The global economy, right from the impact of that local business or e-commerce giant or a multinational conglomerate, depends a lot on freight transport. It is a serious business and a key cog in logistics and supply chain.
Every year, freight worth trillions move across global trade networks. Most shippers want to get a handle on their logistics and supply needs and rely on freight transportation to meet customer needs and to stay ahead of the competition.
What Does it Mean to be Shipped by Freight?
Freight shipping (shipping by freight) is the transportation of goods (cargo and freight) in bulk. The shipments can be done via various modes, including on land, sea, air, rail or intermodal.
Companies and businesses can utilize a freight service to choose the best type of freight transportation that best fits their needs.
Freight brokers work with companies to ensure transportation needs suit logistics, with third-party logistics playing a crucial role in this.
To be shipped by freight, the goods, commodities or cargo have to weigh more than 150 pounds. Below that, it becomes a parcel to be handled by global companies like UPS and FedEx.
In freight shipping, methods of shipment like trucking or ocean freight carry most of the bulk. As such, the freight industry combined moves a staggering volume of freight. Each year the industry handles billions of tons of cargo, all worth trillions of dollars.
What is a Freight Transport Service?
Freight service is a company that offers services in freight transportation, with such companies ideally looking to make the shipment of goods, commodities, and cargo cost-effective, efficient and timely.
Freight service companies also serve as freight carriers. International freight shipping is increasingly becoming too complex for small companies, which has seen freight transportation services and third-party logistics providers take on a growing role in shipping.
In most cases, a good freight carrier becomes an intermediary and helps you:
- secure shipping services at better freight rates
- handle the paperwork needed for shipping
- oversee the shipping process to help maintain an efficient supply chain
Some of the top freight service companies are:
- FedEx Freight
- UPS Freight
- DHL Freight
Which Mode of Transportation Carries the Most Freight?
Freight transportation takes on several modes and what option a company goes for depends on the type of freight, the available transportation and the overall distance involved.
Improvements in container shipping and other economies of scale have seen maritime shipping become bigger, with vast quantities of goods shipped as sea freight.
But of all the modes of transportation used in modern freight movement, road transport accounts for the most freight. Road transport- using trucks- helps move over 50 percent of all freight and over 75 percent of freight transported inland.
According to statistical data from the Bureau of Transport Statistics (USDOT-BTS), trucks carry over 80 percent of the entire freight tonnage shipped in the U.S.
The agency also estimates that the total freight moved between the U.S., Canada, and Mexico in September 2019 accounted for $101.4 billion worth of freight. However, the mode of transport used most was trucks (transporting over $64.0 billion of freight). Rail accounted for $14.8 billion of freight over the same period.
Overall, Maritime shipping accounts for most of the freight transported globally.
What Are the Different Types of Freight?
Generally, there are three types of freight:
- Ground freight– the use of roads and rail to ship cargo
- Sea freight- freight shipping mode that involves the use of ships and ferries among other vessels
- Airfreight- cargo and commodities moved via planes.
Internationally, companies use any combination of these freight types- often called intermodal and multimodal.
Specifically, freight can fall under any of these categories:
Less than truckload (LTL): this type of freight typically covers shipments between 150 pounds and 15,000 pounds. Ideally, LTL shipment carriers move several small loads and can stop to load and unload freight enroute.
Full truckload (FTL): Full truckload freight differs from LTL in that here the weight of the cargo is more than 15,000 and involves the use of a single truck to transport one shipment. It suits transportation of bulk or pallet loads (24- 26 pallets) with less handling while in transit to the destination.
Partial truckload (PTL): Partial truckload freight is when shippers go the cost-saving way by splitting costs involved in hiring a truck. PTL differs from LTL in a way that once inventory is loaded, the probability of moving them onto another truck is pretty low.
Intermodal freight: Here inventory transportation involves the use of different modes of transportation. Typically, intermodal shipping makes use of rail and truck, with containers first loaded on one and then another before reaching the final destination.
Expedited: We use expedited freight when transporting time-critical shipments. Because they have to be moved from point to point in the shortest time possible, expedited freight usually happens via trucks or by air.
In container shipping, companies can choose from:
- Full Container (FCL): Like FTL, full container shipping involves the use of an entire container.
- Share a Container (LCL): when shipping freight using LCL, a shipper shares the cost of the container with others to minimize costs.
What is a Freight Charge?
Freight charge refers to the fees or charges levied for the transportation of freight inventory by road/land, air, or sea. There are two ways by which carriers can transport goods:
- freight-collect basis
The first option involves the transportation of freight paid for by the consignor. This means the consignor holds control and ownership of the goods until a consignee receives the consignment and pays for it.
In freight-collect arrangements, the consignee pays the freight charge and thus takes ownership of the goods. The consignor hands over the goods to a freight shipping provider against a bill of lading.
Shipping companies peg their freight rates on a number of factors, which include:
- Freight destination
- Value of goods
- Weight, size, and volume
- Urgency/ time-critical
- Shipping mode/type of transportation
Why is Freight Transportation Important?
Freight transportation plays a huge role in global trade and by extension in the global economy. The freight shipping industry is responsible for the movement of important goods- whether valuable items like computers or bulk loads like coal, grains, ores, and heavy hauls like farm equipment.
According to the U.S. Department of Transportation, Bureau of Transportation Statistics and Federal Highway Administration, the domestic freight shipment sector moved over 17.8 billion tons of freight every year. In value, that accounted for over $17.5 trillion in 2018. Globally, that figure shoots to over 100 billion tons and hundreds of trillions of dollars.
Freight transportation helps add value to goods. Freight management companies help bring a competitive edge to the industry and shipments reach places with much more demand. That adds value to production, making it one of the largest sectors that boost the economy. The shipping sector also employs millions of people, with several high paying jobs.
The industry also helps in the overall development of infrastructure. Think of seaports, airports, and roads- all necessary to accommodate growing transportation needs. Growth within the freight industry has seen the development of an extensive transport system spanning global networks. From here, the benefits of freight shipping reach far and wide in world economies.
What Are the 5 Types of Freight Transport?
The movement of goods from one location to another relies on an extensive transport network. Within this sector, freight carriers and companies choose between five key modes or types of transportation:
- Road transportation
- Air transport
- Ocean/maritime transport
- Rail transport
- Intermodal transport
Road transport is one of the most-used modes of freight transportation. Quick, cost-effective and less tedious custom processes make road freight attractive.
Other advantages include flexibility (including the capacity for containerization), allows for both long and short-haul trucking and easy tracking.
Air transport has grown tremendously over the last few years. Air cargo serves those who want speed to meet supply chain demands. The concept of “just-in-time” has seen air freight services provide critical services to support to the e-retail industry.
Freighters carry all manner of light shipments, from perishable goods to pharmaceuticals and high-value items.
Ocean freighters move all manner of cargo, including that which may not be safely carried using most other modes of transportation. Companies use sea freight shipping to move dry bulk, wet bulk (like crude oil) and other heavy cargo.
Rail is a mode of freight transport that provides for both cost-effectiveness and intermodal transport.
Trains are seen as an environmentally-friendly mode of transport, with another advantage being its reliable transit times.
Companies can combine two modes of transport (intermodal), often to cut costs and increase efficiency. Businesses can save up to 60 percent in costs compared to air freight.
Which Freight Transport is Cheaper by Air or Sea?
If you consider freight charges for both air freight and sea freight, no doubt the former appears much more expensive. However, one needs to consider that charges apply differently for both modes of transport.
While air freight charges go by weight, sea freight also adds the dimension of volume and container. So, going for sea freight makes cost-effective sense when applied to larger and heavier shipments that would otherwise not fit air transport.
Also to be considered are differences in warehousing fees, with seaports significantly costlier than at most airports.
What are the types of road transport?
The type of road transportation a company chooses depends on the type of cargo- (dry, liquid, gaseous, perishable, high value, hazardous, palletized or oversized and so on).
Trucks and semi-trailers like 53-foot dry vans, flatbeds, and reefers all carry particular goods.
Two types of road transport
- Non-motorized transport (walking, cycling and use of domestic animals)
- Motorized transport (all type of engine-enabled transportation modes- like semi-trailers and heavy haul trucks),
What are the types of cargo?
Cargo can fall into five key types, with the specific type of cargo determining the best mode of transportation.
The four types of cargo are:
Dry bulk cargo refers to all items shipped dry and in large quantities. They include cereals/grain, iron ore, and coal among others.
This type of cargo includes items transported in bulk but in parts that can easily break (breakbulk!). Examples are wood products, cocoa, steel rolls.
‘Roll-on / roll-off’ (ro-ro) cargo go in ferries and other vessels – on at a point and off at the destination. The ro-ro cargo includes cars, buses, and trailer trucks.
Such cargo includes crude oil, petroleum, vegetable oils and other items transported in liquid form. Liquid cargo is moved using tankers or pipelines.
What Are the Benefits of a Transportation Management System?
A transportation management system (TMS) offers several benefits to businesses, with a particular focus on bettering supply chain processes.TMS can help a company move its freight efficiently and cost-effectively using any of the modes of transportation.
Reduction in freight expenses
The TMS tool allows for process optimization and analytics which are key elements in cutting
Real-time tracking of shipping
Companies can easily track of drivers, deliveries and shipments. The result is more efficiency for the company.
Improves customer service
Monitoring tools in the TMS provide vital information to customers, who can then see/ follow freight movement. Improved freight shipping and expected shipment delivery allow for better customer experience.
Improves warehouse efficiency
Using both TMS and warehouse management systems (WMS), companies can improve their inventory management, including those in transit.