Everything You Should Know About the Shipping Industry

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With the rising demand for commodities and goods across the world, issued from the advent of the pandemic, there has never been a better time to start a shipping company of your own. If you invest correctly and utilize your location to your advantage, you will soon bring immense success to your shipping company without much considerable effort.

According to Fbabee.com, manufacturers are always looking for a reliable shipping company they can trust with their commodity shipments. You can easily be one of these companies but for that, you need to play your dice correctly and learn everything about the industry to assure your client that your company is full of trained and expert professionals.

While there is no definite time to start learning about the industry, it is often recommended that you start way before you create your business to know the ins and outs of the shipping industry so that it doesn’t cause you problems later on. To help you do that, in this article we will list every single detail and aspect of the shipping industry so that you don’t get any unpleasant surprises later on.

Size metrics and types

There are various companies like Shipo that transfer enormous amounts of supplies from one location to another. But how do they do it? What are the containers they use to facilitate the transfer and help their goods arrive in an optimal, accurate, and safe manner?

The answer to that question is none other than intermodal containers. These containers are the ones that are commonly seen on top of all cargo ships being lugged from one place to the other. These containers are completely made of steel and are quite resilient – they won’t break apart even if a shipping supplier drops them off by accident.

These intermodal containers can be easily loaded onto other vehicles for transportation such as trains or heavy-duty trucks to be taken for further transport. An average ship can accommodate hundreds and thousands of such containers and they are responsible for almost 2/3 of all marine cargo transportation.

Apart from transportation, these containers also serve another essential function – quantification. Ships don’t measure their weight load by individually weighing all the commodities they are carrying. Instead, they use TEUs (Twenty-foot equivalent units) to measure how much weight they are carrying.

The more a cargo ship can accommodate these separate units, the more its storage capacity. Even if you use different containers, they too are measured in quantities like 10-foot equivalent units or 1/2 TEUs which helps cargo ships across the world maintain one universal size standard.

Understanding your freight

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Manufacturers can use your cargo ship to freight their commodities in a variety of different ways, depending on their preference and the commodity’s storage standards. These cargo loads can be mainly categorized into –

  • FCL – A manufacturer has purchased one or more than one complete container for shipping their products and plan to utilize them all fully.
  • LCL – A manufacturer has a very limited amount of commodities, or they are small in size and occupy minimal space. In this case, a manufacturer purchases a specific amount of space inside a container and shares the rest with other manufacturers.
  • RORO – An entire shipping vehicle, mostly a heavy-duty truck, is loaded onto a cargo ship along with the products it’s carrying.
  • Dry Bulk – Commodities that are better carried together in bulk quantities, such as food grains or coal, are stored in the ship’s hold storage space instead of being stored in the containers.
  • Break bulk – Materials that cannot physically fit in containers, such as custom-made goods or metal sheets or girders, are also stored in the ship’s hold.

It is important that you understand which type of cargo you will be carrying on your shipping ventures. Dedicating a cargo ship to only one freight type is often the best move for many shipping companies around the world.

The different types of businesses in the industry

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You’d be surprised to know that along with freight types, there are different types of shipping businesses as well. Choosing the business type that is most suited to your standards and business plans is crucial for any shipping company to succeed. The first and most common shipping business type is the OFF or ocean freight forwarders.

These are the individuals that are responsible for loading the cargo on the ship and ensure that everything gets spaced optimally. However, the cargo is not their own nor do they have the responsibility of transporting via the cargo ship. Their only job is to load and unload cargo when required.

Next is the NVOCC, or Non-Vessel Operating Common Carrier,  which is extremely similar to OFF with the only exception being that they hold a higher level of responsibility than the prior because they take responsibility for the cargo they place. This business acts as a middle-man between the manufacturer and the actual shippers.

The second last on our list is VOCC, which is short for Vessel Operating Common Carrier, who cater to BCOs, or beneficial cargo owners, directly. VOCC are the actual vessel drivers and are the ones that are responsible for delivering your cargo from one location to another. They often integrate a middle-man such as NVOCCs or OFFs when dealing with normal shipping business.

Surety bonds and lading bills

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A surety bond is an important aspect of a business contract when manufacturers deal with third-party carriers such as OFFs and NVOCCs. A surety bond is basically an assurance that the carrier won’t engage in dishonest activities for their own profit and ensures a financial guarantee in case anything goes wrong on their part.

A bill of lading is an even more important contract because it operates under all three parties – the sender, carrier, and the receiver. It is essentially a document that keeps track of all the cargo on the ship throughout its journey.

Conclusion

There are several things that are a must-know if you intend to flourish in the shipping industry. We hope this article helped you with most of them, and if it did, please consider following our article for regular updates as it will help us out immensely.

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