K. Somsak Chaivichit
Head of Marine & Cargo Insurance
18 years structuring marine cargo and trade insurance programs for exporters, importers, and freight forwarders across ASEAN and beyond.
Short answer
Ocean freight moves goods in containers on scheduled liner services, priced as FCL (full container load, flat rate per container) or LCL (less than container load, rate per cubic meter). A standard shipment requires a booking, bill of lading, commercial invoice, packing list, and customs declarations at both ends. Transit runs 14–35 days on major lanes, and carrier liability is capped by convention — making separate cargo insurance essential for full-value protection.
FCL vs. LCL: The First Decision
| Dimension | FCL (Full Container Load) | LCL (Less than Container Load) |
|---|---|---|
| Space | Entire container — 20ft (~28 m³) or 40ft (~58 m³) | Shared container space, rated per m³ |
| Pricing | Flat rate per container | Per m³ or per ton, whichever is greater |
| Handling | Sealed at origin, opened at destination | Consolidated and deconsolidated at CFS warehouses |
| Risk profile | Lower — fewer touchpoints | Higher — co-loaded cargo, extra handling |
| Economics | Cheaper per unit above ~15 m³ | Cheaper for small shipments despite higher unit rate |
The breakeven typically falls around 15 cubic meters: below it, LCL's per-m³ pricing beats an underfilled container; above it, FCL's flat rate wins on both cost and risk. Shippers in the middle zone should compare landed cost including CFS handling charges, which LCL quotes often understate.
What Ocean Freight Actually Costs
- Base ocean freight — the port-to-port carriage rate, volatile with fuel, capacity, and season
- Terminal handling charges (THC) — origin and destination container handling
- Documentation fees — bill of lading issuance, amendments, telex release
- Bunker adjustment factor (BAF) and currency adjustment factor (CAF) surcharges
- CFS charges for LCL consolidation and deconsolidation
- Demurrage and detention — container storage beyond free days, the most common surprise cost
- Inland haulage — drayage between ports and warehouses at both ends
The Ocean Freight Document Set
- 1Booking confirmation — space allocation on a specific vessel/voyage
- 2Bill of lading (B/L) — receipt, contract of carriage, and document of title; issued as original negotiable set, seaway bill, or telex release depending on payment structure
- 3Commercial invoice and packing list — value and contents declarations
- 4Shipping instructions (SI) — the shipper's data feed into the B/L draft
- 5Verified Gross Mass (VGM) declaration — mandatory container weight certification under SOLAS
- 6Export and import customs declarations at respective ends
- 7Certificate of origin, insurance certificate, and inspection certificates as required by contract or destination regulation
The B/L's three functions explain why it dominates trade documentation: it proves the carrier received the goods, evidences the carriage contract, and — in negotiable form — controls who can claim delivery. Payment structures (LCs, collections) revolve around B/L possession for exactly this reason.
Where Cargo Loss Actually Happens
- Container stuffing — improper loading, inadequate securing, weight miscalculation
- Yard and terminal handling — crane drops, chassis accidents, stack collapses
- Heavy weather — container loss overboard, water ingress through damaged units
- Condensation — 'container rain' from temperature swings on susceptible cargo
- Theft and pilferage — port areas and inland transit points
- Co-loading risk in LCL — adjacent cargo damage and contamination
Carrier liability for these events is capped at roughly 2 SDR per kilogram under Hague-Visby — a fraction of commercial value for most cargo — and several (condensation, some theft scenarios) involve no carrier fault at all. This arithmetic is why cargo insurance is treated as mandatory infrastructure by experienced shippers rather than an optional add-on.
Transit Times and Schedule Reliability
Published transit times are port-to-port estimates; schedule reliability on major lanes historically runs 50–80% on-time performance, meaning buffer planning matters more than schedule optimism. Add customs clearance (1–3 days routine), inland transport, and documentation lead time to any vessel ETA when promising delivery dates downstream.
For time-critical cargo, the ocean-versus-air decision reduces to inventory economics: sea freight's per-kilogram cost advantage must exceed air's carrying-cost savings across the 3–4 week transit differential. High-value, low-weight goods fly; dense, lower-value goods sail.
Key takeaways
- FCL beats LCL on cost and risk above ~15 m³; below it, LCL wins despite higher unit rates.
- Demurrage and detention are the most common surprise costs — prepare documents before vessel arrival.
- The bill of lading is receipt, contract, and title document — payment structures revolve around it.
- Carrier liability caps at ~2 SDR/kg under Hague-Visby; cargo insurance fills the gap.
- Schedule reliability of 50–80% means buffer planning beats schedule optimism.
Frequently asked questions
Port-to-port: 28–35 days to Northern Europe, 14–18 days to the US West Coast, 25–30 days to the US East Coast. Door-to-door adds 5–10 days for customs and inland movement at each end.
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