The decision to ship something via air freight or sea freight is an important one for any business shipping between continents or across very long distances. The cost, as well as transit time needed to ship, can quickly pile up, and it is important to understand the how and why before making any decision.
You need to figure out which mode is better in your unique situation or use-case, and this is not always a straightforward task.
Is air freight or sea freight cheaper? Generally, sea freight is seen to be the cheaper option at first glance, but this is a complex cost calculation and therefore this is not always the case. To start with, air freight and sea freight costs are calculated differently.
Air freight is charged by a combination of size and weight, called the “chargeable weight,” and sea freight is charged by the volume your goods will occupy, or the number of containers you will require to be filled.
Transportation costs are often one of the largest or most important costs facing a business that needs to ship a large amount of goods, or goods over long distances. The transportation cost of an item or resource may be several times the actual cost to produce that item, and therefore can be a critically important factor in keeping your cost down.
In certain industries it is the number one most important factor above all else, and without properly managing your freight costs there is no business to be had at all.
Which Factors Are Most Important to You?
Whether it’s a question of price, of speed, of convenience, or of cargo safety being the most important will dictate whether to use air freight or sea freight. These are the questions shippers and forwarders must consider when determining the choice between air and sea for freight transportation.
The answer very well could be all of the above, and often is, so how does one decide which mode of transit is the optimal choice for a particular shipment? For clients who ship cargo overseas, the choice of whether to use sea freight or air freight will depend on a multitude of factors, including:
- Type of cargo
- Time sensitivity
- Cargo safety
Next, let’s define some key terms that have been and will be used in this article.
Chargeable Weight – The Chargeable Weight of air freight shipments is calculated as the Actual Weight (Gross Weight) or the Volumetric Weight of the shipment, whichever is greater. This uses an estimated weight that is calculated based on the dimensions (length, width and height) of a package, crate or skid (shipments are always shown in the order of Length x Width x Height). Typically, large items with a light overall weight take up more space on an aircraft than a small, heavy item. That’s why the Airlines charge according to Chargeable Weight.
Tonne-kilometres – abbreviated as tkm, tonne-kilometres is a unit of measure which represents the transport of one tonne of goods (including packaging and tare weights of intermodal transport units) by a given transport mode (road, rail, air, sea, inland waterways, pipeline etc.) over a distance of one kilometer. It is calculated by multiplying the tonnes of goods shipped by the kilometers (or miles) the goods have travelled.
Tonne – A metric measure equal to 1,000 kilograms. Not to be confused with ton, an english measure equal to 2,000 pounds (or 907.1847 kilograms).
Multi-modal transport – also known as “combined transport,” is the transportation of goods under a single contract, but performed with at least two different modes of transport; the carrier is liable for the entire voyage, even though it is performed by several different modes of transport (by sea and road, for example). The carrier does not have to own all the means of transport, and in practice usually does not; the shipment is often performed by sub-carriers. The carrier responsible for the entire trip is referred to as a multimodal transport operator.
Guidelines for Selecting Air vs Ocean Freight
In this section, I will give a short outline for some pros and cons for air freight versus sea freight, as each have their merits.
- Air freight is better to use when the cost of the goods being shipped is less than 15-20% of the total value of the goods. For light shipments, you can use google to find a chargeable weight calculator online to work out whether your shipment will be charged by actual weight or by dimensional weight.
- Air freight is safer, more reliable, and faster than ocean freight, but it’s also about 5 times more expensive on average – meaning a $200 ocean shipment can cost $1,000 by air.
- Airlines also have stricter regulations when it comes to shipping hazardous materials.
- Ocean freight offers a better value for large capacity shipments – one container can hold tens of thousands of rolls of toilet paper, something that’s very important at the present!
- Ocean freight is usually much slower than air, and customs issues and port holdups can cause additional delays, Express LCL, increasingly available on more routes and by more forwarders, often guarantees a delivery date and is often not that much slower than air.
- The carbon footprint of Ocean freight is much lower than air freight.
But the actual cost of transportation is only the beginning of the cost calculation. You also need to calculate inventory costs and add those to your transportation costs, and they can vary from port to port and country to country. Not to mention, in this day and age, tariffs. Warehousing and customs fees related to ocean shipping tend to be more expensive than warehousing fees at airports. Keep in mind that both modes of transportation will face customs and destination fees when shipping internationally.
Speed Varies Greatly
Air freight is faster than ocean shipping, without question. Ocean shipments can often take several weeks to arrive. Air freight can reach its destination in one to two days. While new ships are getting a bit faster each year there is still no beating the speed of air freight and there never will be.
Faster delivery times are quickly becoming expectations across many industries, but before immediately shipping everything by air, take the time to strategically plan out your shipping strategy. It will create long-term efficiencies and save you money.
Reliability Can be Achieved Through Both Modes
Airlines are usually better at handling schedule changes than ocean carriers, but this is not always the case. Factors like weather conditions can throw off airline schedules far more easily than ocean journeys, but flights tend to be rearranged and rescheduled quickly and efficiently. Additionally, there are usually multiple flights each day between major cities, while ships tend to leave weekly.
This does not necessarily mean that air freight is always more reliable than ocean freight. When ships are thrown off schedule, they tend to need a few days to get back on top of their operations. However, ongoing alliances between ocean carriers can build reliability and integrity for ocean service, which makes ocean shipping an appealing option—even for some time-sensitive freight like perishables, fashion, and auto parts.
While the alliances between ocean carriers produce increased reliability, those same alliances can cause complications. For example, if three ocean carriers work together, one week you may have a vessel from one carrier, and another week you have the same vessel but a different carrier.
Each carrier has their own set of rules about what commodities are allowed. So even by shipping the same product on the same vessel every week, if a different carrier is in charge, there is a possibility that your product could be denied because the rules have changed.
Not everything is about the bottom line and convenience. Growing social awareness of environmental issues can change the way the public looks at a company and affect its bottom line. We all have a responsibility of taking care of the planet on which we live and ocean freight clearly wins here. CO2 emissions are much higher in air freight transport than ocean freight transport.
This causes cargo shipping by air to have a much larger carbon fingerprint than cargo shipping by sea. However, considering oil spills and the water ecosystems affected by ocean freight, gives pause. Perhaps the jury is still out on this final factor.
The Global Freight Industry
The global freight industry is a massive sector of the economy. In 2015, the most recent year for which data is available, 108 trillion tonne-kilometers of goods were transported across the planet. Of this, the breakdown by method of transport is as follows:
- Ocean Transport: 70%
- Road Transport: 18%
- Rail Transport: 9%
- Transport by inland waterway: 2%
- Air Transport: 0.25%
As you can see, ocean transport is by far the most utilized when examining the economy as a whole. This is evident when thinking about the types of goods and their nature that are being shipped by sea, most commonly via containerized shipping. Things like cars, bulk goods, all manner of often cheap consumer products, food staples such as grains and rices, and oil, natural gas, and other petroleum products.
Ground transport, either by road or rail, may factor into your decision as well. In sea and air shipments, ground transport is necessary to take your shipment from its place of origin to the airport or seaport and then to its final destination because it is usually not possible to establish a production facility near ports due to the limited coastlines of countries.
The cost of ground transport is typically more affordable than air, but more expensive than sea, especially in developing countries, where inland infrastructure may not be efficient. Knitting together shipment of cargo by trucks with rail, air or ocean legs from the shipper’s location through to the destination, is known as a door-to-door shipment, or more formally as multimodal transport. Trucks and trains make deliveries to sea and airports where cargo is consolidated and moved in bulk.
Types of Sea Freight
There are actually many different types of Sea or Ocean going freighters, and knowing what types of goods you are shipping and if they are most commonly transported via air or sea is important. Here are several types of ships used:
Container Ships are cargo ships that carry their entire load in truck-size containers, in a technique called containerization. They form a common means of commercial intermodal freight transport. Informally they are known as “box boats,” and they carry the majority of the world’s dry cargo. Most container ships are propelled by diesel engines and have crews of between 10 and 30 people.
Bulk Carriers are cargo ships used to transport bulk cargo items such as ore or food staples (rice, grain, etc.) and similar cargo. They can be recognized by the large box-like hatches on their deck, designed to slide outboard for loading. A bulk carrier could be either dry or wet. Most lakes are too small to accommodate bulk ships, but a large fleet of lake freighters has been plying the Great Lakes and St. Lawrence Seaway of North America for over a century.
A Multi-purpose ship (sometimes called a general cargo ship) is used to transport a variety of goods from bulk commodities to break bulk and heavy cargos. To provide maximum trading flexibility they are usually geared, and modern examples are fitted for the carriage of containers and grains. Generally, they will have large open holds and tween-decks to facilitate the carriage of different cargos on the same voyage. The crew will be highly competent in the securing of break bulk cargoes and the ship will be equipped with various lashings and other equipment for sea fastening.
Refrigerator ships (sometimes called Reefers) are cargo ships typically used to transport perishable commodities which require temperature-controlled transportation, mostly fruits, meat, fish, vegetables, dairy products and other foodstuffs.
Tankers are cargo ships for the transport of fluids, such as crude oil, petroleum products, liquefied petroleum gas (LPG), liquefied natural gas (LNG), chemicals, vegetable oils, and even wine. The tanker sector comprises one third of the world tonnage.
There are over 100,000 freighter ships worldwide, and that number is growing every year.
Air Freight Industry
Air cargo is used by global importers and exporters when they need to get goods somewhere rapidly and reliably. While 90% of everything is shipped by ocean freight, air freight connects the world faster, cutting China-US freight shipping time from 20-30 days by ocean to only three days by air cargo.
International air freight and express freight shipments are not the same things. Express air freight is typically handled by one company (like DHL, UPS or FedEx) that handles the entire shipment lifecycle, with shipping from door to door in under five days. These express air freight shipments are usually smaller (less than one cubic meter and 200 kilograms) than air freight.
International air freight shipments can be significantly larger and may move across multiple carriers during shipment. As a matter of fact, the largest cargo airplane, the Anatov 225 – can hold an entire train.
Air transport items are often high end, valuable and/or perishable goods whose price may fluctuate more wildly on a short-term basis. Cargo is transported by air in specialized cargo aircraft and in the luggage compartments of passenger aircraft. Air freight is typically the fastest mode for long-distance freight transport, but it is also the most expensive. Half of all air freight is shipped in the holds of passenger airplanes.
Items often transported by air freight include flowers, jewelry, and pharmaceutical products, the latter of which can be very sensitive to temperature and need to be constantly monitored. A large exception to this is bananas, which are transported by sea freight due to their long ripening process.
The North American and European are big consumers of flowers, especially around holidays like Mother’s Day and Valentine’s Day. These flowers are largely sourced from South America and East Africa, so air freight is an obvious choice in such an instance. Because of this, demand for cargo capacity on freight carriers tends to vary wildly by season.
In 2016 right before Valentine’s Day, there was a larger than normal spike in the demand for flowers, which caused a scramble for freight capacity on planes flying from Kenya to Europe, as a large percent of flowers sold on the European market originate in Kenya. Some carriers reported that the traffic moved in anticipation of the holiday soared to nearly double average rates.
The largest cargo only airlines (as of 2015) are as follows:
- FedEx Express with 16.02 billion tonnes-kilometres (tkm) flown
- Emirates SkyCargo, with 11.24 billion tkm flown
- UPS Airlines with 10.93 billion tkm
- Cathay Pacific Cargo at 9.46 billion
- Korean Air Cargo who had 8.08 billion
- Lufthansa Cargo with 7.05 billion
Making a Decision
Ultimately, this can be a complex question, and making a decision can be hard. There are companies out there that can help you figure out what method is best for you. These companies are called 3PL or “third party logistics” providers. They help optimize your logistics and supply chain management. Outsourcing in this way; by going to the professionals, can save you time and money in both making your decision as well as executing the transport.