Cold Chain Storage & DistributionLondon 21st & 22nd Feb 2012

Mark Edwards – Global Freight Manager

Sea Freight An Evaluation of the TransportOpportunities & Risks

What will we look at today?

• Modal characteristics• When to use sea freight• Benefits of seafreight• Drawbacks of seafreight• Temperature excursions• Insurance• Roles and responsibilities• Summary

Modal characteristicsRoad

• Typically used for trans-continental movements

• Well set up hub and spoke systems• Temperature-controlled “groupage”

services becoming widely available• Security risk higher than other modes –

primarily through theft

Modal characteristicsAir

• Typically used for inter-continental movements

• Primarily point-to-point operations but some hub and spoke systems

• Varying degree of “pharma” services offered by airlines

• Ground handling often of a poor quality• Fast transit times• Commensurately expensive

Modal characteristicsSea

• Typically used for inter-continental movements

• Primarily hub and spoke systems through “feeder” and “mother” vessels

• Slow transit times• Commensurately less expensive

When to use sea freight

• Transit time is less important• India to Europe 22 to 24 days• Air freight 1 week – sea freight 4 weeks

• Transportation costs need to be minimised • Air freight +1000% the cost of seafreight

• Regular supply of larger volume products• Sea freight container takes 30

pallets single-stacked

When to use sea freight

• Enhanced security required• Few parties are involved• Containers can be loaded and sealed at

your own site• Containers stay sealed through to

unloading destination• Negotiable documentation

Benefits of sea freight

• Cost• Typically over 1000% lower than airfreight

costs• More secure mode of transport

• Air freight involves multiple hand offs & regular trans-shipment

• Air freight handling is a low-skill environment

Benefits of sea freight

• Lower risk of temperature excursion• Units are sealed throughout journey• No physical handling of product

• Possibility to defer inventory• Take advantage of the longer transit• Use of the right Incoterm

Drawbacks of sea freight

• Variable quality & availability of equipment• Use containers less than 5 years old• Communicate requirements in advance

• Reliability of shipping schedules• Partner with high quality forwarder and

shipping line• Construct reliable supply chain to take

account of such factors

Temperature excursions

• Equipment quality is the key factor• Use containers less than 5 years old

• Ensure containers are pre-conditioned to your required temperature

• Load and seal containers at your temperature-controlled warehouse

• Unload containers at your temperature-controlled warehouse

Insurance

• Sea freight is governed by very old rules• All parties with product on a ship are

deemed to have an “interest” in the voyage

• This means you are proportionately responsible for serious incidents where a “general average” is declared

• Typically this would be a serious collision or pollution incident

• SO………..

Insurance

• Always have marine cargo insurance• Most policies do not cover temperature

excursions - ensure yours does• Ask your broker to investigate a “risk of

loss” clause

Insurance

• Shipping lines and freight forwarders have a very small, limited liability• All work to internationally agreed

amounts • All will reject your claim and point you to

your own insurance

Roles and responsibilities

• Shipping lines • Provision of equipment – container and

ship• Freight forwarders

• Liaison with shipping line• Customs & documentation services

• You• Liaison with your supplier• Temperature information• No different to current supply chain

Summary

• Sea freight is an excellent solution in the right circumstances

• Have a full understanding of your current supply chain before making any change

• Finding the right freight forwarder is a critical success factor