Ocean Freight

Ocean freight is the primary mode of international goods transport, carrying over 80% of global trade by volume — approximately 11 billion tons of cargo annually. It offers the most cost-effective method for shipping large quantities of goods across long distances, making it the backbone of global supply chains.

From consumer electronics manufactured in Asia to agricultural commodities from the Americas, ocean freight moves virtually every category of goods that crosses international borders. Container ships, bulk carriers, and tankers traverse established trade routes connecting major port hubs, enabling the global economy to function.

Industry Overview

The ocean freight industry is built on standardized containerization, introduced in the 1960s, which revolutionized global trade by allowing cargo to move seamlessly between ships, trucks, and trains without repacking. Today's ultra-large container vessels (ULCVs) can carry over 24,000 twenty-foot equivalent units (TEUs), creating massive economies of scale.

Key industry facts:

Metric	Value
Global seaborne trade volume	~11 billion tons annually
Share of international trade (by volume)	80%+
Average growth rate	2-2.5% annually
Major trade lanes	Asia-Europe, Transpacific, Asia-Middle East
Top container ports	Shanghai, Singapore, Ningbo-Zhoushan, Shenzhen

The industry operates through major alliances (2M, Ocean Alliance, THE Alliance) where carriers coordinate vessel schedules and share capacity to optimize routes and reduce costs. Lead times typically range from 15-45 days depending on origin-destination pairs, making ocean freight ideal for non-urgent, high-volume shipments.

What This Section Covers

This section walks you through the key concepts, documents, and processes involved in ocean freight shipping:

• Bill of Lading — The most important document in ocean shipping. Learn about its role as a contract of carriage, receipt of goods, and document of title. Understand negotiable vs non-negotiable B/Ls and their use in letter of credit transactions.
• Container Types — From standard dry containers to refrigerated reefers and open-top units, understand the equipment used to move cargo by sea. Learn dimensions, payload limits, and which container type fits your cargo.
• Incoterms — The internationally recognized trade terms that define responsibilities between buyers and sellers for cost, risk, and delivery. Master the 11 Incoterms 2020 rules and their implications for shipping arrangements.
• Port Operations — How cargo moves through marine terminals, from vessel berth to gate-out, including terminal handling and documentation. Understand the roles of terminal operators, customs authorities, and drayage carriers.
• Ocean Freight Rates — How ocean shipping is priced, including base rates, surcharges, and the factors that influence freight costs. Learn FCL vs LCL pricing structures and how to navigate contract vs spot rate markets.
• Demurrage & Detention — The charges that apply when containers are held too long at port or outside the terminal, and how to manage them. Understand free time, tiered rate structures, and mitigation strategies.

How Ocean Freight Fits in Your Supply Chain

Ocean freight rarely operates in isolation — it is typically one leg of a multimodal journey:

Common ocean freight scenarios:

1. Full Container Load (FCL) — Your cargo fills an entire container (20ft or 40ft). You book directly with a carrier or through a freight forwarder, and the container moves from origin to destination without consolidation.

2. Less than Container Load (LCL) — Your cargo shares container space with other shippers. A freight forwarder consolidates multiple LCL shipments at a Container Freight Station (CFS), then deconsolidates at destination.

3. Break-Bulk — Non-containerized cargo (heavy machinery, steel coils, project cargo) loaded as individual pieces onto general cargo vessels.

4. Bulk Shipping — Loose cargo (grain, coal, iron ore) loaded directly into a vessel's hold, typically for large-volume commodity shipments.

Key Concepts

Ocean freight operates through a network of shipping lines (carriers), ports, freight forwarders, and customs authorities. Cargo moves in standardized containers loaded onto vessels that follow established trade lanes connecting major ports around the world.

Core stakeholders:

• Shippers (exporters) — Businesses sending goods
• Consignees (importers) — Businesses receiving goods
• Shipping lines/carriers — Companies operating vessels (Maersk, MSC, CMA CGM, Hapag-Lloyd, etc.)
• Freight forwarders — Intermediaries who book cargo space, handle documentation, and arrange inland transport
• NVOCCs (Non-Vessel Operating Common Carriers) — Companies that consolidate LCL cargo and issue their own bills of lading
• Terminal operators — Companies managing port container terminals
• Customs brokers — Licensed professionals who handle customs clearance and compliance
• Drayage carriers — Trucking companies specializing in short-distance container moves between ports and warehouses

Essential knowledge areas:

1. Documentation — Master the Bill of Lading, commercial invoice, packing list, and certificate of origin. Understand how documents flow between parties and their role in customs clearance and payment release.

2. Commercial terms — Know your Incoterms. Whether you're shipping FOB, CIF, or DAP determines who pays for ocean freight, insurance, and destination charges.

3. Equipment — Understand container types, dimensions, weight limits, and how to choose the right equipment for your cargo. Know the difference between carrier-owned (COC) and shipper-owned containers (SOC).

4. Pricing — Ocean freight pricing is complex, with base rates plus numerous surcharges (BAF, CAF, PSS, THC, congestion). Learn how rates are structured and how to compare quotes.

5. Timing — Factor in transit time, port congestion, customs clearance, and free time for container return. Late container returns incur demurrage and detention charges.

6. Compliance — International shipping requires customs declarations, export documentation (AES in the US), and potentially import licenses. Non-compliance causes delays and penalties.

Resources

Resource	Description	Link
UNCTAD Review of Maritime Transport	Annual report on global maritime trade statistics and trends	unctad.org
World Shipping Council	Industry association with data on container shipping and trade lanes	worldshipping.org
IMO (International Maritime Organization)	UN agency setting global shipping standards and regulations	imo.org
Maersk Schedule Portal	Major carrier's vessel schedules and port pairings	maersk.com
Freightos Baltic Index (FBX)	Container shipping rate index and market analysis	fbx.freightos.com

Related Topics

To understand ocean freight fully, you should also explore:

• Freight Forwarding — How intermediaries arrange ocean shipments, consolidate cargo, and handle documentation
• Customs & Compliance — Import/export regulations, HS codes, and customs clearance procedures
• Trucking — Ground transportation for drayage and inland moves before/after ocean transit
• Warehouse Management — How cargo is received, stored, and prepared for ocean export or distributed after import