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PART 2: Sea freight and Air freight Shipping methods
Once you have registered as an importer to South Africa, you need to determine the costs involved. This is where your shipping method and Incoterm decisions come into play. There are various shipping methods, such as Sea freight, Air freight, Road freight and Rail freight, and each has its own costs and timeline factors. The most common forms of shipping methods are Sea and Air freight.
Sea Freight
Sea freight is the most economic form of transportation when utilising the containers capacity efficiently.
Transit times to South Africa need to be considered with this shipping method. When shipping an LCL (Less than Container Load) it usually takes longer than a FCL (Full Container Load). Transhipments also often occur when containers are transferred onto another ship along the route, versus direct sailing. An important term to become familiar with is Twenty-foot equivalent units. This is how container capacity is measured. TEU = 6m container. 1 X 40″ FCL = 2 TEU’s. Container and seal numbers are used to identify your cargo, and this information is usually given on the bill of lading. A seal is used to ensure that the container is not opened from the supplier’s warehouse until delivery to your premises or chosen address, and is also used to identify the shipping line. The only time of opening is for a customs inspection.
There are various container types and sizes, but the most common containers are:
- Standard containers – These are widely used dry / general purpose containers and are found in 20’ and 40’ sizes.
- High Cubes – In South Africa, these are usually 40’ containers that are taller than the standard containers.
- Reefer containers – This refers to refrigerated containers that are often used for fresh produce and temperature controlled items.
Charges involved with Sea Freight
PER CONTAINER
Freight: This is charged to the Service Provider by the shipping line – you can get valid rates for a month and if you ship regularly you can become a named account.
BAF – Bunker adjustment factor This charge is for fuel and oils and continually fluctuates.
CAF – Currency adjustment factor: This is paid in one currency and monies earned in another %.
War Surcharge: Also known as a Piracy Risk Surcharge, for example when sailing passed Somalia. This is charged due to the high risk of vessels passing that area.
Port Congestion Surcharge: Idle time for vessels in port.
Peak Season Surcharge:Usually charged at times when shipping activities are at a high level which leads to a greater demand in shipping / containers required over the period.
PER WEIGHT MEASURE (BASED ON LCL DETAILS) Per weight measure can be calculated using cubic metres or weight – whichever is greater.
Freight and BAF: Charged by the co loader based on the container utilisation.
Air Freight This is a popular way to ship and the reason for the increase in air freights is the growing volume of technology-based products which are becoming lighter, with greater value. This justifies the expense of air freight.
There is also an increasing trend towards ‘Just-in-time’ (JIT) inventories, hence the use of air freight in order to make this possible. Most air freight shipments are done on an Ex Works basis. The loading and stowing of cargo is done by the airline – details of dimensions and weight is provided to the airline on booking to ensure space and packing configurations. Some airlines have height restrictions and your service provider can provide you with these details. Consolidation is usually done by your forwarder to ship it via air at a discounted or cheaper rate.
Charges involved with Air Freight
Pick up charges, Clearance charges, Air freight, Fuel surcharge, Security surcharge, Local charges, Clearance, Cartage, Airline handling Fee and Airline split fee. The airline’s split fee is charged per parcel.
Air freight calculations:
Airlines that are members of the International Air Transport Association (IATA) are bound by their membership to comply with tariffs issued by IATA. However since 11th September 2002, airfreight rates are now extremely negotiable. Airfreight rates cover transportation from the airport of loading to the airport of discharge in South Africa.
THESE RATES DO NOT INCLUDE THE FOLLOWING:
- Collection of air cargo from the consignor’s/exporters premises (EXW Charges)
- Delivery of cargo from the airport of destination to the consignee’s premises (Local Charges)
- Storage of cargo before or after loading (Local Charges)
- Customs clearance in the country of destination – usually done by your clearing agent
- Any duties and taxes that may have to be paid – paid by your clearing agent and they in turn invoice you
- Insurance – this can be arranged by your service provider
Chargeable/volumetric weight:
The minimum chargeable weight is 45kg’s. Anything lower than that is subject to minimums. The dimensions are calculated as follows: [(l) X (b) x (h) cm]/ 6000. This gives you the chargeable weight measure and your charges will be calculated on whichever is greater – chargeable weight measure or actual weight. It is important to note that:
- There is a basic minimum charge per shipment. The minimum is usually 45 kg’s.
- The general cargo rates that are quoted for are per kilogram. This rate applies without reference to the nature or description of the parcel which is to be freighted.
- Specific commodity rates apply to certain goods of specific descriptions, such as fresh produce. Rates will be different for each variation of cargo and is usually on a sliding scale, your service provider will be able to give more accurate details.
There are many factors and costs to consider when choosing a shipping method in South Africa. Tradestream as well as your Logistics Service Provider can assist you in making an informed decision regarding which shipping method would best suit your needs, factoring in all costs. In the next article of How to Import – Part 3, we look at the documentation needed when importing into South Africa.[/vc_column_text][/vc_column][/vc_row]