Foreign trade enables markets to expand through the trade of goods and services between countries. However, because one is dealing with different cultures and policies it is important that you understand how the whole import/export process works. One of the main factors which involves the whole process is international freight services. It is, after all, the procedure which transports the goods between the parties who effected the transaction. 

What do you need to know about international freight services?

We are all familiar with the concept of freighting, a means of transport which takes goods from their point of origin to their destination. But when we talk about international freight, where shipping will take place between different countries, the process is more complex than the freight services to which we are more accustomed. International freighting involves a set of international rules and standards which regulate the whole export–import process. 

After closing the import/export deal, the first stage of the freight process to be followed is to choose the best transport mode, in other words, the type of transport that will be used to carry out the international shipment and provide the freighting service. This will depend on a number of factors, such as the type of cargo, delivery deadline and any agreement that has been established during the negotiation.  Because the shipments in question usually involve long distances, the most common modals in international freighting are the maritime transport mode or the air transport mode. In the case of international freight services between countries that share a border, transport can take place by land, via road or railway networks.

What are the advantagens of each mode?

Each transport mode has its advantage and is the most recommended for specific types of cargo: 

  • Maritime transport – because it has a lower cost, it allows for larger cargo capacity. For that reason, it is ideal for large quantities of merchandise, of low or medium added value. This is the mode that is most used in international freighting.
  • Air transport – as the cost of air transport is high, it is recommended for light cargo of high added value. In some cases, it is also used due to the urgent need for transportation. 
  • Road transport – carried out over short distances, transportation is usually door to door, in other words, the goods leave their point of origin going directly to their destination.
  • Railway transport – as with maritime transport, it is indicated for heavy loads, in large quantities and of low added value.

Types of international freight services

It is very important to understand the types of international freight services that there are before hiring the service. That is because the type of freight service is directly related to the goods in question and the mode of transport. International freight services are divided into 4 types, which are:

  1. Incoterms – Incoterms are International Commercial Terms, and are agreed upon between buyer and seller. These terms will establish issues such as costs, delivery and insurance for the cargo. Incoterms comprise 11 terms, divided into 4 categories:
    • Group E (EXW);
    • Group F (FCA, FAS and FOB);
    • Group C (CPT, CIP, CFR and CIF);
    • Group D (DAP, DPU and DDP).
  2. Modals – with modals, the freight value will vary according to the transport mode chosen to move the cargo.
  3. Multimodal Freight– multimodal freight is based on prices established for modal freight, since it is a combination of two or more transport modalities. 

Types of payment for international freight services

Freight payments can be broken down into 3 categories:

  • Freight prepaid  – means that freight will be paid as soon as the goods are shipped. This is normally done in the country of origin of the goods, but is not mandatory and can be paid for abroad. 
  • Freight payable at destination  – in this category, international freight charges are paid by the importer, when the goods arrive or are picked up in the country of destination. 
  • Freight collect –  payment for international freight collect services can be made in a location which is neither the country of destination nor of origin. In other words, the freight can be paid from anywhere in the world. The shipping company is informed by the freight forwarder about payment, in order to give the goods clearance.

We at TCW operate with a solid network of freight forwarders, located near to the world’s main ports and airports. We have a set of tools which allow full time integration to shipment follow-up, for we understand that in a highly competitive market it is of the utmost importance to have immediate access to information. Get in touch with us and we will be pleased to clarify any doubts you may have and assist you in expanding your business through foreign trade!