Guide to Choosing the Right International Freight for Your International Purchases and Sales

The internationalization of companies is becoming an increasingly attractive strategy for global businesses. To expand their operations to other countries, especially those with stronger currencies, it is essential to understand and properly plan the international freight process.

Choosing the right type of freight is crucial to maximize sales and avoid potential losses. In this guide, we will provide comprehensive information to assist you in selecting the most appropriate freight for your international purchasing and sales needs. Let’s dive in!

What is international freight?

According to the Houaiss dictionary, freight is the amount paid for the use or lease of a vessel or any other means of transportation (road, maritime, rail, or air) owned by another person or company. In the context of international trade, international freight refers to the transportation of goods between two countries, governed by an internationally accepted contract. This operation plays a crucial role in foreign trade.

How to plan and choose the appropriate international freight for your needs?

When choosing the most suitable international freight mode, it is essential to take into consideration the following information:

Place of origin
Destination
Required delivery time
Characteristics of the cargo (weight, volume, nature, cubic capacity)
Availability for shipping
Mode of transportation to be used (air, maritime, road)
Service cost

Next, we will provide detailed information about the international freight process and how it is conducted.

How does the international freight process work?

The international freight process involves several stages, from the exporter’s factory or distribution warehouse to the chosen main mode of transportation. Before the goods are allocated to the international freight mode, it is essential to go through the export customs clearance.

Customs Clearance

Customs clearance is a procedure that verifies the exporter’s declared data regarding the goods, the documents presented, and specific legislation. This step is carried out by the customs broker, who correctly fills out the customs declaration, avoiding issues such as fines and unnecessary taxes. Additionally, the customs broker provides guidance on shipping and receiving products, knowing the most efficient carriers, ports, airports, and logistics companies.

Storage in primary and secondary zones

After verifying the necessary documentation for shipment, the cargo is stored and prepared near the maritime or air terminal. There are bonded warehouses divided into primary and secondary zones, where the handling, storage, and customs clearance of goods take place.

Types of international freight modes

There are different modes of transportation for international freight. Below, we highlight some of the main ones:

International Maritime Freight

Maritime transportation is the movement of goods by vessels designed to navigate the seas. It is considered the oldest mode used in foreign trade and offers advantages such as lower freight costs, security against attacks or theft, the capacity to transport large volumes of cargo, and coverage of long distances.

Maritime transportation offers a series of advantages and disadvantages that should be considered when choosing the appropriate mode for international freight. Let’s analyze each of them clearly and concisely.

Advantages of maritime mode

Lower freight costs: Maritime transportation is known for having lower freight costs compared to other modes. This is due to the lower fuel consumption of vessels and the ability to transport a large quantity of goods in a single shipment.
Increased security: The maritime mode is considered safer in terms of attacks and theft compared to other means of transportation. Ports and ships have robust security measures to protect cargo throughout the journey.
Cargo capacity: Maritime vessels have significant carrying capacity, allowing for the transport of large volumes of cargo in a single shipment. This is especially advantageous for companies dealing with large-scale goods.
Long-distance coverage: Maritime transportation is highly efficient for covering long distances. Ships can travel across oceans and seas, connecting different parts of the world economically and reliably.
Cargo versatility: The maritime mode can transport virtually any type of cargo, from bulk products such as ores and commodities to refrigerated goods, vehicles, and containers. This versatility makes it a popular choice for various industrial sectors.

Disadvantages of maritime mode

Longer transit time: Maritime transportation is known to have a longer transit time compared to other modes, taking weeks or even months for the cargo to reach its final destination. This should be considered when planning delivery times.
Limitations at ports: In some cases, maritime transportation may present limitations regarding the ports of discharge. Not all ports have the appropriate infrastructure to receive certain types of cargo or may have specific restrictions. It is essential to consider these aspects when choosing the maritime mode.
Packaging requirements: Maritime transportation requires robust and suitable packaging to protect the cargo during handling and adverse marine environmental conditions. The packaging must withstand the movement of waves, potential impacts, and adverse weather conditions.
Port congestions: In some cases, ports may experience congestions due to a high volume of vessels and bureaucratic processes. This can cause delays in loading and unloading the cargo, affecting planned delivery times.

When deciding on maritime transportation, it is essential to consider these aspects and evaluate how they align with the specific needs of your company and the goods to be transported.

International Rail Freight

Rail transportation is carried out by wagons connected to locomotives, using iron rails. It is mainly used for transporting goods over long distances and in large quantities. Its advantages include lower cost, increased safety, and low energy consumption.

Advantages of rail mode

Capacity for large loads: The railway system has spacious wagons designed to accommodate large volumes of cargo. This capacity is especially beneficial for companies that need to transport significant quantities of goods, allowing for shipping at scale.
Reduced freight and maintenance costs: Rail transportation presents a relatively lower cost of freight and maintenance compared to other transportation modes. This is due to the operational efficiency of railways, which allows for the transportation of large quantities of cargo at once, resulting in economies of scale.
Enhanced security: The railway system offers greater security in the transportation of goods. Due to the specific infrastructure of railways and strict control of train flow, the risk of accidents and theft is significantly reduced compared to other transportation modes.
Energy efficiency: Rail transportation is known to be highly efficient in terms of energy consumption. Electric locomotives are one of the main sources of energy used in the railway system, providing a more sustainable alternative compared to fossil fuel-powered modes of transportation.
Exclusive routes: Railways have dedicated exclusive routes for cargo transportation, meaning that railway operations are less susceptible to delays caused by traffic congestions common on roads and highways. This contributes to greater predictability and reliability in deliveries.

Disadvantages of the railway mode

While rail transportation offers various advantages, it is also essential to mention some of the disadvantages associated with this mode. Here are some of them:

Geographical restriction: The railway system is limited by the availability and reach of railways. Not all regions have an extensive railway network, which can make direct access to certain locations challenging. This may require the use of other transportation modes to complement the final distribution of the cargo.
Limited flexibility: Unlike road and air transportation, rail transportation has relatively less flexibility in terms of routes and schedules. Railways usually operate according to a fixed schedule, which may not perfectly meet the specific needs of some shippers or recipients.
Longer transit time: Compared to other transportation modes, such as air transportation, rail transportation can be slower in terms of transit time. This is because locomotive speeds may be lower compared to aircraft, resulting in longer delivery times. Therefore, for cargoes that require urgency, the railway mode may not be the most suitable option.
Limitations on the type of cargo: While rail transportation can accommodate a wide variety of goods, certain types of cargo may face restrictions or require special packaging to meet railway regulations and requirements. Additionally, highly perishable or temperature-sensitive products may not be suitable for rail transportation due to the lack of climate control in wagons.
Initial investment and infrastructure: The expansion and modernization of the railway system require significant investments in infrastructure, equipment acquisition, and ongoing maintenance. In some cases, the railway infrastructure may be limited or not meet necessary standards, which can impact the efficiency and reliability of operations.

Generally, rail transportation is widely used for the transportation of commodities and low-value-added products, such as soybeans and iron ores. Its efficiency and ability to transport large volumes make it a popular option for these types of cargo.

International Air Freight

International air transportation is carried out by airplanes and is ideal for cargoes with lower volume, perishable goods, valuable items, and those requiring fast delivery. Among the advantages of this mode are speed, versatility, express delivery, and a high level of security.

Advantages of the air mode

Speed: Air transportation is known for its speed. Aircraft can cover long distances in a short period, providing fast delivery times. This is especially advantageous for cargoes that require urgency or for distant markets.
Versatility: Air transportation is highly versatile, allowing the transportation of a wide variety of goods. From small parcels to bulky cargo, air transportation offers flexibility to accommodate different types of loads.
Express delivery: The air mode is particularly suitable for express delivery services. Airlines have regular and frequent routes, enabling the quick and efficient shipment of goods. This is especially valuable for companies seeking to meet tight deadlines.
Precise schedules: Air transportation generally follows more precise departure and arrival schedules compared to other modes. Airlines adhere to strict itineraries, and flights are scheduled in advance, offering greater predictability and planning for logistics operations.
Security: The air mode has a high level of security. Airlines implement rigorous cargo security and tracking procedures to ensure the integrity of goods during transportation. Additionally, exposure to theft and damage is reduced due to restricted access controls in airport areas.
Reduced costs for insurance, storage, and packaging: Due to the speed and shorter transit time of air transportation, costs related to insurance, storage, and packaging can be reduced. The need for extended storage is minimized, decreasing storage costs. Additionally, the fast delivery may also require fewer layers of protection and packaging, resulting in additional savings.

Disadvantages of the air mode

Higher cost: Air transportation is generally more expensive compared to other modes, due to the operational costs of airlines and the use of airport infrastructure. This factor may limit its viability in certain logistics scenarios.
Need for integration with other modes: In many cases, air transportation requires integration with other modes to get the cargo to its final destination. This is especially true when airports are not located directly in destination areas or when the goods need to be moved beyond the airport using other means of transportation.
Limited cargo capacity: Aircraft have a relatively smaller cargo capacity compared to modes such as maritime or rail transportation. This may restrict the amount of cargo that can be transported in a single shipment, necessitating the fragmentation or consolidation of loads.

International Road Freight

Road transportation is done through trucks and trailers on streets, roads, and highways. It is widely used in Brazil, especially for the transportation of cargo over short distances, high-value-added products, and perishable goods. Although it presents a higher freight cost compared to other modes, road transportation offers route flexibility and agility.

Road transportation has several advantages and is widely used in Brazil. Below are some of the main advantages of this mode.

Advantages of the road mode

Extensive use in Brazil: Road transportation is the most widely used mode in the country, thanks to an extensive road network and easy access to different regions. This provides greater convenience and agility for transporting goods within the national territory.
Route flexibility: Road transportation offers flexibility in choosing routes. Vehicles can travel on roads and paths of different sizes and conditions, allowing for direct delivery to desired locations. This flexibility is especially advantageous in remote or hard-to-reach areas.
Suitable for short distances: The road mode is especially suitable for transporting goods over short distances. It is an efficient option for local, regional, or intermunicipal deliveries, ensuring shorter transit times.
Less bureaucracy in documentation: Compared to other modes, road transportation generally involves less bureaucracy in the required documentation. This can result in faster shipping and clearance processes, reducing the need for complex procedures.

Disadvantages of the road mode

Low cargo capacity: Compared to other modes, such as maritime or rail transportation, road transportation has a relatively lower cargo capacity. This can limit the amount of goods that can be transported in a single vehicle, requiring fragmentation or the use of more vehicles to meet demand.
Complexity for international logistics: Road transportation can be more complex when it comes to international logistics. Depending on the destination, transit agreements and specific authorizations may be required, as well as dealing with customs and border regulations, which can increase complexity and operational costs.
High operation and vehicle maintenance costs: Road transportation may present higher operational and maintenance costs compared to other modes. This includes fuel, vehicle maintenance, tolls, and expenses related to personnel involved in transportation.
Less used by the foreign market: Road transportation is less common in foreign trade operations, especially when it involves longer distances and international borders. Other modes, such as maritime and air transportation, are generally preferred due to their capacity to handle larger volumes and greater efficiency in international routes.
High risk of cargo and transportation theft: Road transportation is subject to risks of cargo theft, especially in certain regions or routes with a history of criminal activity. This requires the implementation of appropriate security measures to protect goods during transportation.
Susceptible to congestion and traffic jams that can cause delivery delays: Road traffic can be affected by congestion and traffic jams, especially in urban areas and during peak hours. These delays can impact delivery deadlines and require careful planning to avoid unwanted delays.

Dutoviary Mode

Dutoviary transportation is carried out through pipelines and is especially suitable for the transportation of fluid materials such as petroleum, derivatives, natural gas, and alcohol. This mode has advantages such as low maintenance requirements and is suitable for long distances and large volumes of goods.

Responsibility and risk in international freight: Incoterms

In international cargo transportation, it is essential to establish the rights and obligations of both the buyer (importer) and the seller (exporter) of the goods or services. To facilitate this definition, there are the so-called Incoterms.

The Incoterms, created by the ICC (International Chamber of Commerce), are rules established with the aim of improving communication between countries and avoiding conflicts in international business. They regulate and define the rights and responsibilities of the importer and the exporter.

It is worth noting that in the most recent version of the International Commercial Terms, the rules can be used in both international and domestic market transactions.

It is also important to highlight that Incoterms do not impact insurance contracts, banking relationships, and customs broker activities. They specifically regulate the relationship between the exporter and the importer.

Currently, there are 11 established Incoterms, each with its specifications. They are:

EXW (Ex Works)
FCA (Free Carrier)
FAS (Free Alongside Ship)
FOB (Free on Board)
CPT (Carriage Paid To)
CIP (Carriage and Insurance Paid To)
CFR (Cost and Freight)
CIF (Cost, Insurance, and Freight)
DAP (Delivered at Place)
DPU (Delivered at Place Unloaded)
DDP (Delivered Duty Paid)

When choosing the most suitable Incoterm for your operation, it is essential to consider the supplier’s availability for negotiation. Additionally, it is important to be aware of all the costs involved in transportation and, if necessary, seek guidance from a specialized professional in the field.

Main Costs of International Freight

Various costs are associated with international freight, such as port of loading and discharge, transshipment fees, documentation expenses, storage, among others. It’s important to be aware of these costs to calculate the total freight value.

Below are some of the costs associated with the total freight:

POL (Port of Loading): Refers to the port of loading according to the Incoterm® FOB (Free On Board). It’s the location where the goods are loaded onto the ship to initiate transportation.
POD (Port of Discharge): Refers to the port of discharge, i.e., the final destination of the cargo. It’s the location where the goods will be unloaded from the ship.
Comm (Commodity): This is the fee related to the commodity itself, specifically for general and non-hazardous cargo. This fee varies depending on the characteristics and nature of the cargo.
TT (Transit Time): This is the total transit time required for the cargo to be transported from the port of loading to the port of discharge. This information is important for estimating the delivery time.
Rate OFR (Rate of Ocean Freight): This is the rate for ocean freight, i.e., the amount charged for transporting maritime cargo from one port to another. This rate is calculated based on the weight, volume, or value of the cargo.
Transshipment charges: These are transshipment fees charged when the cargo needs to be transferred from one ship to another during the journey. These fees are calculated based on the weight of the cargo or a fixed rate per ton.
Docs (Documentation Fee): Refers to the documentation fee, which is charged for the processing and creation of transportation documents such as the Bill of Lading (B/L). This fee is usually charged per issued B/L.
DDF (Documentation Fee – Destination): This is the documentation fee charged at the destination for processing the transportation documents required for cargo release. This fee is applied at the destination location.
Storage at CFS (Container Freight Station): Refers to the storage fee at the container freight station, usually charged based on the weight or volume of the cargo and per day of storage.
BL fee (Bill of Lading Fee): This is the fee charged for the release of the Bill of Lading (B/L) from the shipper. This fee is applied per issued B/L.
Deconsolidation: This is the deconsolidation fee that occurs when the cargo is separated from the main Bill of Lading (Master B/L) and assigned to each individual House Bill of Lading (House B/L) according to the cargo consignee. This fee is applied per issued B/L.
CUC (Chassis Using Charge): This is the fee charged for the use of chassis, which is a type of trailer used for transporting containers on wheels. This fee is related to container movement.
EMF (Equipment Management Fee): This is the equipment management fee charged for extra services related to the equipment used in transportation, such as the delivery of high-security container seals.
ISPS (Fee for Security in the Port): This is the fee charged for security on ships and port facilities, aiming to ensure protection and security during transportation.
BAS (Base Rate): This is the basic freight rate, representing the minimum value of the freight established for cargo transportation.
ODF (Documentation Fee – Origin): Refers to the documentation fee charged at the origin for the processing and creation of all standard transportation documents.
OHC (Handling Charge – Origin): This is the handling charge at the origin terminal or port, related to cargo loading and unloading operations.
Capatazias per wm: These are capatazia fees, charged based on the weight or volume of the cargo and the location of its movement.

In addition to these individual costs, it is common for freight agents to use the term “ALL IN” to provide the total freight, already including all the mentioned fees and surcharges. This simplifies the calculation for customers as they receive the final freight value with all costs included.

Types of Payment for International Freight

There are three forms of freight payment in cargo transportation, as described below.

Prepaid Freight

Prepaid freight refers to the immediate payment of freight after shipment, usually to obtain the release of the Bill of Lading. Typically, this type of freight is paid at the place or country of shipment but can also be paid overseas, depending on the agreed conditions.

Prepaid freight is commonly associated with Incoterms terms where freight is the responsibility of the seller. However, it’s essential to highlight that prepaid freight can be used even when freight is the responsibility of the buyer. This means that prepaid freight and Incoterms are distinct concepts.

Freight Collect

Freight collect refers to the payment of freight anywhere in the world. In this case, the carrier is informed by the freight agent about the receipt of the freight for export operations to be released.

It’s not mandatory to mention the amount of freight to be paid on the Bill of Lading. Instead, the term “Freight as Per Agreement” can be used, indicating that the freight value will be determined according to the established agreement.

Freight Payable at Destination (freight payable at destination)

Freight payable at destination means that the importer is responsible for paying the international freight upon the arrival or withdrawal of the goods. In this case, it can be considered that freight will be paid as per the freight collect rule.

In this situation, the freight payment can occur at a location different from the place of shipment or destination, as agreed upon by the parties involved. It’s essential to clearly establish the freight payment terms to avoid any ambiguity or conflict during the commercial transaction.

Conclusion

When starting the process of internationalizing your products or services, it is crucial to study and plan the transportation of your goods. Understanding logistics, the costs involved, and the advantages and disadvantages of each mode of transportation contribute to increasing competitiveness in the international market. Exporting or importing operations involve various stakeholders and require efficient communication among the parties involved.

What is Cheap2Ship?

Get to know Cheap2Ship, a technology company specialized in logistics and foreign trade. Through our advanced platform for freight management and quotation, medium and large companies have experienced a significant increase in operational efficiency and a reduction in logistics costs.

Our commitment is to provide greater transparency in costs related to current freight suppliers, such as carriers, freight agents, and transporters. With this, our clients can make more informed and strategic decisions for their businesses.

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