added value.
