In this article, we will discuss and compare ocean freight cost and air freight cost ship from China to US.
Understanding Ocean Freight
Ocean freight is deemed one of the oldest most accessible means of transporting cargo around the world. Ships carrying cargo from one destination to another have different types of shipping containers depending on the load they have to transport.
1. Full Container Load (FCL)
This is an entire shipping container reserved for a single shipper. This shipping container is suitable for large shipments where the shipper has enough cargo to fill a shipping container. Big brands, countries and other large trade companies use an FCL as it provides exclusivity and allows for efficient loading and unloading at the port. Shippers pay for the entire container space, even if they cannot fill the space.
2. Less Than Container Load (LCL)
LCL is different from an FCL shipment as an LCL shipment involves putting smaller shipments from multiple shippers into a single container. This means the shipper’s shipment doesn’t fill an entire container, so they share the container
space with other shippers. So, shippers have to pay only for the space their cargo occupies within the container rather than the whole container space.
Cost Components Of Ocean Freight
Depending on factors such as container size, handling and documentation fees, port charges and others, the cost of ocean freight will rise accordingly.
Freight Rates Based On Container Size:
Whether it’s an FCL or LCL container, shippers also have to consider the size of the container itself. Ocean freight costs depend on the container size. Generally, the size of ocean freight containers is around 10ft, 20ft, 40 ft and higher. Larger containers have higher rates. Hence, a 20-foot container will be less expensive than a 40-foot container.
Terminal Handling Charges
Another factor contributing to cost is the charges associated with the handling of containers at the port terminals. This handling of cargo includes loading, unloading, and storage of the cargo. These charges cover before, during and after the shipment.
Documentation Fees
The documents are those that the shippers need to prepare for ocean freight. Paperwork related to customs clearance, bills of lading, and other documentation may incur fees.
Port Charges
Concerning shipping, other fees like port entry charges, security fees, and other costs associated with using the port facilities.
Inland Transportation (If Applicable)
If the shipper wishes to transport their cargo from port inland, this will also incur costs. It can also go the other way where the cargo is taken from the point of origin to the port to be shipped to its final destination.
Understanding Air Freight
Air freight shipping is a recent development in world trade and travel. With the emergence of airplanes and air travel, this presented another faster and more secure means of travel. Air travel was then repurposed to ship cargo to their destinations with little delay.
Express Air Freight
This freight service is one of the fastest possible transit options, typically taking a few days for cargo to be delivered to its destination. Express air freight often uses passenger flights or dedicated cargo planes to transport time-sensitive shipments like perishable goods, pharmaceuticals, critical components and heavy cargo.
Standard Air Freight
Unlike express air freight, standard air freight is ideal for less bulky cargo that does not require immediate delivery yet can be gotten to its destination quickly compared to ocean freight. Standard air freight does not have the speed associated with express air freight and they are less expensive.
Cost Components Of Air Freight
Air freight is generally more expensive than ocean freight. More so, when the cargo is larger, the distance is further and the type of air freight service used.
Freight rates based on weight and volume
The weight and dimensions of your cargo play a huge role in the cost of your shipment. Some air freight carriers can either use the actual weight (gross weight) of the cargo or the volumetric weight (dimensional weight) to determine the cost of shipment. The volumetric weight considers the cargo’s length, width, and height. Typically, for air freight, carriers use the volumetric weight. This is determined by the minimum accepted density-to-weight ratio by the carrier to avoid making a loss.
Fuel Surcharges
Airplanes need fuel and the price of fuel fluctuates from time to time due to market conditions. So, if the price of fuel increases drastically, the cost of the freight increases. Moreover, the farther the distance and time of travel, the more fuel is burnt to deliver cargo which also adds to the additional costs.
Security Surcharges
Planes must go through security and safety checks and certifications before being allowed to fly. Since cargo is a precious package that must be protected, it attracts surcharges. The surcharges cover safety protocols and compliance. This benefits the cargo shipper to ensure their cargo is safely delivered without harm.
Handling Fees
The handling, moving, processing, loading, and unloading of your cargo in the airport also attract charges. Nonetheless, the amount attached to these fees can vary depending on the carrier and air freight service you use.
Customs Clearance Fees
Customs clearance involves a lot such as import and export fees, customs duties, and compliance-related expenses that must be covered to accommodate your cargo to its destination. When your custom clearance fees are covered, your cargo gets unhindered movement across borders.
Cost Comparison: Ocean Freight Vs. Air Freight
Typical Costs per Kilogram or Cubic Meter:
Air Freight:
For air freight, the rates are typically calculated based on the weight categories and service speed, whether express or standard. On average, air freight costs significantly more than ocean freight due to the higher fuel costs and the need for faster delivery times. Significantly, the density-to-weight ratio of your cargo determines the cost of the shipment. In terms of kilograms, costs can range from $5 to $8 per kilogram.
Ocean Freight:
On the other hand, ocean shipping costs less due to how massive in scale each shipment is. Generally, ocean freights tend to be 12 times cheaper than air freights. Ocean freight uses large-scale vessels that can transport larger loads for greater distances at a lower expense. Unlike air freight which has a weight limit that must not be exceeded.
Typical Costs per Container or Cubic Meter:
Air Freight:
You should know that air freight does not typically use containers like ocean freight for shipments. Instead, it’s based on weight. However, if we consider volume, air freight can be significantly more expensive.
Ocean Freight:
Ocean freight costs are usually calculated per container like TEU (Twenty-foot Equivalent Unit) or FEU (Forty-foot Equivalent Unit) or per cubic meter (CBM). The cost per container varies based on the shipping route, type of container (20-foot or 40-foot), and other factors. Generally, costs range from $2,000 to $10,000 per 20-foot container and $4,000 to $20,000 per 40-foot container. However, for less-than-container load (LCL) shipments, ocean freight is typically priced by volume. Costs can vary but usually fall between $2 and $4 per cubic meter.
Example Cost Scenarios For Different Shipment Sizes
For A Small Package (5kg)
Air Freight:
This is likely the fastest option but also the most expensive. At $5-8 per kilogram, air freight could cost around $25 to $40.
Ocean Freight (LCL):
Typically, LCL is not ideal for small packages due to per-cubic-meter pricing. Yet, costs would depend on consolidation with other shipments but could be minimal. An estimate of $10 for this case.
For a Medium Box (20kg)
Air Freight:
For such a cargo, costs could range from $100 to $160.
Ocean Freight (LCL):
An LCL shipping, a container of this size is more feasible for this cargo. Assuming a volume of 0.1 cubic meters and a rate of $3 per cubic meter, the cost could be around $3. In LCL ocean freight, you pay for the space your cargo occupies (volume), not its weight, as long as it fits within that volume then your cost is reduced.
For a Full Pallet (500kg, 2 cubic meters)
Air Freight:
The cost for a full air freight cargo of 2 cubic meters could reach $2,500 to $4,000. It can also be higher if you require special packaging or express delivery.
Ocean Freight:
For a full container load (FCL), you could spend around $5,000. This is assuming a rate of $5,000 per container. Yet, these are very rough estimates that should not be taken as the standard. These estimates do not include additional fees like terminal handling or customs clearance. The actual cost will increase depending on the current market conditions and the type of cargo.
Transit Times: Ocean Vs. Air Freight
Ocean freights are slower than air freights. They take significantly longer transit time. The average transit time for ocean freights can range from 20 to 45 days, depending on various factors. For instance, the distance between the origin and destination of the cargo will increase or reduce the time. This means the shipments travelling longer distances will naturally take longer. Moreover, the specific route chosen can affect transit times. Taking direct routes is faster than those with multiple stops or layovers.
Meanwhile, air freights are much faster as transit time typically takes 3 to 7 days. This depends on the origin, destination, and routing of the shipment.
Impact On Inventory Holding Costs And Time-Sensitive Shipments
Ocean freights have longer transit times which implies that you need to carry more inventory to meet demand while the shipments are in transit. This can lead to higher inventory holding costs.
On the other hand, air freights have faster transit times allowing you to keep lower inventory levels, reducing holding costs.
Nevertheless, if you have time-sensitive cargo that you need to get to its destination quickly, then air freights will be more suitable than ocean freights.
For air freight shipments from China to the US, you can expect delivery to happen quickly. Typically, within a range of 3 to 7 days. Ocean freight, from China to the US by sea can take anywhere from 15 to 45 days. It typically takes 15 to 25 days for ocean freight between major ports in China and the U.S. However, it will exceed 25 days if the destination port is on the East Coast of the US which is farther. The West Coast port is closer for ocean freights from China. Unfortunately, congestion or delay issues at ports may add to a longer transit time.
Additional Cost Considerations For Ocean And Air Freights
Insurance Costs:
Insurance costs for air freight are slightly lower than those for ocean freight. Due to rigorous safety checks, air travel is less prone to accidents compared to ocean travel. Although the percentage might be lower, the overall cost of insurance for air freight can still be higher due to the potentially higher value of goods typically shipped by air.
Packaging And Handling:
Air freights have stricter weight restrictions often requiring lighter packaging materials to minimize costs. Whereas ocean freights have more flexibility for packaging. In addition to that, both air and ocean freight involve terminal handling fees that cover loading, unloading and storage at the terminals. These fees can vary depending on the port/airport, shipment size and specific services required. Importantly, specialized packaging for air freight may incur higher costs compared to standard packaging for ocean freight.
Customs Duties And Taxes:
Air freight clearance can sometimes be faster due to the smaller volume of paperwork involved. However, the complexity of the goods and required inspections can still influence clearance times for both options. More so, the larger the cargo, the higher the tax rate on the cargo.
Conclusion
Ocean freight and air freight are the two major shipping methods used worldwide. However, ocean shipments are typically used due to their capacity to accommodate more cargo than air freights. Although ocean freights are cheaper, the efficiency of air freight makes it beloved for shippers who want to get time-sensitive cargo to its destination faster.
Choosing either of these shipping methods demands that you know the nature of your cargo, budget and speed of delivery. Therefore, shipping from China to the U.S. can be expensive or cheap depending on the shipping method and services you request for your shipment.