These days most US-based companies that sell products online have their inventory made by a contract manufacturer in South East Asia–commonly in Shenzhen, China.
This raises the question: to get the inventory into your US-based warehouse, do you use air or ocean shipment? In this article we are going to run through the pros and cons of each and some basic rules to follow.
You can jump to the bottom of the post to get a high level comparison in a table format.
🧮 How it’s charged
Air freight uses a ‘chargeable weight’ approach, which takes into account the actual weight of the items being shipped as well as the volume of the items. The volume of the shipped items will have a weight assigned to them. Whichever is higher between the actual weight and the volumetric weight will be the weight used to calculate the cost of the shipment.
For international air shipments, volumetric weight is calculated using the rules:
6000 cubic cm = 1kg (metric)
166 cubic in = 1lb (imperial)
Volumetric weight (air) = volume of shipment (cub cm) / 6000
Using this rule set we can work through an example. Let’s say we are shipping items with the following dimensions to see what the chargeable weight would be.
Actual weight: 10kg
Volumetric weight (air)= 100 cm * 50 cm * 20cm = 100,000 cubic cm
100,000 / 6000 = 16.6kg
16.6 kg volumetric weight is greater than the 10kg actual weight, so 16.6kg would be the chargeable weight.
You can play around with volumetric vs. actual weight calculations with the calculator from Rockitcargo here.
Air shipping is the fastest transportation method, taking roughly 7 days (1-2 days less for express). However, items can get held up in customs, so budget roughly 14 days to get from the manufacturer to your US warehouse.
Air freight has restrictions on what items can and can not be shipped. A non-extensive list on some these include:
- Flammable liquids and solids
- Toxic and infectious items
- Corrosive items
- Magnetic substances without degaussing packaging, magnetic steel and other strong magnetic products
- Items dangerous to public health
- Oxidizers, organic peroxides, radioactive materials and corrosive items
- Powder, liquids, pastes, and other items with danger signs on their packaging
- Biochemical products and infectious materials of all kinds
You can get more details on restricted items here.
Air shipments are far more predictable when it comes to timing (especially when using express air shipments) compared to ocean shipping. Air shipments may be delayed by 1-2 days while ocean shipments could be over 7 days.
With faster times and improved predictability, air shipments–unsurprisingly–come with a higher cost.
You can see shipments costing 3-4x more to transport via air vs. ocean.
For example, if you were shipping 2 pallets, each weighing 100kg (220lb), from Shenzhen to Los Angeles it would cost ~$1,000 by ocean and ~$4,000 by air. If you were doing a Full Container Load (FCL)–meaning you are shipping a full container’s worth of items rather than renting out a portion–the difference would be greater.
We have seen the disparity be even greater. One of our clients did both ocean and air shipments for their products, with the per item cost being $0.50 for ocean and $10 for air–a 20x difference.
What type of products / situations should you use air shipment for?
- High value
- Urgent, i.e you need to restock quickly (the reduced cost of holding inventory can counter the increased shipping costs somewhat)
Roughly 90% of the world’s trade is transported via ocean. There’s good reason for this as it’s cheap and great for bulk shipments.
🧮 How it’s charged
If you are doing shipping by the Full Container Load (FCL), either 40ft or 20ft, the cost calculation is very easy, as it’s charged on a per container basis.
If you are using Less Than A container Load (LCL), costs are calculated in a similar fashion to air shipments, taking into account the volume and weight of the shipment. Using the rule set:
1 cubic meter = 1,000 kgs (metric)
35.3 cubic feet = 2,204 lbs (imperial)
Volumetric weight (ocean) = volume of shipment (cub m) * 1000
We can work through an example using this rule set for a theoretical shipment.
Actual weight: 900kg
Volumetric weight (ocean) = 200 cm * 200 cm * 100cm = 2m * 2m * 1m = 4 cubic meters (CBM)
4 CBM * 1000 kgs = 4,000kg
4,000kg is greater than 900kg so we can use the dimensional weight for costs.
Point of note here: since ocean shipping can take a large amount of weight, it will be rare that a shipment is over 1,000 kg per cubic meter, so most shipments will use dimensional weight.
Ocean freight can take up to 45 days (door to door). FCL will take less time (sometimes as little as 20 days), since it doesn’t have to build in time to load and unload containers with multiple different shipments, like LCL does.
One of the reasons it is worthwhile budgeting up to 45 days for ocean shipments is predictability. Unlike air shipments, ocean shipping can be prone to lengthy delays (often more than a week) at ports and customs.
🌎 Carbon footprint
Ocean shipping is the “greener” option of the two shipping methods. Although shipping contributes roughly 2.2% to global carbon emissions, it is roughly 150x less impactful than air shipments.
What type of products / situations should you use ocean shipment for?
- Oddly shaped
- Low value
- Not urgent
Overview of shipment types
Are you looking for ways to finance your next inventory order? We may have a solution for you here. At Kickpay we specialize in helping companies finance their inventory purchases.