Key documents for transporting goods by sea
Different types of ocean shipping
Key characteristics of the main ocean vessels which your business can use when engaging in international trade.
Many different types of ship are used to transport goods around the world. The differences between them reflect the varied needs of international traders. In particular, different types of ship are used to carry different types of cargo, or to carry cargo in varied ways.
The different types of ship are summarised below:
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Container ships (or 'box ships') carry their cargo packed into standard 20' or 40' containers that are stacked both on and below deck. Smaller 'feeder' ships carry containers on coastal and inland waters.
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Roll-on/roll-off (ro-ro) vessels carry both road haulage and passenger vehicles. For more information about road haulage, see how to move goods by road.
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General cargo ships carry loose-packaged cargo of all types.
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Bulk carriers carry unpackaged goods - usually large volumes of single-commodity goods such as grain, coal, fertilisers and ore.
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Tankers carry liquids (such as oil and gas) in bulk.
Merchant ships primarily do business in two different ways:
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Liner vessels operate on fixed routes, to fixed schedules and usually with a standard tariff. Liner trades are dominated by container ships, roll-on/roll-off carriers and general cargo ships.
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Charter ('tramp') vessels operate entirely according to the demands of the person chartering them. Their ports of loading and discharge are set by the charter, as is their cost, which depends on immediate supply and demand conditions. Most tankers and bulk carriers operate in the charter markets.
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How are goods carried on ships?
The three main ways of loading goods for transport onto a ship - as bulk, break-bulk, or in containers.
There are three main ways in which goods are transported on ships. These affect how different ships are built. For more information, see the page in this guide on the different types of ocean shipping.
Goods shipped in containers
The use of containers dominates commercial international shipping. The advantages of packing goods into containers include:
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the ease of intermodal transit, ie containers can be unloaded from the ship and transferred directly to a road or rail vehicle
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the opportunity to offer consumers a door-to-door service
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speed and efficiency of loading and unloading
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security of goods during transit
There are more than 20 internationally recognised types of container, including refrigerated units and open-topped containers, but there are two basic sizes. Their dimensions in metric terms are:
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20ft: 589cm (l) x 235cm (w) x 239cm (h) - volume 33.2 cubic metres
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40ft: 1,203cm (l) x 235cm (w) x 239cm (h) - volume 67.7 cubic metres
The largest container ships can accommodate more than 20,000 20ft containers.
Goods shipped as break-bulk
Break-bulk refers to any non-bulk cargo that isn't containerised (such as goods on pallets, or in crates or drums or sacks), which is loaded directly into a ship's hold. Break-bulk tends to be used for specialised trades (such as fresh fruit), or for trade to small ports that do not have the necessary infrastructure to handle containerised traffic.
Goods carried as break-bulk can be more susceptible to damage than containerised goods because they are stowed loose in a ship's hold. So strong packaging is essential, as is dunnage (loose packing material), which is placed around the cargo to protect it from damage during transit - see how to label and package goods being shipped out of the UK.
Goods shipped in bulk
Large shipments of certain commodities - such as coal, ore, wheat or oil - are typically carried in bulk, unpackaged in the ship's hold.
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Main international shipping routes
An overview of some of the world's most important maritime trading arteries along which you can transport your goods.
Shipping routes reflect world trade flows. Sailings are most numerous and most frequent on routes where trade volumes are largest and demand is therefore greatest.
In liner trades to and from the United Kingdom, the busiest routes are to the Far East (especially China and Japan), passing through the Mediterranean, the Suez Canal and the Malacca Straits. The North Atlantic route, linking Western Europe and the USA and Canada, is also busy, and there are well-established routes to the Middle East, India, Australia and New Zealand, Central and South America, as well as to East and West Africa.
There are direct liner services from the UK to most other countries, and certainly to all the main trading economies. However, if your cargo is destined for a smaller port in one of these countries or for a port in a country with little trade with the UK, there may not be a direct sailing available. In this case, your cargo will need to be transhipped to another local sailing at the end of the ocean voyage.
In-bulk trade routes reflect the places of origin and consumption of the commodities carried. For example, many of the main oil routes begin in the Middle East and end in developed countries where demand for oil is greatest.
There will usually be a range of routes by which your cargo can reach its destination. It's worth exploring all the options available to find the one that best suits your needs in terms of price, speed, safety and contractual stipulations. This can be done by directly contacting those shipping companies that advertise sailings to your destination or by engaging freight forwarders to make arrangements for you - see using brokers and forwarders.
Find an overview of the world's shipping routes on the World Shipping Council website.
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Costs of ocean shipping
The main factors behind differing costs of shipping, and how different shipping operators set their prices.
There are two main elements to the cost of transporting goods by sea - the ocean freight charged by the carrier, and costs associated with handling and clearing the goods at the ports of loading and discharge.
A number of factors can influence how these charges are calculated:
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for liner traffic, freight is usually charged according to the shipping company's standard tariff, although larger or frequent shippers and freight forwarders may be able to negotiate preferential shipping rates
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charter rates for other vessels depend on supply and demand conditions prevailing at the time when the charter is negotiated
However, there are many other factors that can impact on the final price, including:
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different rates for specific goods and general cargo
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congestion charges at busy ports
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currency adjustment factor, to take account of exchange rate changes during the journey - shipping costs are usually calculated and quoted in US dollars
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bunker adjustment factor, to take account of fuel price fluctuation
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surcharges (like a security surcharge) levied by ports and/or by the shipping company to cover the costs of particular regulatory regimes
Another factor that affects the cost of shipping containerised cargo is whether or not you have a full container load to transport. Shipping companies' tariffs are based on flat per-container rates, so it is clearly most economical to ship your goods in containers that are full. If you have a less-than-container-load consignment, it may be worth consolidating your cargo with that of other traders, so you'll only pay for the weight or volume (whichever is greater) of your own goods.
Working out the most cost-effective way to ship your goods around the world can be a complicated task. As with most services, you can research the options yourself or pay a third party (such as a freight forwarder) to handle these issues for you, finding transport modes and routes that suit your needs - see using brokers and forwarders.
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Key documents for transporting goods by sea
The paperwork involved in sending your goods by sea including the Standard Shipping Note and downloadable examples.
As with most aspects of international trade, using ocean shipping to transport your goods involves the completion of specific documents. The list below shows the key documents, but is not comprehensive.
Export Cargo Shipping Instruction
An Export Cargo Shipping Instruction (ECSI) is the document by which you provide the shipping company with details of your goods and set out your instructions for the shipment. It follows up on the initial booking, when space will have been confirmed on particular sailings. The process is often concluded by telephone.
You are not required to use an ESCI, but it's good exporting practice to do so because it's a helpful checklist at the planning stage.
In addition to an ESCI you will also need one of the following:
Standard Shipping Note
You'll need a Standard Shipping Note (SSN) if your goods are non-hazardous. This gives the port of loading the information it needs to handle your goods correctly. The SSN is also used by the shipping company to check the actual information about the goods once they have been loaded into the container with the predicted information supplied beforehand.
Download an example Standard Shipping Note (ODT, 10K).
Dangerous Goods Note
You'll need a Dangerous Goods Note (DGN) if your goods are hazardous. This document details the nature of any dangerous goods in a consignment and the hazards presented by them.
Download an example Dangerous Goods Note (DOC, 14K).
In addition to an SSN or DGN, you will also need one of the following:
Bill of Lading
A Bill of Lading is issued by the carrier and serves three purposes. The Bill of Lading will:
- show that the carrier has received the goods
- provide evidence of a contract of carriage
- serve as a document of title to the goods
Sea Waybill
A Sea Waybill fulfils the same practical functions as the bill of lading, but does not confer title to the goods and is therefore quicker and easier to use. It's often used where there's a well-established trading relationship between buyer and seller or in transactions where ownership doesn't change hands, for example between divisions of a single company.
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Cargo insurance for goods at sea
How to make sure your business gets the right insurance cover for your international maritime goods transit.
As with any commercial transactions, there are risks associated with trading internationally and it's important to arrange appropriate insurance cover. You're likely to see the phrase 'marine insurance'. This doesn't only apply to ocean shipping - it also covers transport by road, rail and air.
Shipping companies' liability for the cargo they carry is set by various international conventions and does not always equate to the full value of the goods. The level of protection this offers varies from market to market, so you should check what the position is - see transport insurance.
Contracts of sale and insurance
The main risks that arise in international trade are loss, damage and delay (including detention at customs). How these risks are shared between buyers and sellers should be covered in the contract of sale (not the contract of carriage), using Incoterms.
Incoterms are a standard set of trading terms that indicate precisely when responsibility for costs and risks shifts from seller to buyer. This affects your insurance, because the more costs you're responsible for, the greater the insurance cover you'll need. For example:
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In an ex-works transaction, the seller is considered to have delivered the goods once they've been made available for collection at the factory or warehouse. From that point on, risk passes to the buyer, so the buyer should insure the journey from that point.
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With a delivered-duty-paid (DDP) sale, the risk only passes to the buyer once the goods have arrived at their place of destination and have been cleared for import. In this case, the seller should insure the journey up to that point. There is no obligation under DDP for either buyer or seller to contract for insurance. Only two terms in Incoterms - CIF and CIP - require insurance to be contracted - in both cases it is the seller's obligation. For all other Incoterms, it is recommended that buyer and seller agree who will be responsible for taking out insurance to cover the safe delivery of the consignment.
For more information, see our guide on international commercial contracts - Incoterms, but be aware that Incoterms are terms for contracts of sale and they do not apply to contracts of carriage. You are advised to check whether the Incoterm you currently use continues to apply.
Traders often tend to under-insure themselves, so it's recommended that you add 10 per cent to the amount of cover you think you need. You can also arrange cover for contingencies, for example the buyer refusing to accept your goods when they arrive.
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