How to Choose the Right Global Transportation Mode

Choosing the Right Global Transportation Mode

In global shipping, choosing the right transportation mode is a crucial decision that impacts customer satisfaction, company profitability, and the environment. 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).

Ocean freight

90% of global trade moves on ocean vessels. Our global economy is heavily dependent on reliable maritime shipping.

Rail

Rail transport is normally associated with domestic freight, but it can be an economical choice for cross-border moves. For example, a cross-border rail solution from China to Europe ships 20 days faster than ocean freight and as much as 30% cheaper than air freight.

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.

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’s an example. There is very limited direct air service from China to Mexico, so some freight forwarders offer a China-to-Mexico shipping solution via the US that ships products via air freight from China into a US city near the border and then trucks products, in bond, to the final Mexico customer.

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.

Although there are only 4 options to choose from, decisions on mode choice can be complicated and costly without proper analysis.

Cost

Faster is always better when it comes to shipping. But staying within your budget is critical to maintaining profitability. Many electronics components ship between China and Southeast Asia via air freight. But shipping via truck can reduce those costs over 50% vs. 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.

Understanding the International Shipping Cost for Air and Ocean Freight

Transportation costs are by far your largest logistics expense. And if your supply chain is global, it’s critical to your bottom line that you closely manage your international shipping cost for air and ocean freight. That means having a good understanding of how those costs are calculated. You won’t become an expert overnight, but this article will give you a basic understanding of pricing for global shipping so you can be a smarter buyer.

Getting fair and accurate pricing for air and ocean freight shipping starts with you.

Carriers and freight forwarders need certain data to provide a solid rate quote, and companies don’t always take the time to gather and check this data before asking for a quote. Check out the accompanying sidebar for the information you’ll need before seeking a quote.

Forwarders will want information not only on what you are shipping, but also on the shipping terms. For instance, do you simply need port-to-port transportation? The cost for this service will obviously differ from the cost to provide door-to-door service.

The terms of sale between you and your buyer/supplier will also determine the scope of the shipping service and what will be included in your international shipping cost. If you are buying products from an overseas supplier and the Incoterm is ExWorks, then you are responsible for paying for all transportation from the overseas factory to your door. If the Incoterm is CIF Long Beach, for example, your costs and responsibilities start at the destination port.

For air and ocean freight, unless you have a direct contract with a carrier or are moving lots of volume, you’ll usually get a better international rate from a forwarder that has multiple contracts with carriers based on certain volume agreements by lane.

Air Freight Shipping Cost Calculations

There are different tiers of air freight service based on how quickly you need to move the freight. With Consolidated Air – the most cost-effective and sustainable mode – you tap into a forwarder’s fixed consolidated flight schedule on certain lanes. Standard Service, the next best option for your budget, meets your service requirements and gets it there faster than non-air-freight options. If you need Expedited and Next Flight Out (NFO) Service, that will obviously cost you more.

An air freight quote may include origin charges to get cargo to the airport and destination charges for delivery to the consignee. But let’s dive into the actual air freight charges and how they are calculated to determine your international shipping cost. The main thing you need to understand is that airlines charge based on either the gross weight of the cargo or the volumetric weight – whichever is greater. Volumetric weight, also known as dimensional weight, is an estimated weight based on the length, width, and height of a package.

Let’s dive a little further into the issue of volumetric weight.

There are space and weight limitations for cargo on an aircraft, and carriers need to protect themselves from unprofitable cargo. For instance, a large shipment of cotton balls won’t weigh much, but it will take up a lot of space, preventing the carrier from loading other goods in the cargo bay. Conversely, two pallets of steel bars will also limit the amount of other cargo that can be loaded, this time because of aircraft weight limits. So the cotton will get priced using volumetric weight, while the steel bars will be charged using the gross weight. Air cargo rate calculations are based per kilo. Airlines charge whichever is greater between the gross and the volumetric weight, and they refer to it as the “chargeable weight.”

Beyond the actual freight charge, your air freight shipments are subject to many additional fees, called accessorial charges, which may include:

• Fuel surcharges that reflect the cost carriers have associated with fuel – these surcharges change frequently in line with fuel prices
• Security surcharges that cover screenings at airports to comply with regulations
• Customs brokerage fees
• Terminal handling fees
• Dangerous goods fees for hazmat cargo

There are many more accessorials that may impact your international shipping cost, depending on the airline and your shipment specifications.

Some Key Data Required for Air and Ocean Freight Quotes

• Description of commodity (HS Code)
• Quantity being shipping
• Total weight
• Total shipment dimensions
• Pick-up location
• Delivery location

Ocean Freight Shipping Cost Calculations

Calculating rates for ocean shipping tends to be a little more complicated than air freight because charges may differ based on the specific port, terminal, and country you ship to. Like air freight, you’ll have carrier charges to move the freight, as well as charges at origin and destination to move goods to and from the port.

The biggest factor impacting rates for ocean freight shipping services is deciding whether the goods require a dedicated full-container-load (FCL) or whether goods can be consolidated with other cargo in a less-than-container-load shipment (LCL).

For FCL, shipping lines charge a flat fee based on the type of container used. The three primary types are a 20-foot, a 40-foot, and a 40-foot-high-cube container.

Calculating LCL rates gets a little more difficult because you are sharing the shipping cost with other shippers. LCL is priced based on Revenue Ton (R/T), and R/T is calculated based on weight or size, whichever is greater. The idea is similar to gross weight and volumetric weight in air freight. In LCL, when converting weight to R/T, it is often based on the factor of 1000KG = 1 R/T. For size, 1CBM = 1R/T. The conversion factor varies by lane, so you would want to keep this in mind.

This handy CBM calculator can help you calculate a consignment’s weight and volume. Sea freight consolidators run consolidation programs to all major global ports. They book a certain volume of full containers with the carrier and then consolidate multiple shipments into the container at a warehouse near the port.

Small-volume shippers can save money by shipping LCL, even though the LCL rate per cubic meter is more than FCL due to the added consolidation-related handling. But because the FCL rate is cheaper, it could be worth using a full container even if your volume is well short of what a full container could hold. The tipping point for moving from LCL to a 20-foot container varies for different lanes, but a general starting point would be around 20CBM.

In addition to the carrier freight charges, expect to see some of these additional charges in your ocean shipping quote:

• Container freight station charges (for LCL only)
• Terminal handling charges
• Customs brokerage
• Pick-up and delivery charges
• Bunker charge (fuel surcharge)
• Currency adjustment factor (compensates for exchange rate risks when cargo is payable in a foreign currency)

Many people need to “touch” air and ocean freight during its journey – forwarders, truckers, customs brokers, port personnel, terminal operators, consolidators, customs agents, and security workers. Because none of these touches are free, they need to be accounted for in your international shipping cost.

Building Air Freight Shipments: What You Need to Know

If you’re shipping air freight, your main concern is getting the freight where it needs to be, and fast. You’re not necessarily concerned about the equipment used and exactly how the freight moves from origin to destination. Truckers, forwarders, and air carriers take care of those details and keep you in the loop. But the container types used and who prepares the cargo can actually have a big impact on what you pay, how fast your shipment moves through airports and customs agencies, and the damage that could occur in transit.

That’s why it helps to have at least a basic understanding of air freight containers and pallets and how those are prepared for shipment. Check out this reference guide on air shipping container types. Here are some basic questions about what goes on behind the scenes as air cargo moves from your dock to your customer.

What is a ULD?

A unit loading device (ULD) is the air freight equivalent of the ocean container. It allows for the safe, fast, efficient transit of freight on passenger and cargo aircraft. A steamship line can put upwards of 20,000 stacked containers on one vessel. With airplanes, it’s a different story. Loading spaces are small and irregularly shaped. That’s why there are many different ULDs, in different sizes and shapes, to make the best use of the available space.

There are two basic types of ULD: a closed metal container that houses freight inside and a metal pallet onto which cargo can be loaded.

Cargo on pallets is covered with a net and secured under the ULD. Whether you’re moving pallets of merchandise, cars, or expensive equipment, ULDs are secured to the body of the aircraft to keep the freight from shifting, even during the most turbulent flights.

Air cargo can be tendered to the carrier either loose or already containerized. Once loose freight is checked in, it is loaded by the carrier into a ULD.

When would you use a container or a pallet?

Containers have the following advantages:

• Make loading and unloading faster and easier
• Protect against any kind of weather – do not require the extra wrapping that you’d want for the palleted cargo
• Protect better against damage  – no need for corner guards or other special protective packaging
• Prevent unauthorized access to the cargo

ULD pallets, sometimes referred to in the industry as “cookie sheets,” are cheaper to use than containers. Other advantages:

• Accept oversized cargo that won’t fit in a container
• Take up less room than containers since they are flat and can be stored efficiently and returned by plane
• Have more options for how to build the pallet (size and shape) depending on where on the plane the airline ULD pallet is being loaded

As a shipper, the choice of ULD is typically made for you by the airline or your freight forwarder. It’s a little different if you’re shipping temperature-sensitive cargo. You’ll want a specialized, temperature-controlled airline ULD.

How is your ability to secure reliable air freight capacity affected by airline ULDs and who builds them?

Passenger airlines often overbook and then must ask some people to deplane and travel on a later flight. That happens with air cargo, too! The potential for your freight to be offloaded is lessened if you work with a freight forwarder that has Block Service Agreements (BSAs) with the airline. Larger forwarders essentially pre-purchase airline cargo space well before they have customers for that space. These BSAs correspond to a certain volume of cargo (metric tons) over a certain time in certain lanes.

It’s common to achieve most of this committed tonnage through fully built-up ULDs. So, if your cargo is moving with a forwarder that builds the ULD and tenders it to the airline, the space is secured. On the other hand, if the cargo is tendered loose to the airline, the airline builds the ULD, mixing your cargo with freight from other forwarders. In this case, the air carrier is not obligated to transport this freight on a particular flight as part of any existing BSA. So, if the carrier has accepted more freight than it can fit, it can offload your cargo.

How is shipping speed affected by who builds the ULDs?

In air freight, flight times are predictable; handling times are not.

If you want to minimize total transit time, you may be better off working with a freight forwarder to build ULDs at origin and then receive and deconsolidate ULDs at its container freight station (CFS) near the destination airport.

The reason is simple: congestion at airport cargo facilities. Bottlenecks are caused by high freight volumes combined with COVID-related circumstances – mainly manpower shortages.

At origin, ULDs built by a forwarder and sent, as ready-to-ship units, to the airline are called BUPs (Bulk Unitization Program). These BUPs greatly reduce handling time at the cargo terminal by combining lots of separate items into a single unit. For that reason, BUPs benefit from preferential conditions and more rapid handling at the airport.

At the destination, BUPs are turned over to the forwarder for unloading. These BUPs can be available up to 3-4 days faster than airline-loaded ULDs. Let’s take an example.

A flight arrives at LAX from China at midnight. If your goods ship as loose cargo with the airline, that means the airline and its handling agent are responsible for processing the inbound freight. Under normal market conditions, the earliest it might be available, if you are lucky, is some time the next day. If there is a congestion delay, it could be up to a week. In contrast, if your goods arrive as a BUP shipment from China, your forwarder could likely pick up its own cargo by noon, bring it back to the CFS, and, if the consignee is nearby, deliver the next day.

How is the timing of customs clearance affected by who builds the ULDs?

In the US, the Transportation and Safety Administration (TSA) requires that all air cargo be screened before it is loaded onto a passenger flight. To keep goods flowing, the TSA certifies independent cargo screening facilities to screen cargo prior to providing it to airlines. This Certified Cargo Screening Program (CCSP) allows shippers to avoid long waits at airport Customs facilities by having a qualified forwarder with BUP capability build ULDs and pre-screen the cargo.

A pre-screened BUP can save at least 6–8 hours compared to screening at the airport.

How is product damage or loss affected by who builds the ULDs?

Cargo handling at airline terminals is more about speed than quality. Typically, shipments must be tendered to the airline 6 hours before departure. For a Boeing 747-400 freighter, which can fit cargo volumes equivalent to five semi-trucks, that’s a lot of ULDs for cargo handling agents to build in a very short amount of time.

When you rush, you get careless, and the damage percentage increases. An experienced forwarder that is being paid to build BUP shipments does not operate under the same time pressures. And it typically has people trained to follow careful procedures around proper loading and securing of airline ULDs. Those people are incented for a job well done and will be held accountable for errors that lead to lost inventory or damage. You rarely see the same structure and discipline with airport cargo handling operations.

You don’t need to be an expert in air freight to ship effectively. But it helps to understand the basics about how airline ULDs are built, who builds them, and how these decisions impact the cost and speed of your cargo. After that, you can leave the details to an expert.

Ocean Freight Container Specifications

No symbol is more representative of global trade than the ocean shipping container. Close to 800 million containers are shipped globally (World Bank, 2019 data). But containers come in different shapes and sizes. It’s wise to be familiar with the different options so you can choose the one that makes the most operational and financial sense for your company.

Following is a Q&A on ocean freight container specifications and what you need to know.

Is there a guide that provides the dimensions of all the different types of ocean containers?

Check out this comprehensive guide on ocean freight container specifications.

How much weight can I load into a container?

The max weight for a container is the “maximum gross cargo weight” listed on the container door. That’s typically around 55,000 lbs for a 40-ft container. But most shippers try to stay within legal road weight restrictions. For instance, in the US, restrictions on roads limit total weight to 80,000 pounds for a standard tractor-trailer. When you factor in the weight of the truck, chassis and container, that leaves about 42,000–44,000 lbs for the actual cargo. If you go over that, you’ll need to use trucking partners with special equipment and special permits to transport heavy loads.

If you ship dense cargo – like knockdown furniture or stone or metal products – it could make good financial sense to maximize the container weight and then pay extra for specialized land-side transportation. If you can add 10,000 more pounds to every container you ship, you’ll ship 25% fewer containers, so the ocean savings could more than make up for the added road transport costs. It will depend on the commodity. In the US, as an example, most shippers try to keep container cargo weight below 37,000 lbs for 20’ and 42,000 lbs for 40’ to meet road transport weight limits.

Should I ship in a 40-ft or 20-ft container?

A 20-foot container holds half the cargo of a 40-foot container, but in the US, it costs about 80–90% as much. In other trade lanes, the cost difference could be greater. 20-ft containers are suitable for heavy cargo because such cargo may hit a max weight limit in a 40-ft container long before the container is even close to full. You can still save a little by shipping in a smaller box, so you’ll need to evaluate your specific needs. Let’s take an example. If you have a shipment of auto parts that weighs 74,000 lbs, you may be able to fit the entire shipment into a 40-foot container, but weight restrictions prevent you from doing so. In this case, shipping two 20-ft containers – each loaded with 37,000 lbs of cargo – would be your cheapest option. A knowledge of ocean freight container specifications helps you make these decisions.

Should I ship FCL or LCL?

When you ship a full-container-load (FCL), it means you have enough cargo to fill or nearly fill a container. When you ship a less-than-container-load (LCL), it means your shipment is small, and you may be able to reduce your shipping cost by using a freight forwarder to consolidate your cargo. Even though LCL will cost you more per unit of freight shipped, you save by sharing the shipping cost with other small-volume shippers. There is a breakeven point at which a large LCL load equals the price of a dedicated 20-ft container. An experienced global freight forwarder can advise what that point is based on your commodity, shipping lane, and current market rates.

While LCL shipping has advantages for small-volume shippers, here are some downsides you should be aware of:

• Longer ship times. FCL loads can move directly to the port of origin and to the consignee at the destination. LCL loads must go through a container freight station at each side for consolidation/deconsolidation. How much time can this add to the trip? As an example, from LA to Shanghai LCL service adds around 9 days versus FCL.
• Increased chance for damage. More touches mean more opportunity for damage. Also, you are sharing the container with other products, so shifting cargo in transit could cause problems.
• Customs delays. With an LCL shipment, if just one of the partial shipments on the container experiences issues, it delays the whole shipment.

Who loads the container?

It’s almost always the shipper that loads the freight for FCL loads. Loading of LCL containers is done by the freight forwarder arranging the consolidation. Proper loading requires exact knowledge of ocean freight container specifications.

What if my freight doesn’t fit in a standard ocean container?

Freight that is over height or over width is called out-of-gauge cargo, or OOG. For cargo that fits within the width and length dimensions of a container but is too high, Open Top containers are the most economical choice. These are loaded from the top by a crane and dropped into the container.

Over-width cargo can use a Flat Rack container, which has the sides and top open. The floor of a Flat Rack is a foot thicker than the floor of a standard container. You want to make sure that the load is tightly secured to avoid damage. And you’ll need protection against the elements with a tarp or shrink wrap, depending on the product.

Both Open Top and Flat Rack containers come in 20-ft and 40-ft options. These specialized containers will cost a little more. If your shipment is deemed OOG cargo, it will require special permits when it travels on the road, making it more expensive to ship. Railroads won’t accept OOG cargo at all.

How about shipments requiring temperature control?

20-ft and 40-ft refrigerated containers (reefers) have built-in air conditioning units that need to be continuously powered up and programmed to meet the product’s temperature and humidity requirements. Trucks that haul these containers to and from terminals need to have a generator set, or genset, unit. Terminals can provide plugs to keep reefers powered during loading and unloading. And the cargo ships themselves have plugs for reefers.

All steamship lines offer 40-ft reefers, but only some offer 20-foot reefers.

Reefer containers look different than standard containers on the inside. The walls will be aluminum, not steel. The floor, instead of wood, is a series of aluminum rails that allow air to circulate under the cargo. Reefers are mostly used for food products, but composite materials like carbon fiber may ship in reefers, as well.

BONUS TIP: think about insuring your temperature-controlled cargo. The A/C units usually work, but not 100% of the time. You don’t want to risk losing $40,000 worth of meat to avoid $175 on marine cargo insurance.

As you can see, there are many types and sizes of containers with different ocean freight container specifications. You want to make the right choice based on what you are shipping and the volume. Or you can rely on your freight forwarding partners to provide guidance.

Understanding Cargo Insurance

With most insurance – life, health, home – you buy it in the hope you’ll never have to use it.

Cargo insurance is much the same. But many global shippers often overlook insurance details and assume they are fully covered when, in fact, they’re not. That creates a huge risk for your company, particularly if you’re shipping high-value goods.

Here are some of the most common misperceptions about cargo insurance.

1. “ Events are rare. I don’t really need to insure my cargo.”

You never think it’s going to happen to you – until it does. And when it does, the costs, if you are not adequately insured, can really harm your business. In California in 2020, a full truckload of footwear worth $846,000 USD was stolen. A couple of years earlier, in Kentucky, thieves got away with a trailer of electronics worth $1 million USD. Homeowners understand that catastrophic events like fires are rare, but they insure anyway because without insurance they could not financially withstand the loss. Global shippers must look at cargo insurance more like home insurance.

2. “ My cargo is covered under the carrier’s policy.”

Carriers are liable – but only if it is proven that their negligence caused the loss. Even if it is, carrier liability is limited. You’ll receive only a small percentage of the product’s value. The best option to avoid this woefully inadequate coverage is to purchase All Risk Cargo Insurance when booking your global shipment. All Risk Cargo Insurance is the broadest, most comprehensive form of coverage. It insures the full value of the cargo in transit, from pickup to final delivery (normally 110% of cargo value).

Liability Coverage for Standard vs. All Risk Cargo Insurance

In the chart below, we look at the difference in what you would receive under the carrier’s liability insurance and an All Risk Cargo Insurance policy. The actual cost of the insurance, on a shipment-by-shipment basis, is quite small compared to the product value you would lose as a result of being under-insured with standard liability coverage.

3. “ My cargo is covered under my company’s blanket insurance policy.”

It’s possible, but unlikely, that your blanket coverage would match what is offered under All Risk Cargo Insurance. In particular, many blanket policies fall short when it comes to international shipments.

4. “ When I purchase on CIF terms, I don’t have to worry about insurance; it’s the seller’s responsibility.”

CIF literally stands for Cost, Insurance, and Freight and refers to an Incoterm where the seller pays to cover the cost of ocean shipping and insurance to the buyer’s port. So yes, the seller must provide insurance. But they are only obligated to provide minimal coverage and may leave many risks uncovered. For instance, they may insure only the ocean passage and not door-to-door.

The other problem with relying on the seller to insure your cargo is that any claims would go through the seller. You are not in control. You would have to file and coordinate the claim with an overseas insurance agent that likely won’t have its own representatives in the US. Time zone differences and language barriers can also slow down the claims process and add unnecessary frustration..

5. “ The only time I’ll ever need coverage is when my cargo is lost or damaged.”

That would seem to make sense, but it’s not always accurate. There is a maritime law referred to as “General Average” that allows a vessel to jettison certain cargo in order to save lives, the vessel, or other cargo. The expense of the lost freight is then shared proportionally by all the other shippers. Under General Average, the vessel operator will not release your cargo until General Average Security is paid in full in cash or cash equivalent. When you obtain All Risk Cargo insurance, general average is included, and the insurance will post the guarantee needed to release your freight.

In some cases, General Average can be declared even when no cargo is lost. The best example is when the vessel Ever Given got stuck in the Suez Canal in March of 2021, resulting in billions of dollars in delayed shipments and General Average Security at 25% of cargo value for uninsured cargo.

6. “ If my product is rejected due to packaging damage, I am covered.”

Not true. Cargo insurance covers only damage to the goods and often will not pay to replace damaged packaging. If a retailer rejects your product based solely on package damage, cargo insurance will not protect you. That’s why it’s so important to invest the time and money to properly package your international shipments to prevent damage.

Companies generally do a good job of managing risk when it comes to things like computer systems going down, buildings being damaged, and employees filing workman’s compensation claims. But when it comes to protecting products while in transit, there is still confusion and, as a result, significant risk.

Partnering for Smarter Mode Selection and Freight Cost Control

Choosing the right transportation mode isn’t just about speed or cost—it’s about aligning logistics with your business priorities. From air and ocean to multi-modal solutions, each option comes with trade-offs in time, budget, and sustainability. That’s where a strategic freight forwarding partner like Dimerco adds value. With deep expertise, strong carrier relationships, and flexible routing strategies, we help global shippers make informed, cost-effective decisions—every time. Let us help you optimize your supply chain and move freight smarter across the world.