MNGT6: INTERNATIONAL BUSINESS AND TRADE 1
Lesson 4
Modes of international transport
Freight forwarders
Most exporters, and nearly all importers, use freight forwarders. Some use only one,
others use dozens, but clearly the freight forwarder plays an essential part in the
international trading activities. Their basic function is to act as intermediaries between
shippers, with goods to send, and carriers with space to be filled.
The Services Of Forwarder
Advice
Documentation
Customs clearance
Transport booking
Groupage
Advantages of using freight forwarders
Expertise
Contacts
Facilities
Convenience
Disadvantages of using freight forwarders
Increase cost
Loss of control
MODES OF INTERNATIONAL TRANSPORT
1. SEA FREIGHT
2 forms
LINERS TRAMP
General cargo & passengers Mostly bulky cargo
Regular sailing schedule No schedule
Regular routes No fixed routes
Firm freight rates Rates subject to negotiation
MNGT6: INTERNATIONAL BUSINESS AND TRADE 2
Types of sea freight services
Conventional
The traditional, but now less common, service carrying break-bulk, that is non-unitized
cargoes. The development of containerization over the last 30 years has severely reduced
the number of conventional vessels in operation.
Containerized
By far the most common sea freight service used by the average exporter. The principle
was first developed in the mid-1950s and is based on the concept of moving goods in
standard sized units i.e. unitized loads.
The majority of containers are built to the International Standards Organization
specification, basically 6 or 12 meters, and a wide range of different designs are now in
common use.
These include:
• Insulated and/or refrigerated (reefers)
• Open topped
• Curtain sided
• Liquid and powder tanks
• Hazardous cargo tank containers (tanktainers)
2. RAIL FREIGHT
3. ROAD FREIGHT
The load may be accompanied by the driver who continues the journey, or be
unaccompanied and a ‘subsequent ‘carrier will collect the trailer and continue the transit
to destination.
4. AIR FREIGHT
The traditional use of air for high value, low volume, cargoes will always exist but there is
now a clear trend towards the increased use of air transport for many other cargoes. The
benefits of speed and security, very competitive rates and the increased appreciation of
the Total Distribution Cost of a transit rather than just the freight costave persuaded many
exporters that air freight is a genuine and viable option.
CHOOSING A MODE OF TRANSPORT
Destination
The final destination of the goods will clearly have a direct influence on the transport
service used. Certain modes of transport become a logical ‘rule of thumb’ for particular
markets, unless there are reasons why other modes should be used.
Availability
In relation to the above comments it is generally the case that the most available transport
services, in terms of number, regularity and quality, will be those most commonly used for
certain destinations.
Type of goods
There are many factors to do with the nature of the goods to be shipped which will affect
the mode used. These include:
• Size
Large indivisibles (which cannot be ‘broken down’) require very special
treatment and routing. It may also be that very dense cargoes cannot be moved
as full loads because they will exceed legal weights.
• Segregation
Some goods are liable to taint others, or be easily tainted them-selves. That is
to say they impart on other goods, or pick up themselves, odors or flavors which
are not desirable. This may preclude the use of a normal groupage service.
• Fragility
MNGT6: INTERNATIONAL BUSINESS AND TRADE 3
Not only does this affect the nature of packing but also leads to modes of
transport which minimize handling and maximize speed of transit.
• Value
Likewise, highly valuable goods will require minimum handling and maximum
speed. It is also the case that certain services, for example express, can provide
greater levels of security and personal care than others.
Perishability
Perishable goods need maximum speed of transit and often special stowage.
• Special Requirements
Apart from the above there are many other special needs which the transport
method must accommodate. These include refrigeration, insulation, ventilation
and even heating. Plus all the packing, marking and stowage requirements of
hazardous goods.
Speed of transit
It is not only perishable or high value goods which are appropriate to fast transit times, but
also those for which there is an urgent demand. This
would include items such as replacement components for broken down equipment, or
vehicles off the road. It should also be borne in mind that a faster transit invariably leads
to earlier payment with calculable financial benefits.
Cost
A factor which is always of concern whenever choices must be made in business. In the
case of international transport it is pretty obviously the case that the freight rate charged
will differ from one service to another, and that the fastest method, that is, air freight, will
be the most expensive, and the slowest, usually sea freight, will be the cheapest.
