What is Sea Freight Shipping and what are its advantages?
Sea Freight Shipping is one of the oldest transportation methods in human history, dating back to the time when ships were first built by humans. Many goods are still transported using this method, and it is currently the most popular mode of transportation worldwide. Millions of containers and bulk goods are transported every day using this method. Sea Freight Shipping is preferred over other transportation methods due to its transport capacity and most importantly, its cost.
In general, Sea Freight Shipping refers to the movement of any type of cargo or passenger using various ships, boats, barges, and other watercraft on oceans, seas, lakes, channels, and rivers. Many of the goods transported by sea are usually bulky and heavy. The long transportation time most of the time does not justify it for passengers except for purely tourism trips. On the other hand, in some cases, the geographical features of a country make it impossible to enter by sea. However, Sea Freight Shipping is still the most important type of transportation, and a high percentage of global trade is transported by this method.
When Sea Freight Shipping is mentioned, cargo ships that are equipped for transporting different types of goods with specific features come to mind. Ports and specialized equipment facilities have been developed to ensure the fast and secure loading and unloading of goods, especially in terms of time.
Advantages and disadvantages of sea transportation:
A) Advantages
1- Sea transportation allows for the transportation of high-volume cargo, which is made easy due to the size and capabilities of ships. A ship will definitely carry more cargo than an airplane. This allows ships to easily transport their cargo on scheduled dates. However, this opportunity varies based on the size of the ship and the capacity allocated to the originating port. In contrast, air transportation has limited cargo space and even less so for land transportation.
Ships can easily transport thousands of containers and loads weighing up to approximately 200 to 500 thousand tons from one port to another.
2- Another advantage of sea transportation over other modes of transportation is its lower cost, which is why cargo owners and commercial companies prefer to transport their goods through water routes. Today, it can be said that the majority of trade and transportation is carried out through seas and waterways.
3- The third advantage of sea transportation is the easier processing of cargo.
4- Finally, the relative stability and similarity in related freight rates is the most important advantage of sea transportation.
B) Disadvantages
1- The most important disadvantage of sea transportation is the long duration it takes to transport the cargo.
However, it should be noted that considering its advantages, if there is no urgency to receive the cargo, sea transportation can still be the best option for transportation.
2- Another disadvantage is the impossibility of servicing all desired locations due to port limitations or even the absence of a port near the sea.
Sea transportation process:
When a cargo ship enters the docks of a port and approaches for unloading, health officers inspect the documents and issue permission for the ship to communicate with the port. Customs officers immediately provide the ship captain with a specific office form to register general characteristics of the cargo and the ship, such as name, captain’s name, crew size, flag, type of ship, origin and destination ports, weight and amount of cargo to be unloaded, quantity of provisions and prohibited goods, etc. Then, the cargo that is not intended for unloading, as well as the provision and prohibited goods storages, are sealed and labeled, and then the ship captain or the representative of the relevant transportation company declares a list of the goods to be unloaded in two copies of a summary declaration to the customs.
What is tallying?
One of the most common terms in sea transportation is “tallying.” When cargo ships arrive at ports, the process of unloading the cargo begins. At this time, the goods must be controlled and their visual specifications and some other details must be recorded in lists. This process is called tallying. Representatives of the port customs and officials or representatives of transportation companies do this work together.
Types of sea transportation:
The most important types of sea transportation are as follows:
1) Chartering method
There are cases where the owner of the cargo or the sender needs to rent the entire ship due to various reasons such as the volume of cargo, lack of specific packaging, etc. This method is called chartering or full ship rental.
2) Cross-stuffing method
This method is one of the types of sea transportation. This method is used when the destination port does not have the necessary facilities and capabilities to accommodate large ships. Therefore, it is necessary to transfer the goods from one ship to another or to other ships and deliver them to the destination port. It should be noted that this method is also carried out in reverse.
That is, from a small origin port, the goods are loaded onto different ships, and they are transferred to the large cargo ship in another big port. Another use of the cross-stuffing method is to circumvent some sanctions. Countries such as Iran, which are under sanctions, can import some of their necessary goods using this method.
3) Transshipment method
As we mentioned at the beginning of the article, not all countries have access to international waters. Therefore, another type of sea transportation called transshipment has been created. In this method, the cargo is delivered to a port near the destination and then transported to the destination by land or air transport methods.
4) Groupage method
Another type of sea transportation is the groupage method. In this method, similar goods exported by different producers or sellers are loaded onto a ship. In these cases, the shipowner or transportation company issues a group bill of lading for all similar goods.
5) Bulk method
Some goods are transported in bulk without any packaging. These goods have different types and are moved by their own specialized ships.
What is marine transportation insurance?
Insurance is one of the necessary and compulsory requirements for transportation, especially marine transportation. Insurance should cover all risks, including accidents, unforeseeable events, and other incidents, to compensate for damages incurred by companies and institutions by the insurance company. In marine insurance, the insurance company undertakes to pay for damages to the cargo based on the terms of the insurance policy. Many companies around the world and companies operating in Iran prepare and regulate insurance terms based on the terms of the London Insurance Institute. Damages to the cargo are determined based on some points, and insurance companies usually use reinsurance to compensate for damages, for example, Iran insurance used Lloyd’s of London as a backup before sanctions.
Special damages
In some cases, special and unforeseeable conditions such as hurricanes or tsunamis may cause damage to the goods. In these cases, the insurance company is obliged to pay for the damages.
General damages
In some cases, to prevent the ship from sinking or to prevent damage to all goods, the captain decides to throw some of the goods into the water. In these cases, the incurred damages are divided among the interested parties, and each pays a portion of it based on the rules.
Total losses
The loss of goods can be divided into two categories: complete loss and constructive loss. Complete loss refers to incidents such as sinking, fire, and other situations that cause the cargo to be completely lost. In this case, the insurers pay the damages they have committed to the buyer.
Constructive loss
The other type of loss is constructive loss. Constructive loss means that due to different maritime incidents, the nature of the cargo changes and its value decreases or is lost. Many goods such as food, digital goods, and many other items lose their value or become worthless when in contact with water. At this time, insurance experts estimate the damage and pay the necessary compensation to the buyer based on it.
What are the commitments of marine transportation providers?
The Brussels Convention, which was passed in 1924, is one of the oldest laws governing maritime law. In addition, similar rules were also established in Hamburg in 1978, which is one of the newest rules in this regard. These laws provide detailed information on the commitments of marine transportation providers.
The most important commitments of marine transportation providers include: preparing the ship and providing sufficient fuel for it, preparing the ship’s warehouses and refrigerators, issuing bills of lading, preparing cargo loading and transportation plans, and so on.