What is Freight (Cargo)

The freight article provides you with the knowledge on the terms you must know when dealing with the freight. First, we will see what is freight

Freight is another name for goods or cargo move via air, land, and water from their origin to destination. Finished goods, work in progress or raw materials are the types of freight. The movement of cargo becomes freight transporting. The name freight specialized in international trade as air freight and sea freight according to the mode used for transporting.

Freight Shipping

The freight shipping is the process of transporting cargo via water. Later the shipping term started to use for transporting via air and land by some countries like the USA. Freight categories due to its nature and specialised vessels are there to carry cargo. The container vessels use to carry container cargo, Bulk carriers to carry cargo like, cement, grain, fertilizer, barges are to ship cargo to short distances. Specialised equipment are available to handle freight like granty cranes, shore cranes, forklifts, and low bed trailers.

The price which should be paid to move cargo from one point to another using ocean transportation is known as the sea freight rate. In general, sea freight is cost-effective than air freight, yet the transport time (transit time) is higher. Thus, ocean transport is necessary to move heavy cargo and high valued cargo is generally transported via air.

Air Shipping

When cargo moves via air it becomes air shipping. Air shipping is the best viable option for high valued cargo and cargo which should reach the destination within a shorter time period. Only light cargo moves via air to reduce the risk of accidents. The specialised air planes to carry air freight also call as freighters. A high percentage of air shipping done using the belly of passenger flights. And there are special container types to stuff cargo called Unit Load Devices (ULD) to carry air freight.

Land Freight

The cargo move via land also called as land freight. Both road and railway freight come under land freight. Land freight is highly used to transport cargo within the country’s territory as well as to land log countries. Railway freight is cheaper and environmental friendly when compared to road transportation. UPS, J.B. Hunt and United Van Lines are few companies providing sustainable trucking solutions to their customers.

Freight In

Freight in is the charges incurred when bringing down the cargo to a firm. Or we can say, the inbound logistics cost is similar to the freight in. The trucking costs, charges for customs clearance, for the shipping line, customs broker, freight broker, warehousing cost, port or airport charges come under freight in. Knowing the freight in is very essential to identify the cost of production. So the freight in is a priority factor for your business to become competitive, maximise the profit as well as to achieve cost leadership strategies.

Freight Out

Same as in freight in the cost born when delivering the cargo from the factory to market or the customer categorise as the freight out. We could also say it as the “outbound logistics cost”. Outbound logistics cost includes transporting cost, warehouse management cost, clearance, insurance costs. Selecting competitive international forwarders or the 3PL providers will be needed for minimum freight out.

FCL and LCL

These are the two types for booking cargo space or transporting freight in container transportation. FCL stands for Full Container Load and LCL is the abbreviation for Less Than Container Load. Using a whole container for one shipment is FCL and stuffing several shipments in one container is LCL. In other words, if your shipment is big enough to fill one container you have to book space for a container. If you have a small shipment which is very small to fit in a container, it is LCL. In such, you can hand over the shipment to a consolidator where consolidators, book one container and stuff consignments of several shippers to fill it.

Basically, the size of the package and freight rate decides whether you should ship as FCL or LCL. In most of the cases, when the volume is less than 15 CBM it is economical to ship as LCL. You also have to consider the clearance and transporting cost if you select FCL for a small shipment.

Consolidated Cargo

It is easy to understand the concept of consolidated cargo as you are aware of the full container load and less than container load.

When shipping LCL, freight forwarders or NVOCC’s collect several small shipments from cargo owners. And they console the cargo in a container box and ship under their name to the destination. The consoler issue a BL to the cargo owner for the handed over cargo. At the destination, the consoler destuff the container and the consignee can clear the cargo. This process is very convenient to utilise the ship space and container space. So the cargo in the consoled box is consolidated cargo.

Container Freight Station

The container freight station is also known as CFS. As the name reflects CFS is a place where freight could store until they are cleared or stuffed for shipping. CFS is basically a warehouse for cargo and could be open space or closed space.

Freight Ton

Now you know freight…

Have you seen the carrier offering freight quotes “5 USD w/m” for LCL cargo. What does this mean? w/m stands for weight measurement. Normally the carrier offers a rate in the said form to highlight, the rate they have offered is charged either on weight ton or on measurement ton, whichever is higher. The w/m is the freight ton of cargo.

We will see how to find the freight ton and freight rate

When the package is ready for shipping, you can measure its volume in cubic meters (CBM) by multiplying the height, length and width.

For example consider a package of 10m length, 10m width and 10m height. So its volume ton becomes 10 X 10 X 10= 1,000 CBM

Consider the weight of the package is 15,000 Kg. 1 ton is equal to 1,000 Kg. So the weight ton of package becomes 15 tons

So the applicable rates could be either:

1,000 X 5 = 5,000 USD OR

15 X 5 = 75 USD

Since the freight charge for CBM ton is higher, the freight ton considered for billing becomes the volume of the shipment.

You don’t have to do this manually. A lot of online calculators are available to make your life easier..

Freight Movement

The process of transporting freight from one location to another is called freight movement. Freight movement or movements can be done via air, water, and land (road and rail). The different modes have different rules/guidelines, methods for transporting goods

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