Air is faster and ocean is cheaper. But there’s more to consider when selecting the best mode of transport for your goods and comparing air freight vs. sea freight. To help you make more informed decisions, this article explores four key questions:
- Can you justify the premium for speed?
- Can you spare just a little extra time?
- Can you be sure of your production schedule?
- Can you be more flexible when needed?
Let’s work out the answers together.
Can You Justify the Premium for Speed?
There is a premium to pay for air rather than ocean transportation. Air freight may be essential if you are shipping perishables with a short lifespan, temperature-sensitive items such as pharmaceuticals, or high-value goods that require careful handling.
Air freight is also best if you want to reduce inventory levels where warehouse space is particularly expensive. Regular flight schedules allow you to pull products into your warehouse on an as-needed, just-in-time basis. So the extra cost of air transportation is partly offset by the savings made in reducing stock holding.
Also consider how quickly your goods must be dispatched on arrival when comparing air freight vs. ocean freight. When there is a need for speed, this helps to justify the cost of air transportation. Customs processes are likely to take about the same length of time whether items arrive into an airport or into a seaport. But there can be a big difference in the time it takes to unload goods. Air cargo is usually unloaded and put into the terminal within a matter of hours. Ocean cargo can take much longer before the customs team can get to work.
Can You Spare Just a Little Extra Time?
It is always worth comparing the actual transit times for air vs. ocean freight on each specific route. As sailing frequency improves and effective steps are taken to tackle congestion – for example, port upgrades and canal improvements – you may be surprised to see how fast your goods could move on certain sea lanes, especially on intra-regional lanes. In our recent white paper Unlock the True Value of your Supply Chain, we describe how one company switched transport modes from air to ocean for distribution from Hong Kong to South Korea, achieving a 27% cost improvement and 28% CO2 reduction while only increasing lead time by on average 6%.
The issue of green transportation is, of course, increasingly important as customers and other stakeholders scrutinize each company’s environmental impact before making purchasing decisions. Sustainability and profit are no longer considered contradictory but rather complimentary. On balance, it may be worth sparing a little extra transit time in order to save a lot of emissions and money.
When your goods do not fill a container or when it is essential to ship them before you can fill a container, consider using a less-than-container-load (LCL) service. This ocean freight solution can be faster than the classic full-container-load (FCL) service as you do not have to wait for a full container to be filled. The astonishing fact is that on some short intra-regional routes LCL service may not be much slower than equivalent air transportation.
Can You Be Sure of Your Production Schedule?
As explained in a previous article, freight rates keep changing so it is important to understand how rates are calculated.
Ocean freight is usually the most cost-effective way to transport larger quantities of goods, particularly when filling an entire container and therefore benefiting from the standardized shipping processes. It’s worth remembering that ocean freight works best when you are absolutely sure of your production schedule, as there may be a significant time penalty for missing a particular shipment time slot. For example, if your goods miss one 24-day (port-to-port) ocean crossing from Houston to Bremen, your container may have to wait a whole week before another ship sails, so it would be five weeks before your goods reach your German customers. With air freight, your wait for the next flight is likely to be no more than 24 hours.
Can You Be More Flexible When Needed?
Various trends are impacting air freight vs. ocean freight, so companies need to track these developments and be ready to adjust shipment plans accordingly.
Today, air freight capacity is not keeping up with growing demand. Because of this, more air freight is moving onto passenger flights which offer less weight and space capacity than cargo airplanes. In addition, many goods – including lithium-ion batteries, gasses, items that are toxic, corrosive or flammable or a public health risk – simply can’t be transported on passenger flights and these restrictions are becoming increasingly stringent and complex.
Meanwhile, there are fewer ocean carriers due to mergers and business failure, and this means less choice for shippers. So it makes sense to look at alternative modes of transport. For example, rail freight is a valid alternative from China to Europe already today – this green mode can deliver goods faster than ocean and cost-efficiently than air.
Lessons from the past reveal the importance of remaining flexible. Airspace closures during Iceland’s 2010 volcanic eruption produced some of the highest-ever air freight rates. A key takeaway has been to ensure supply chain resilience, identifying alternative shipping strategies and routes to avoid business disruption and reputational damage. And the cause may not always be a natural disaster. Right now, many companies are switching from ocean to air transportation to achieve swifter delivery into the USA with the aim of potentially avoiding massive new duties on their goods.