Choosing the Right Global Transportation Mode

IEEPA Refund Calculator Investor Relationship Financial Overview Company Overview Financial Overview Corporate Governance Overview Board of Directors Committees Internal Audit Regulations Shareholder’s Insights Shareholder’s Insights Shareholder’s Report Investor Contact Investor FAQ Contact MyDimerco English繁中简中 Home » Choosing the Right Global Transportation ModeChoosing the Right Global Transportation Mode by Dimerco | May 25, 2022 In global shipping, choosing the right transportation mode is a crucial decision that impacts customer satisfaction, company profitability and the environment. Here’s information to help you understand the available options, with examples to illustrate when certain modes make more sense. Global Transportation Modes You’ve got 4 options for shipping globally. Well, 5 if you include combining multiple modes to complete the journey. Let’s look at each. Air freight Did you know that, according to IATA, air freight makes up just 1% of the total volume of global trade but 35% of the value of goods shipped. Air freight is the fastest mode and is used by industries whose products are high value (electronics components, aerospace parts, pharmaceuticals), high demand (fashion products nearing the peak selling season) or perishable (seasonal flowers, fresh food). PROs CONs Cross-continent air shipments take days, versus weeks for ocean shipping More frequent shipping times than ocean Time-definite delivery for more predictable supply chains Enhanced security for high-value products Air freight will cost more than all other transportation modes Limits shipment of certain types and sizes of goods, like hazmat products and large, heavy cargo Not green-friendly Ocean freight 90% of global trade moves on ocean vessels. Our global economy is heavily dependent on reliable maritime shipping. PROs CONs Efficiently moves large volumes of freight long distances More economical than air Significantly greener than air and truck transport Slow transit times (ocean vessels travel at around 23 miles per hour vs cargo planes at 560 mph) Costs and complexity rise if your origin and destination points are far from a maritime port. Rail Rail transport is normally associated with domestic freight, but it can be an economical choice for cross-border moves. For example, Dimerco’s cross-border rail solution from China to Europe ships 20 days faster than ocean freight and as much as 30% cheaper than air freight. PROs CONs Less susceptible to weather- and traffic-related delays Green-friendly Slow transportation mode, often requiring multiple transfers throughout the journey Not every location has easy access to rail, requiring a rail-truck solution Truck Trucking services can be a very economical option for cross-border shipments within a region, such as between the US and Canada and Mexico and between China and Southeast Asia. PROs CONs Cheaper than air or ocean freight Few restrictions. Specialty truckers are available for just about any type of freight – from oversized to hazmat to refrigerated Easy tracking via GPS for real-time visibility Slower than air freight More prone to unpredictable delays Capacity constrained due to a shortage of truck drivers in many countries Multi-modal Multi-modal shipments involve 2 or more types of transportation modes. A multi-modal strategy can help deal with a variety of freight disruptions. Here are 2 examples: There is very limited direct air service from China to Mexico, so Dimerco offers a China to Mexico shipping solution via the US that ships products via air freight from China to LA or Dallas and then trucks products, in bond, to the final Mexico customer. As ocean freight rates rise, container shipping from Thailand to Batam, Indonesia have become expensive for the slower, 2-week transit time. For one customer, Dimerco now moves goods via truck to Singapore, completing the journey with a short ocean voyage – cutting transit time by 7 days. Key Criteria: Which Mode to Choose When determining the best transportation mode, here are the key criteria you should examine. Product Your product characteristics (size, shelf life, hazmat) may limit your options. For instance, flammables, aerosol cans and many other products cannot ship via air. Urgency You’ll save money if a longer transit time is acceptable. But sometimes it’s not. For instance, components en route to an Apple factory in advance of a new iPhone launch aren’t traveling by sea freight. Origin and Destination Where are you shipping from? Do you have easy access to maritime ports or international airports? Your destination may also impact mode choice. When a Fortune 100 technology company’s air shipments into Shanghai were cancelled due to COVID restrictions, Dimerco routed freight to Hong Kong International Airport and coordinated last-mile distribution via truck from Hong Kong direct to factories in China. Cost Faster is always better when it comes to shipping. But staying within your transportation budget is critical to maintaining profitability. It helps to understand how shipping costs are calculated for air and ocean freight since the formulas differ drastically. Many electronics components ship between China and Southeast Asia via air freight. But shipping via truck can sharply reduce those costs. Dimerco’s cross-border road freight solution moves freight between Shanghai and Singapore (and all points in between) in 8 days or less (without COVID-related border delays) at a 56% savings over air freight. Capacity Sometimes there is insufficient freight capacity on your preferred mode and you will need to be flexible. For instance, an electronics company was shipping air freight from Batam, Indonesia to LA via Singapore. But air freight capacity is limited out of Batam, so the company now ships via ocean to Singapore and onto LA via air. Sustainability The accompanying diagram shows the relative contribution of different freight modes to greenhouse gas emissions (GHGs). This is becoming a priority for large multinationals, who have made public commitments to reduce their carbon footprints by specific dates. Your future mode choices may lead you, more and more, toward greener freight options. Primer on Transportation Mode Choice We hope this brief primer on transportation mode choice was helpful. Although there are only 4 options to choose from, decisions can be complicated and costly without proper analysis. As a leading freight forwarder and 3PL that connects Asia with the world, Dimerco is happy to help. Contact us to schedule a discovery call. Post Tags: Air Freight | Asia Pacific | China | Customs Clearance and Compliance | Freight Forwarding | Multimodal Transport | Ocean Freight | Road and Rail Freight | Supply Chain Solutions | USA We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.ACCEPT Cookie settingsManage consent Close Privacy Overview This website uses cookies to improve your experience while you navigate through the website. 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