Air Freight vs. Ocean Freight
What better? Air Freight or Ocean Freight?
If you are an importer, you may be asking yourself, when should I ship by ocean or when should I ship by air? There are many things to consider when making this decision. Check it out:
Transit time on an ocean shipment can take anywhere from 12 days up to 45 days depending on the origin and destination. For example, a shipment from Shanghai to LA averages 13 days, while a shipment from Chennai to Kansas City could take up to 45 days. Transit time on an air freight shipment can take anywhere from 8 hours to 7 days depending the origin and destination. For example a shipment from London to New York takes 8 hours, while a shipment from Guangzhou to St. Louis could take up to 7 days depending on the service selected.
Make sure to add a couple extra days onto the final transit time given by a conventional carrier or freight forwarder. It’s better to be safe and understand there are challenges faced in all stages of the supply chain.
Service and Strings
With ocean freight, carriers each have their dedicated routes and transit times. They may call port to port or tranship at a port in between the origin and destination, which would add days and decrease cost. For example,
The ocean and air freight rates are based on service level, fuel availability, the season, among other environmental effects such as politics, nature, strikes, and more. Typically air freight is a 60% higher expense than ocean freight, however, there are times where air freight is more beneficial. For example, a manufacturing company may bring in parts via air freight to avoid a $200,000 loss if production were to shut down.
Furthermore, even if an LCL ocean freight rate may be less than an airfreight rate, the total cost could end up being very close. That’s because LCL shipments typically incur more terminal handling expenses with many minimums. If you have a smaller shipment, make sure to get pricing for both air and ocean so you can weigh your choices and quite possibly receive your freight quicker.
Transpacific ocean freight rates change every 15-30 days. Carriers implement what are known as general rate increases (GRI) or peak season surcharges (PSS) to keep up with supply and demand. Transatlantic ocean freight rates change about once a quarter. Air freight rates change about every 7 days. Freight forwarders and BCOs have a much better chance at receiving a good rate for buyers and shippers, because they can leverage volume.
We would suggest to always use a freight forwarder when pricing shipment options. When it comes to LCL freight, the rate won’t change that often. This is because shippers are sharing the cost of the entire box and are charged on a per CBM basis. A GRI may be added when implemented on a per CBM basis, as well.
Ocean port terminal charges may include an origin and destination handling fee, chassis split and rental, pier pass, clean truck free, security port charge, documentation fee, IT, among other fees.
Airport terminal handling is a little different. Airlines simply charge a destination handling fee which can range from $35-$100 based on the airline and airport. Make sure you consider minimums!
Storage and Free Time
Once a shipment comes in, airlines typically give 2-3 days free time on average, while port terminals give 5-7 days. Once the last free day expires, one can expect storage costs to run anywhere from $50/day – $200/day for ocean shipments, while air shipments are based on the weight with minimums starting at $50.00.
US Customs and TSA Regulations
When it comes to importing ocean freight, one must consider U.S. Customs and Border Protection regulations and the Importer Security Filing (ISF) regulation. ISF, also known as 10+2, is only required on ocean freight. An importer must submit certain data elements to CBP 24 hours prior to sailing from last origin port of call. These elements include data such as manufacturer & seller information, container stuffing and consolidator information, as well as importer and commodity information. Import Security Filing required elements can be found here. On the other hand, air freight does not require ISF. However, if an exporter is using air freight, they must undergo an air screening and submit a “consent to screen” form for each shipment. The screening document must be printed on the shipper’s letterhead. You can find an email of one here.
When shipping high value or commodities that may be known for high theft, one should consider shipping via air freight. In fact, some companies even have their valued commodities hand-carried from point A to point B. For example, a freight forwarder can literally fly a staff member over to Frankfurt to hand carry an important part, walk it through U.S. Customs, and deliver it to a manufacturing plant in Detroit to keep production going. Or, an individual that is importing diamonds, may want to carry them and claim them to U.S. Customs in person.
All in all, making shipping decisions is not easy. One must balance transit time vs. cost. Furthermore, one must consider delays which are out of any freight forwarder’s control. Different delays that both an ocean and air freight shipment can incur may boast from strikes, natural disasters, lost packages, weather, war, peak seasons and roll overs, among other things. For example, a shipment could easily be delayed because it has been flagged for U.S. Customs exam. To read more about U.S. Customs exams, click here.
If you have any questions, don’t hesitate to contact our team.
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Scarbrough, headquartered in Kansas City with local presence in every major port in the world, is a complete international and domestic supply chain service provider, offering U.S., Mexico, and Canada Customs brokerage, Import & Export Transportation Solutions, Domestic brokerage and asset-based trucking, Warehouse Fulfillment services, Trade Compliance Consulting, Large Equipment and Project Cargo moves, as well as Parcel Audit Savings. Scarbrough is widely known for its trade experts, free training, personalized customer service, customized solutions, and data analytics tools. Since 1984, Scarbrough has continued to satisfy its clients by following its motto on a daily basis: “It is our job to make your job easier.” Moreover, our team of experts is available at your disposal. We offer free 20 minute consultations on any topic from supply chain optimization and duty savings opportunities to the basics, helping to guide new importers and exporters as they jump into the world of global trade. Contact us now.