What Is Ocean Freight Shipping?

A Complete Guide to Ocean Shipment & Ocean Container Tracking Systems — The Ultimate Guide

What Is Ocean Freight Shipping?

Close to 90% of global trade1 is done using ocean freight shipping as the mode of transport, making it the frontrunner of international shipping. Ocean freight shipping involves shipping large volumes of goods packed into containers through cargo ships. It can be called the most efficient, economical, and environmentally viable way of transportation, especially when moving larger volumes across the globe. Ocean shipments are also considerably safer than other modes of shipping.

That said, ocean freight is a particularly unpredictable space. There’s no continuous visibility beyond the port. Know how you can monitor your ocean shipments and take timely corrective actions. This is because most shippers are trying to secure good container capacity with limited expenses which makes the demand-supply balance very volatile. Plus, when the supply is lower than usual, it becomes even more difficult for shippers to fulfill their cargo needs, let alone manage costs. All this makes ocean freight a complex affair, especially for international transportation. Dealing with vendors or suppliers overseas, international standards, paperwork, and market volatility weigh them further down with more concerns.

Who uses ocean container shipments?

In an ocean shipment, the major stakeholders are i. the manufacturer or the company — the first party — that wants to ship the cargo, ii. the shipper/hauler — the second party — whom the manufacturer hires to transport the cargo, and iii. the logistics provider — Third-Party Logistics (3PL) — connects the first and third parties, i.e., manages the shipment on behalf of the manufacturer using the services of the shipper/s.

What Are the Different Types of Ocean Freight Shipping? — LCL & FCL

Ocean freight shipping is mostly done using ocean containers. Standard shipping containers are commonly made of steel and aluminum and come in standard sizes specified by international standards, most commonly 20-foot, 40-foot, and 40-foot-high cube containers.

Majorly, ocean freight shipping can be done in two ways — using Less than Container Load (LCL) shipping and Full Container Load (FCL) shipping.

LCL shipping is when your shipment is not large enough to occupy a whole container, and thus, you share a container with another shipper. It is used to transport moderate volumes of ocean cargo. It is majorly done to bring down the overall transportation cost by only paying up for the container space your shipment occupies instead of the whole container.

The LCL shipping mode is not only cost-effective but also helps to deal with the availability problem during peak seasons or other times when there’s container shortage, for instance, the recent pandemic in 2020. It is a perfect way to transport small to moderate volumes of goods without spending on a full container load.

On the other hand, LCL shipping also has some drawbacks. For instance, your shipment could get delayed because it is facing multiple stops on the way due to sharing the container. This also forces a longer transit time on your shipment, along with the added need for more cargo handling, which would not have been the case were it only your shipment the container was carrying. Sometimes, when transporting a shipment in a shared container, there is also the risk of contamination from other cargo, which defeats the purpose of delivering the cargo safely and on time. Know how to track your LCL shipments and packages.

FCL shipping is when you are transporting large volumes of cargo. This is when choosing a container that exclusively transports your shipment. FCL shipments are larger than LCL shipments and thus costlier since you are paying for the entire container all by yourself. But it comes with advantages that make it an overall good deal.

Although air is the fastest mode of transport, FCL is the fastest mode of shipping if transporting by way of the ocean since it is not in shared containers. Since your shipment owns the whole container, there is no contamination risk. It also eliminates the risk of damaged cargo since it is only handled during loading and unloading, and there are fewer chances of delay when transporting goods through FCL. Another big advantage of using FCL is that you can avail yourself reefer service for condition-sensitive cargo.

It is a cheaper option when compared to air freight and the best choice when shipping larger cargo volumes. One of the main hurdles in FCL shipping is reduced availability, especially during peak seasons and other high-demand periods like during a war, a natural calamity, or a pandemic. An FCL is also more likely to bear additional costs of demurrage and detention, etc. It is a comparatively expensive choice for smaller shipments for obvious reasons.

Here’s Why You Should Care about End-to-End Supply Chain Visibility.

What Is Ocean Container Management?

Ocean shipping uses containerization to transport goods — specialized shipping containers that carry raw materials, spare parts, and finished goods for transportation. These containers are specifically designed so that they can be used seamlessly across all modes of transportation and across the globe. These shipping containers are standardized for intermodal transport and can thus be easily transported anywhere — pulled by a truck, carried in railcars, or transported overseas on a vessel.

Container management is one of the underrated but most important aspects of an intermodal shipping operation since it ultimately helps you save on costs and get better efficiency throughout the supply chain. Here’s how an end-to-end intermodal shipment tracking system works.

Containers are often hard to manage, especially in intermodal settings since you get visibility on the containers from many different supply chain participants. This kind of scattered data makes it difficult for the logistics team to manage container movement, affecting day-to-day operations and more important supply chain decisions. All this leads to lost containers, inefficient container utilization, higher demurrage & detention costs, etc.

This is what brings into picture ocean container tracking.

Why Should You Track an Ocean Container and Shipment?

The more important question is — what are the risks in not tracking your ocean container?

Supply chains are already complicated to begin with; transporting through the ocean adds many other challenges to the mix, making ocean freight visibility one of the biggest challenges. Whenever thinking about poor visibility, one tends to connect it with costs, that too visible ones. But poor visibility is not just about that. It leads to other problems like demurrage and detention fees and complicated port schedules to keep up with.

Read this blog to know how to overcome supply chain digitization challenges.

There are far too many risks in shipping an ocean container without having enough visibility into it, like theft, customs complications, delays, port-level visibility issues, handling intermodal shipments, containers going overboard at sea, and endless problems tracking condition-sensitive shipments. Here are 5 things you need for successful real-time supply chain tracking.

The biggest trouble is that shippers usually get their ocean container visibility data from ocean carriers, which is not the most reliable source. The fact of the matter is, the carrier’s most important objective is to get freight to the destination, which means they will not care or even inform you about other things going on with your shipment/container on the way. Here’s how you can operators on track.

Not having relevant data about your ocean shipment/container might disturb the whole big picture, especially when it comes to intermodal/multimodal shipments. A little bit of unaddressed delay in one part of the journey could drastically affect another. For example, if a shipment is delayed due to a vessel rerouting, the remaining journey faces cascading delays, and managing drayage movements becomes disruptive. As a matter of fact, ocean shipments data is hard to access and even harder to analyze for enterprise shippers. Recent times have taught us how sudden, unplanned changes in the global market could translate into unmanageable supply chain disruptions.

This is where investing in a reliable ocean container visibility solution proves to be profitable in the long run. Here are the five major challenges that make it essential to manage your ocean containers better:

  1. Ever-Changing Global Regulations — changes in safety compliance, technology, and cybersecurity regulations, equipment inspections, etc., at a global level could deeply affect sea-based transportation.

  2. Demand Spikes Owing to Market Disruptions — Situations like the recent COVID breakdown ask for always-ready ocean shipping resources because of the constant necessity for global transportation. This calls for better management of limited available resources.

  3. Global Political Environment — Any changes in international politics could directly/indirectly impact shipping and transportation. A change in a country’s government could result in changes in regulations, restrictions, and even demand-supply fluctuations with that country.

  4. Cost Challenges — Ocean shipping is not immune to rising costs, tax increments, data expenses, and other charges like demurrage and detention fees. To keep these costs in check, optimal utilization of containers and other inventory is essential.

  5. Ocean Cargo Loss — Ocean cargo falling overboard is not a very uncommon thing. Other risks that cause cargo loss are the unpredictable nature of the sea, damage due to bad weather, theft at the ocean, shipment spoilage or contamination in LCL shipping scenarios, etc. This puts not just the bottom-line profits, but also customer satisfaction, carrier growth, and shipper’s reputation at risk. This is how you can save millions of dollars by improving your supply chain security.

The only way to meet these challenges is to get end-to-end ocean freight tracking data. Real-time data can explain to you what is happening with your shipment and help you respond to events that you might not be prepared for otherwise.

How Can End-to-End Visibility Help You Prepare for the Next Suez Canal-like Incident?

What Is Ocean Container Tracking?

Once your container sets out in the ocean, it is hard to say how it is doing unless you have a proper system dedicated to keeping track of it. And leaving your container out in the ocean while not keeping track is risky. More so, when dealing with intermodal shipments; imagine having no information about when your containers get rerouted or held up due to congestion. With all the global business and climatic challenges, it is more important each day to watch your containers at the first mile, last mile, and in between.

The ocean shipping industry has devised many ways to keep ocean containers in check over the years and has made considerable progress with many good options like GPS container tracking devices, smart containers, and integrated business intelligence systems. The three most used ocean container tracking options are data aggregators, smart containers, and GPS container tracking.

These tracking systems can be divided into two main categories:

Ocean Container Tracking — tracking at the container level, i.e., FCL tracking. This works best when your shipment is the only one traveling into the container. You could even use devices that would act as remotely monitored locks to keep your container secure.

Ocean Shipment Tracking — tracking at the shipment level, i.e., LCL tracking. It sounds easy to master ocean cargo tracking when you look at the number of technologies available. But it is not just about tracking the containers; it is really about how you monitor ocean shipments. A container-level tracking system is only good for FCL cargo. When managing LCL cargos, i.e., a shared container with other shipments, it is more important to take care of ocean shipment tracking. This is because if you are tracking at the container level, you would never know what is going on with your shipment.

Thus, whenever you choose between a shipping container tracking technology, you need to first consider whether you need to track at a container level or a shipment level, and that decision depends on whether you are transporting your shipment/s on an LCL or an FCL container.

Which Are the Parties Involved in Ocean Shipment Container Tracking?

There are four main parties involved in ocean container tracking, out of which two (first and second party) are actively involved, and the other two (third and fourth-party) passively use the data for smooth operation at their ends. Let us briefly look at the parties involved:

First party — The consigner, the company that creates goods to be transported from point A to B. If the ocean cargo is delayed, the first party is the one to suffer the most, owing to supply chain disruptions, customer dissatisfaction, and higher operational costs. This is the reason the first party used ocean container tracking to keep their supply chain operations smooth.

Second-party — The carrier/transporter/hauler responsible for transporting the container from point A to B. The first party hires the carrier to transport their cargo, and thus the carrier needs to keep track of it using ocean container tracking constantly. If there are delays, damage, or any other unfortunate event on the way, the first party would always hold the carrier responsible.

Third-party (3PL) — The third-party logistics provider — one that is responsible for carrying out the shipment for the manufacturer/first party. The 3PL manages the carrier throughout the shipment journey, making it important to track the ocean cargo.

Fourth party (4PL) — The external service provider that handles the logistics on behalf of the manufacturer. In this situation, the manufacturer outsources its supply chain operations to this partner. This means the responsibility of ocean container tracking also falls upon the 4PL. This is how you can keep your intermodal transport operators on track.

The entire system gets more complicated when the shipment is intermodal — one where multiple modes of transportation are involved — the case with most ocean shipments. It is much more difficult to catch hold of the shipment in an intermodal shipping scenario since the data comes from various sources, making it more difficult to analyze and make sense. One needs to know the exact location and package condition to avoid such complications. Here are 5 reasons why outsourcing shipment tracking to 3PLs can hurt your business.

What Are the Challenges in Ocean Container Tracking?

  1. Port level challenges
    1. Demurrage/Detention at the Port: Ports have yards that store the containers temporarily before/after getting loaded onto vessels. These ports have free days — days beyond which storing the containers in there would attract charges. These charges are called demurrage and detention charges
      1. Demurrage: In import, demurrage charges are the costs the consignee bears for the delay in picking up the container from the port. The charges depend on the carrier, ports, and type of container.In export, demurrage is charged when the container has been delivered to the carrier but is still stored at the port yard. This delay in loading might even mean the container missing the vessel.
      2. Detention: Detention charges arise when a container unloaded from the vessel is transported from the port to the customer facility, and the empty container is not returned to the port or the empty container depot on time.

      Both demurrage and detention are charged per container per day. The only loss here is not the charges for the delay; it is also the cascading delay in the overall journey of the ocean cargo and additional charges at the port for further detention. Demurrage/detention charges are a mechanism to prevent port congestion and discourage customers from keeping containers for longer periods.

    2. Ocean cargo stuck in customs — Your ocean cargo could get stuck in customs due to several reasons — Missing documentation, incorrect information, a mismatch between declared and actual customs value of goods, etc. Once the customs reject the consignment, it would be sent back to the shipper or held at the port. Such held-back consignments attract storage charges and could also end up missing the vessel. Not having visibility on the cargo could mean not knowing where the consignment ended up. Know how you can reduce container dwell time.
    3. Ocean cargo rollover — This is when an ocean cargo is loaded onto a different vessel than the scheduled one. This could be due to several reasons, including documentation errors, customs disputes, technical issues with the scheduled vessel, overbooking on the vessel of choice, etc. Know the 5 things you need for successfully tracking your ocean containers. A cargo rollover causes other problems for all the stakeholders — unplanned delays, rescheduling costs in case the shipper is responsible for the rollover, additional port storage charges, and further scheduling problems (in the case of multimodal shipments).
    4. Port congestion — Sometimes, due to extreme demand spikes, poor weather conditions, shortage of space at the port yard, shipment of excess stock due to natural disaster prediction, and unavoidable shutdowns (e.g., COVID-19 lockdowns), ports get congested. Due to such congestions, it becomes even harder to get port-level visibility and manage shipments.
  2. Shipment level challenge
    1. Cargo loss — there could be multiple reasons for ocean cargo loss, such as containers going overboard, cargo theft, cargo loaded onto the wrong vessel, etc.
    2. Damage due to mishandling — the trucker, port staff, or other logistics participants could play their part in causing damage to the cargo through mishandling during loading and unloading.
    3. Spoilage — Condition-sensitive goods could get spoiled due to unplanned delays, improper packaging or storage, container rain, etc. Read this blog to know the real business cost of damaged packages.
    4. Missing cargo — Cargo can sometimes be stuck somewhere at the port or even forgotten at some point during switching modes of transportation in a multimodal setup
  3. Challenges at the ocean
    1. No visibility at the ocean — When shipping overseas, it often gets hard to get visibility, especially once the container leaves the port. Even if one of the shipments does not reach its destination in time or at all, you might have no idea where it went and how since getting visibility at the ocean is not easy. This is how you can track your ocean shipments using IoT.
    2. Unscheduled Rerouting — The latest example is how many vessels were rerouted due to the giant container vessel stuck in the Suez Canal. When such events occur, you can do nothing but reroute, dealing with the delays and related troubles.
    3. Spoilage — Condition-sensitive goods could get spoiled on the way due to unplanned delays, improper packaging, traveling in an LCL setting, container rain, etc.
    4. Delays — There could be many reasons for cargo getting delayed, including vessel rerouting, customs delays, delays in other transportation modes in intermodal shipments, global shipping regulations, etc.

Can these challenges be overcome?

Of course, and that could be done through proper supply chain planning, labor management, better route decisions and carrier decisions, well-managed administrative functions. Most of these challenges could be overcome through end-to-end ocean container visibility. Even demurrage and detention charges can be avoided through better visibility.

Cargo stuck in customs clearance could also be handled through visibility and historical data analysis. Ocean container tracking could help plan to ensure that there is enough storage space to receive the cargo, ready before the container reaches the warehouse to avoid delays that cause detention.

Podcast: Glyn Hughes, Director General, TIACA; Former Global Head of Cargo, IATA Walks Us through the Air Freight Landscape, Trends, Challenges, and Opportunities.

What Is a BoL, And Why Is It Important for an Ocean Shipment?

To understand BoL (Bill of Lading) tracking, it is important first to understand what a BoL is and how it works in ocean container tracking. Bill of Lading (BoL) is the freight movement contract — the receipt that the shipping line/carrier gives the shipper. It acts as a contract of cargo movement between the shipper and the carrier and the shipper and contains the complete detail of the cargo’s journey from origin to destination. BoL tracking is tracking the ocean cargo using this document’s number.

Through the BoL, the shipper knows the path of the ocean cargo being moved, the method used to move it, the parties involved, and other necessary information as required, like the value of items being moved, shipment dates, names & addresses of both shipper and consignee, handling instructions, And packaging details. A BoL can act as a legally binding transportation contract, making it a valuable document.

BoL tracking can be the most straightforward way to track a container — one that would give you the least detail on the container. The container tracking method is called Bill of Lading (BoL) tracking. Tracking a container using BoL tracking is easy, but the more important question is — can you track a shipment with BoL?

The short answer is — No.

Take, for example, an LCL shipment. All you can do using BoL tracking is track the container, where it goes, and a basic ETA (Estimated Time of Arrival), which might change depending on the travel situation. Thus, you cannot track specific shipments but just the container using the BoL number. This renders BoL tracking useless when transporting condition-sensitive shipments and LCL shipments.

What Are the Types of Ocean Container Tracking Systems Available?

Although several ocean container tracking solutions are available in the market of late, not all those solutions fit the exact set of problems that your shipment faces. Most of these solutions can only help you track the container as a whole and not at the shipment level. While in some solutions, you can choose whether you want to track at a package level as well, those solutions might not provide the kind of detailed data and analytics you expect and need. Let us discuss some good solutions available for ocean containers and shipment tracking.

  1. Using data from Data Aggregators — Data aggregators are service providers that aggregate and analyze container visibility data from multiple data streams. But these data streams are not completely helpful because:

    It cannot provide end-to-end visibility — i.e., it lacks complete visibility from the first mile to the last mile without any break in continuity. Such visibility would not help when you find out at the destination port that a few packages are missing.

    It does not provide condition data — which renders the data useless if you are transporting condition-sensitive packages. With these data streams, you cannot know if the goods travel at the right temperature, humidity, etc.

    It cannot provide port-level visibility — which is especially important to ensure that the cargo was loaded onto the right vessel, whether it was rerouted, and many other things that could go wrong at the port itself. The port’s EDI (Electronic Data Interchange) system will not tell you where your container actually is in the port process.

    In short, data aggregators cannot help you know some crucial details about your shipment, like what happens to it on the way, what stage it is at the port (e.g., customs, port transfers), or if it is in proper condition throughout its journey. If your shipment has been compromised, you will know it once it reaches the destination, making all this data unactionable. Check this in-depth webinar to know whether you should use a data aggregator or sensors in your supply chain.

  2. Using Smart Containers — They are containers with built-in sensors and communication equipment through which you can track shipments in real-time. The sensor package travels inside the container and can tell you not only the container’s location but also data on container handling, yard & port movements, and condition inside the container. Smart containers are easy to use since you do not have to install the devices anywhere separately, and the biggest advantage is reliable data on your container.

    However, the trouble with smart containers is that you must stick with a particular service provider that provides you with the containers. This service provider might not operate on the routes you prefer, but you will have to compromise if you want to use their smart containers. This also makes the solution less economical than other options since you cannot choose the most economical route. Also, while deciding on a smart container, you need to ensure it can provide condition data at an item-level or package-level since some containers do not provide such data.

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  3. Using GPS tracking for shipping containers — GPS tracking devices would easily overcome most of the difficulties you face with the two options above. You can choose to use GPS container trackers at a container level, shipment level, or even at a package level, depending on the kind of goods you are transporting. Download this free e-book on GPS vs RFID vs Roambee Sensors for Cargo Security.

    GPS container trackers can also be used as external container tracking devices fixed to the container wall for first mile and last-mile visibility. Such tracking can also be done using low-cost devices that many companies provide these days. But managing these devices and using the data you have is a task that needs expertise.

    Fixing the devices to the container is a task, which gets more complicated since you must change devices or recharge batteries from time to time. Also, device recall/retrieval becomes another big job if you are shipping internationally, especially when dealing with an intermodal shipment. There are so many participants involved that you might find it difficult to control the process, relying on the carrier or 3PL. In such cases, GPS tracking devices cannot be relied on since they lack continuous visibility.

    One major drawback of the GPS container tracking system is that it is hard to integrate it with your existing systems, creating many complications in an already complex system. A GPS device cannot provide data on shipment handling, which port it is at, whether it is stuck in customs or in the loading queue, etc.

    The biggest thing missing in the GPS container tracking system is that it does not provide predictive insights, so you only get the data but do not know how to handle disruptions and delays.

    These gaps that data aggregators, smart containers, and even GPS tracking devices leave bring forth the need for a better solution — an IoT container tracking system — an end-to-end real-time ocean container tracking system.

    How Can Smart Supply Chains Help You Make Better Business Decisions?

  4. Using an end-to-end ocean shipment monitoring solution — A solution that uses a smart blend of Internet of Things (IoT), Artificial Intelligence (AI), and Robotic Process Automation (RPA) to provide independent real, real-time, & relevant data throughout the journey.

    Here’s why you should care about end-to-end supply chain visibility.

    We discussed three good ocean container tracking options available in the market, but all those solutions lacked something or the other. But the biggest gaps were lack of data reliability, availability, and actionability. To fill those gaps, you need to find an agile IoT-based container and ocean shipment tracking solution that is easy to set up, use, and manage. You can know how “IoT + AI + RPA = The Future of Supply Chains” here.

    Let us look into the detail and see how and why the IoT+AI+RPA solution could prove better than all the above options.

Which Is a Better Ocean Container Tracking System?

Roambee’s ocean freight tracking solution brings in automation and provides end-to-end tracking with accurate and actionable data. The solution uses plug-and-play, on-demand devices, making sure you get real-time shipment location and condition data. Moreover, these IoT tracking devices can collect data even when the container is on the ocean, transmitting it to the cloud as soon as they are back in the network. The device retrieval is taken care of with reverse logistics.

These IoT tracking devices can even lock onto your FCL container to detect when the container is unlocked, inspected, or stolen. Using these battery-powered sensor devices, you can track your LCL containers, choosing to go as granular as required by tracking at a shipment level, package level, or item level. While multiple shipments are traveling in a container, an IoT-based ocean shipment tracking system enables you to track each shipment separately. The system not only helps you with shipping container monitoring but also tells you what is to be done to address specific events. The IoT+AI+RPA solution helps you make better decisions through system assistance and take timely actions on anomalies. The system provides intelligent data analytics that tell you how to use the information the devices provide, making the data actionable.

Webinar: Enabling Data-Driven Supply Chains through Information Sharing

Let us explore in detail how an IoT-backed container tracking system works and why it is better than the other solutions available in the market. The solution provides:

End-to-end visibility — so that you are always aware of your cargo’s location throughout its journey. You not only get to know the cargo location at the first, last mile, or at port-level but from end-to-end without fail.

Condition monitoring — so that you do not just know where your container is but even what condition it is in. The condition data will tell you all about temperature excursions, container rain, physical shocks, etc., making it easier for you to make quick decisions to deal with the delay or damage.

Other vital information — such as unplanned inspections on the way, unscheduled route changes, delays, or detention at the port.

A single unified view of all your containers — which makes it easier to analyze the data without having to resort to multiple streams of data.

Timely Alerts on loading, unloading, tampering, inspection, etc., helping you take immediate action in case of an anomaly.

Predictive ETAs — the most important part of the solution, which makes sure you do not just have ETAs but ETAs that are so accurate that you could make commitments depending on them. These predictive ETAs make sure you do not have to struggle with delays you did not know about or share wrong ETAs with customers and regret later.

Device logistics — which means tracker retrieval, which makes it easy to recover reusable tracking devices. The system uses portable plug-and-play IoT container tracking devices that you can simply retrieve after use.

Such an ocean shipment tracking solution works better because this solution provides integrated, transparent visibility, which other solutions do not.

Learn How You Can Track Your Ocean Container with an IoT-backed Container Tracking System

Having data on where your containers are is good, but it is not good when what you really want to know is if the data is accurate and reliable and how you can use that data to solve problems in your supply chain.

The IoT+AI+RPA system can validate events based on your cargo portal without having to integrate with it. This comes in handy when using multiple ocean liners, most of which do not have Application Programming Interfaces (APIs) that can be integrated with Roambee’s platform. The system brings automation to your ocean shipment tracking system by using the smart blend of:

You can bring in automation in your ocean shipment tracking system by using the intelligent sequence of IoT + AI + RPA, each of which has its own important function that makes up the complete solution.

IoT, using which your shipments converse with you, sharing their location and condition at any point in the journey.

An in-Depth Guide on IoT + AI + RPA

AI (Artificial Intelligence), which means system intelligence, so that you are not just looking at data on where or in what condition your shipment is, but also know what to do about it.

RPA (ROBOTIC PROCESS AUTOMATION), which brings in system assistance that makes sure you have enough actionability to take timely actions as and when required using the system intelligence.

In short, an end-to-end real-time ocean container tracking system gives you information that is really real-time and contextually relevant for your shipment and analytics that help you make the right decisions and act before it is too late, unlike with other ocean container tracking solutions.

Source 1: https://www.oecd.org/ocean/topics/ocean-shipping/