Despite being affected by the COVID-19 epidemic, the potential for the ocean freight has remained stable over the years, even growing strongly from the end of 2021 until now. According to the General Statistics Office, the total volume of goods transported through seaports in Vietnam in 2022 is 733.18 million tons, an increase of 4% compared to 2021. So why is ocean shipping important? Many businesses choose such a form of transportation? To understand this, please read the content below to find the answer for this question!

What is ocean freight?

Ocean freight (or martitime transport) is the determinant of transport in combination with infrastructure at seaports, loading and unloading vehicles to transport goods. Sea freight includes both domestic and international transport.

Goods transported by the form of sea transport often have a large volume. Because international cargo ships have large tonnage, they can be applied to many industries.

Advantages of ocean freight

Because seagoing ships often have a large tonnage, this is the only method of transport that can carry bulky and super-heavy goods.

Seaport infrastructure is modernly invested, supporting loading and unloading, lifting or lowering containers…

Because the transportation route is a long journey, suitable for transporting goods of low value, the ocean freight costs are also reasonable and cheaper than air freight.

Sea routes also face less obstacles than road (traffic jams, landslides, …)

The sea route also takes advantage of nature, without spending a lot of money on investment in exploiting the route, installing rails like the form of rail transport.

The sea route is an economic bridge between Vietnam and other countries in the world. Set the scene for development cooperation and trade exchange between countries.

Shipping goods by sea helps businesses save costs while ensuring the safety of goods.

Which items should use sea shipping?

Bulky goods, large goods can be transported by ocean freight. Except for goods on the list of goods banned from import and export, other items can be transported by sea:

Dry goods, canned goods, canvas shoes, toys

These items do not require high shipping time but often occupy large volumes and must ensure the safety of the goods. Therefore, these goods are suitable for sea transport to save costs.

Minerals, metal products, wood

For items that are not too high in value and have a large quantity, this is the best solution. Because the costs for these items are quite high due to their large tonnage and higher value compared to common goods.

Items that are perishable or of special nature

Frozen goods with a large load are difficult to transport by air. Therefore, sea transport is the optimal solution for enterprises specializing in import and export of these items.

Fees and surcharges in ocean freight

THC (Terminal Handling Charge)

THC is also known as the loading and unloading surcharge at the port, i.e. the fee collected per container to compensate for cargo handling activities at the port. This fee will be regulated by the port and collected from shippers (shippers/consignees).

AMS (Automated Manifest System) fee

AMS is the cost for customs declaration of details of goods when imported into the US… The shipping company is the unit that declares the shipment and sets the AMS fee, then the exporter is obliged to pay this fee back to the shipping company.

Fees similar to AMS fees when exporting goods to other countries:

• Shipping fee to EU: ENS (Entry Summary Declaration) fee
• Shipping fee to Japan: AFR fee (Japan Advance Filing Rules)
• Shipping goods to China: AMR (Advance Manifest Rule) fee
• Shipping to Asia: ANB fee

D/O fee (Delivery Order fee)

When the shipment is imported, the consignee goes to the shipping line/forwarder to get the delivery order. Then to present to the retail warehouse / make an EIR (for FCL container goods) to receive the goods at the port. At the same time, the shipping line/forwarder will collect the D/O fee for the shipment.

B/L fee (Bill of Lading fee), AWB fee (Airway Bill fee)

Shipping by sea: When the shipment is exported to another country, the shipping company must issue a Bill of Lading for the shipper. Therefore, this fee will be collected by the shipping line for the issuance of the bill of lading.

CFS (Container Freight Station fee)

CFS fee is the fee that the forwarder collects from the exporter when the goods are in the warehouse waiting to be loaded onto the container or unloaded from the container. Normally, the CFS fee will be collected by the port side from the shipping agent

Handling fee (Handling fee)

Shipping lines or forwarder companies will collect fees from shippers to perform tasks such as declaring Manifest, issuing B/L. When the forwarder company deals with its agent/branch in a foreign country to agree on the implementation of necessary procedures as the representative of the branch in Vietnam. These procedures include: customs declaration, registration of B/L, D/O…

DEM and DET fee

Demurrage charge (DEM) is a fee incurred when storing containers at the yard beyond the time specified by the shipping line. Normally, a certain period of free time allowing customers to store containers is 05 days. If the storage time at the yard exceeds 05 days, the shipping line will collect this fee from the goods owner based on the number of containers and the number of days, then the shipping company will pay this fee to the port as agreed. 

DET (Detention charge) is the fee for storing containers at the warehouse. Similar to DEM, for DET, customers also get a free storage period. Depending on the type and size of the container, the DET fee is calculated differently.

*Note:

Free periods for DEM and DET include holidays, public holidays, Saturdays and Sundays. Therefore, shippers need to arrange a suitable time to prepare goods to avoid excessively high storage fees.

Normally, the DEM/DET fee of refrigerated containers is higher than the other types of containers

In the case of high-value shipments, limited handling or large quantities of goods. Depending on your agreement with the shipping line, it is also possible to extend the free period of storage at the yard and at the warehouse.

Common causes of delay in storage time leading to loss of DEM and DET fees include: incorrect information on documents, wrong customs procedures, slow release of goods, inability to contact the consignee…

EBS (Emergency Bunker Surcharge) surcharge

EBS fee is a surcharge to compensate for the loss for shipping lines due to fluctuations in gasoline and fuel prices. Used for routes to Asia, and for routes to Europe, it is called ENS (Entry Summary Declaration). This surcharge will be collected by the shipping line from the shipper and this fee will not be included in the Local charge.

How is the sea freight calculated?

In fact, ocean freight rates are calculated based on volume (CBM) or weight (KGs) depending on each shipment. In order to determine the freight accurately, Expander Logistics will coordinate with the customer to estimate the freight, after exchanging some information related to the shipment. This information includes: type of goods, sending and receiving locations, volume of goods, shipping lines in charge of transportation, etc.

After determining the necessary parameters, proceed to calculate the volume and weight of the shipment. When performing, the actual volume of the goods will be compared. Compare the value of the total volume and total weight of the shipment. Decide how the shipment is calculated and then multiply by the amount per KGs/CBM.

The calculation method is as follows:

Step 1: Volume of the whole shipment

CBM = volume of 1 carton x number of cases = (length x width x height) x quantity

Step 2: Convert weight to volume, with the unit: 1 CBM = 1000 KGs

Step 3: Compare volume and weight

• CBM > KGs => apply by volume (bulky goods)
• CBM < KGs => applied by weight (heavy goods)

FOR EXAMPLE:

You need to export a shipment with an actual weight of 2500kg which is placed in 50 boxes with dimensions of 0.5 x 0.4 x 0.4 (length – width – height). Assume that the unit price by volume and weight is: 0.9 USD/kg

Then the freight will be calculated as follows:

• Volume of the whole shipment

50 x (0.5 x 0.4 x 0.4) = 4 CBM

• Convert volume to weight: 4 CBM = 4000 KGs
• Compare: 4 CBM > 1000 KGs => By volume (bulky goods)

=> So the freight is: 4 x 1000 x 0.9 = 3600 USD

The process of importing goods by sea

1. Schedule a train

After signing a foreign trade contract, the enterprise sets up a train schedule and provides information to the shipping unit.

2. Check booking

The ship booking company needs to check and confirm the information on the booking slip to avoid errors that lead to loss of editing time. Important information to pay attention to such as: port of departure, port of destination; whether the temperature and ventilation are correct or not; container type, container size

3. Pack goods and update information

The exporter updates order information continuously for agents or forwarder branches in the importing country. This helps importers and forwarders to easily track the packing progress (container number, empty container photos, temperature table for refrigerated containers, etc.)

4. Checking documents and papers related to the shipment

Check the number of types of documents in the set of documents related to the shipment, whether the information on the documents is in sync with each other. Any errors in the documents will cause damage to the shipment no matter how small or large. First of all, it is necessary to extend the time for customs clearance of shipments, affecting the nature of goods, and slow delivery to customers.

5. Receive notification of arrivals

Before the date of arrival of the ship, the consignee will receive an Arrival notice from the shipping company to inform the estimated time of arrival. The information on the arrival notice includes: name of exporter – importer, container number, seal, ship name, trip number, description of goods and local charges.

6. Receive delivery order D/O

To receive the goods, you need to prepare the following documents to get the delivery order:

• Letter of introduction
• Original B/L
• Power of attorney (if any)

7. Registration of certificates for shipments

For some special items, shippers need to register for certification for the shipment.

For products and goods under the management of the Ministry of Health, potentially causing unsafety and requiring regulation conformity certification, including: drugs with biological ingredients, therapeutic vaccines, and traditional medical equipment; Products and goods under the management of the Ministry of Agriculture and Rural Development: plant varieties, livestock, aquatic products, veterinary raw materials, veterinary drugs, fertilizers…

Register for inspection of food hygiene and safety for imported goods for fresh food items.

8. Electronic customs declaration and customs clearance procedures for imported goods at the port

Prepare a set of customs declaration documents, including:

• Customs Declaration 
• Sale Contract
• Commercial Invoice 
• Bill of Lading
• Packing list 
• Certificate of Origin
• Import license (if any)

In order to simplify the process of importing goods, it is operated smoothly, saving time and costs. You can refer to the package Customs service at Expander Logistics with surprisingly low cost.

Next, you need to complete the obligation to pay taxes, fees and charges to the Customs office. Submit the barcode and customs clearance declaration to Customs supervision. Then bring the D/O to the port’s sales office to pay the fee.

9. Drag the goods to the warehouse and return the empty container to the Depot

When transporting goods to the warehouse, it is necessary to check the condition of the goods, whether the container is intact or not, check the seal… After removing the goods from the container, the owner needs to clean the container clean and return it to the port. or ICD.

10. Maintain records and documents

Documents and records related to the process of importing goods from abroad should be stored carefully. In case it is necessary to compare when there are problems, complaints …

Sea freight services are provided at Expander Logistics

• With more than 10 years of experience in the field of sea transport forwarding, Expander Logistics company is well in charge of international transportation and always supports customers in preparing import and export procedures.
• Expander is currently an associate partner with major shipping lines in the world such as: MARSK, ONE, CMA-CGM, YANG MING, NAMSUNG, WANHAI,… in order to provide customers with optimal transportation solutions in terms of efficiency costs.
• Professional service, commitment to not incur costs, fast shipping time, ensure delivery time as committed to customers.
• Expander Logistics strives to find solutions to shorten transportation time and ensure absolute safety of goods.
• Providing sea transport services combined with customs clearance.
• With services provided at Expander Logistics include: FCL and LCL; Door to Door Delivery; Customs service for import and export shipments by sea

Expander Logistics is always willing to consult, support and answer questions for customers free of charge about the provisions of the Law for sea transportation, how to carry out the most accurate procedures for importing goods by sea. If you want to find out more information related to sea transport or any of our services, please contact the hotline or website address below:

Tel/Zalo: 0967013690

Facebook: https://www.facebook.com/expanderlogisticsvn

Website: https://www.expanderlogistics.vn/