How to pick the best export transport mode?
One of the important decisions in foreign trade is about transportation. How to pick the best option? Transport involves how the product moves, from the place where it is produced or stored to the point where it was agreed to be delivered to the buyer. The transport mode for the product delivery has a crucial influence on its price. This choice reflects directly on the product competitiveness and therefore must be well thought out.
The transportation of an export product can be split up in inland freight at origin, international freight and again inland transportation at the destination. Inland freight at origin is the displacement of the product from its manufacturing site up to the location where the international transport begins. International freight is about the product transfer from the origin country to the destination country ruled by an international contract. And finally, the inland freight at destination starts at the discharge point until the product reaches its final destination.
Export transport modes
The main international transport modes are: maritime, air, rail and road transport or a combination of those also named intermodal or multimodal transport. A number of factors weigh to pick the most suitable mode. The exporter shall evaluate variables such as place of load and discharge, product weight and dimensions and delivery urgency. Logistics experts may assist to make the best decision.
Maritime or ocean transport is the most used globally and particularly the container transport. Approximately 90% of all products are transported by ocean due to its lower costs. Transport costs vary according to the cargo particularities and are influenced by weight, sensitivity, perishability, dangerous cargo classification, value, distance, origin and destination port pair choice. Freight rates can be based on weight or measurement of the product and also by type of container used.
Air transport is used in general terms for small, valuable or urgent cargoes. It can be done by companies associated or not to the International Air Transport Association (IATA) or other freight services. The most common procedure is exporters to rely on cargo agents when adopting this mode.
Rail transport is mostly used on intermodal transport within a specific country or cross borders where available. It is the most suitable land transportation for medium distances in countries that have a developed rail network such as the United States, European Community, China and Russia to move great tonnage. Some big country territories as Brazil could become more competitive if investment in the rail mode was prioritized.
Road transport suits exports on short or medium distances. It is part of the intermodal transport – where more than one means of transport is used. In general it is a deregulated activity where free negotiation between parties takes place.
Neighbor or Community countries tend to set agreements to cross boarders by land transport modes or even waterways.
The different modes of transport are also linked to the Incoterms used. The International Commerce Terms define rights, obligations, costs and risks associated with the transport and product delivery, from origin to destination. Through graphics, the online INTRADE platform presents, in a simple form, the transport modes and its correlations with the chosen Incoterm. The transport choice present advantages and disadvantages. The combination of the different modes available is commonly used and desirable. It is the exporter’s choice to select the best alternative to deliver the sold product to its customer.