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Category Archives: Freight Solutions

UK Overseas Exports: Statistics, Trends and Analysis

The UK economy as a whole, including exports, has been badly hit by the COVID-19 pandemic. In a recent Monetary Policy Summary, the Bank of England noted that GDP is thought to have been 20 percent lower in the second financial quarter of 2020 than in the last quarter of 2019, and the Bank also predicted that economic activity would not recover to Q4 2019 levels until the end of 2021. In addition, government figures show that UK exports and imports have both declined since the pandemic struck. And with ongoing Brexit negotiations causing further uncertainty in the markets, it has undoubtedly been a turbulent year for businesses and the markets more generally.

To highlight the ongoing volatility, we’ve taken figures provided by the Office for National Statistics that reveal how the top 10 commodities being exported from the UK fared over the period from May 2019 to May 2020 and turned this data into an interactive graph.

Top trends

The graph and the table above show that there was considerable fluctuation in these commodities over the 12-month period. Motor vehicle exports were particularly badly hit by the fallout from the pandemic and the government lockdown, which was instituted on 23 March. Exports of motor vehicles dropped sharply from £3,058 million in March this year to just £698 million in April. The year-on-year fall in export activity in the sector from May 2019 to May 2020 was £2,411 million. However, between May 2020 and August 2020, activity went up by £1,151 million.

Electronic equipment also saw a steep year-on-year decline in exports, dropping from £1,801 million in May 2019 to £1,411 in May this year (with the steepest decline coming after lockdown restrictions were implemented). Mechanical appliance exports fell sharply too. These commodities registered a year-on-year decrease between May 2019 and May 2020 of £1,669 million, again with the most notable drop occurring post-lockdown. Between May 2020 and August 2020, activity fluctuated slightly, peaking at £1,703 million in July and falling again to £1,554 million in August.

Falls in consumer confidence and sales across many parts of the world have fed into this trend, as has the decrease in production caused by some factories stopping or slowing production. This issue remains ongoing. Figures from the Society of Motor Manufacturers and Traders, for example, show that just 85,696 new models left vehicle plants in the UK in July, which is 22,543 lower than the total from July 2019.

Not all industries have been negatively impacted though. For example, exports of pharmaceutical products have remained fairly high and stable throughout the year. Despite a temporary government restriction on exports covering 80 key medicines due to the pandemic, overseas sales of pharmaceutical products have steadied and risen. These goods recorded a year-on-year increase in exports of £181 million between May 2019 and May 2020. In part, this may be due to the fact that many companies are searching for vaccines and treatments for COVID-19 and are experimenting on different products within the marketplace. However, pharmaceutical exports fell by £193 million between May and August of this year.

As is typically the case during times of economic crisis, precious metals saw huge fluctuations in exports over the 12-month period, reaching a high point in April this year and recording an increase of £148 million year-on-year in May 2020. The recent increase in export values is partially a result of a surge in gold prices, which have risen by 30 per cent this year and topped $2,000 (£1,527) an ounce for the first time as traders sought out safe investment havens amid the global pandemic. Prices of other precious metals have also increased considerably since the beginning of the year. However, between May 2020 and August 2020, exports have fallen steadily by an average of £528 million each month.

The potential impact of Brexit

COVID-19 has undeniably had a huge impact on the economy and on exports, and Brexit is causing further uncertainty. The UK is due to formally cut ties with the European Union when the transition period comes to an end in January 2021 and no trade deal has yet been agreed. It remains to be seen exactly how much of an effect Brexit will have on economic activity, but the Office for Budget Responsibility has predicted a 5.2 per cent fall in potential GDP over the coming 15 years if a “typical” free trade agreement is put in place with Brussels. Exporters will no doubt be watching the details of any possible trade deal with interest over the coming months to see how it may affect their businesses and industries more broadly.

Has your company’s ability to export been affected by ongoing market uncertainty? To share your thoughts and experiences, join the conversation on social media using the hashtag #UkOverseasTrade.

All of the data featured within the interactive graph can also be viewed in a table below:

Top 10 UK Overseas Exports Trends in £ millions (May 2019 to May 2020)

*Drops below top 10 commodities exported in the month.
Source: HM Revenue and Customs.

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What are the different types of shipment?

Within the freight industry, there are a variety of different options when it comes to transporting a shipment from A to B. When you’re planning how to send or receive a shipment, one of the first decisions you’ll need to make is the method of transportation. For example, will you opt for land, sea or air? However, after you’ve chosen the most suitable method of freight transportation, you may need to consider other options for your shipment.

As with many different processes, freight services involve a lot of terminology that is specific to the industry. In this guide, we explain the meaning behind some of the abbreviated terms that are frequently used in freight services, such as DDP, DDU, LCL and COD.

What is a DDP shipment?

DDP stands for delivery duty paid – a delivery agreement where the seller or sender of the shipment accepts responsibility for all the fees involved with the shipment’s delivery. This includes the fee for getting the shipment into the destination country, as well as any import fees, export fees and taxes. The seller can choose to charge the buyer for these fees by adding them to the overall invoice.

An alternative to this is delivery duty unpaid (DDU), which means that the buyer will be contacted by the relevant customs office when the shipment arrives. At this point, it will be up to them to pay any charges or taxes to receive the shipment.

What is an LCL shipment?

Not all shipments completely fill the shipping container they’re being transported in. When this happens, the shipment is recognised as LCL, or less than container load. Shipping containers are often 20 or 40 feet in length, so it’s to be expected that some loads simply won’t need every inch of space. Freight forwarders will be keen to make the most of the space on sea freight ships. The solution to this problem is often to consolidate several different shipments into one container.

You may also have heard of full container load or FCL. This is the opposite to LCL, where the shipment has completely filled the shipping container to maximum capacity. Although it’s important for a freight forwarder to be aware of whether a shipment is LCL or FCL to get the best out of the space, these terms are also important for other reasons. For example, it will affect the cost of the freight services, as the person who is responsible for it will either need to pay the cost of transporting the shipment or, if the shipment takes up an entire container, the cost of transporting the whole shipping container.

What is a COD shipment?

Also known as cash on delivery or freight collect, collect on delivery (COD) is where the delivery driver that gets the shipment to the door of the person or organisation who ordered it is required to take the payment for it. You would often find a request to use this method of payment on an invoice or bill. It sometimes only refers to the shipment by itself with everything else paid separately, but it is possible to have all freight fees, delivery charges, taxes and custom fees included in a COD instruction.

When the delivery driver approaches the buyer to accept payment in exchange for the shipment, they would usually take the payment in cash or a cheque. CODs are appealing for situations where the buyer doesn’t want to pay for the shipment in advance and the seller doesn’t feel comfortable delivering the shipment until it’s been paid for.

There are advantages to CODs, such as the benefit of delaying a payment until a later date and having more security around tracking the shipment throughout the transportation process. However, it’s rare for a COD to be used as many delivery drivers don’t want the responsibility of accepting payments. Also, as taking payment during delivery is time consuming, it can be expensive to add a COD instruction to a delivery, so sellers will tend to use an alternative option.

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How to calculate shipment volume

In preparation for getting something shipped via freight, it’s important that the shipment is measured accurately and in accordance with the limits used by shipping companies.

If you’re hiring an experienced freight forwarder to handle the transportation of your shipment, you won’t need to deal with many of the necessary duties, but even then, you’ll need to provide an accurate measurement. In this guide, we look at how freight shipment volume is calculated, how you can do it yourself and how it differs for the various forms of transportation.

How to calculate CBM for shipment

Cubic metres (CBM) is the universal measurement for both national and international freight shipments. You calculate the CBM by multiplying the height, width and length of the shipment, and if you have multiple shipments, simply do this for each item and add the volumes together.

The CBM measurement used to calculate the freight shipment volume is required for determining other important information about the load, including:

Dimensional weight – a theoretical figure created to reflect the weight of a shipment that is large but light. For example, this would be applicable to a box full of couch cushions, which could be the same size as a washing machine but far lighter.

Chargeable weight – a figure based on the shipment’s actual weight. Although this isn’t often needed for sea freight, it’s an important factor for air freight, as the weight restrictions are far more stringent.

Freight class – a theoretical figure for labelling oversized loads. Often used in America, this calculation has been utilised by road freight trucks for determining the weight of individual items.

How to calculate CBM for an air shipment

As previously mentioned, the calculation for air freight shipments is important, as it could affect the flight of the freight plane. For instance, if multiple items were incorrectly labelled as being lighter than they actually are, the plane could be carrying more weight than it’s able to, which could lead to serious issues with the journey from A to B.

Differing from dimensional and gross weight, chargeable weight is a combination between gross weight and volumetric weight. The difference between these two are that the gross weight is based on how heavy the shipment is while the volumetric weight is an estimate based on the dimensions of the shipment’s height, width and length.

A shipping container being added to a sea freight ship.

To calculate chargeable weight for an air freight shipment, you need to:

  • measure the length, width and height of the shipment in inches
  • at this point, you should weigh your shipment in pounds. This is the gross weight and it will be important for later in the process
  • calculate the volume by multiplying the length, width and height together
  • convert the inches into CBM. 61,023.7 cubic inches is the equivalent to 1 cubic metre
  • the freight carrier will have its own air cubic conversion factor. On average, the air cubic conversion factor is 167
  • find out the volumetric weight of your shipment by multiplying the volume by, in this instance, 167
  • convert the gross weight of your shipment from pounds into kilograms
  • compare your gross weight, now in kilograms, with your completed volumetric weight
  • the chargeable weight is the larger figure between the gross weight and the volumetric weight.

How to calculate CBM in LCL export shipments

Although it’s important to get accurate weight readings for shipments being transported by air, a similar level of attention to detail must be given for transportation by sea. However, while chargeable weight helps to prevent air freight planes from exceeding capacity, the same approach for sea freight ships is based around using space efficiently.

Less than container load (LCL) is a term that refers to small shipments that don’t completely fill out the capacity of a shipping container. When this happens, the freight forwarder will often consolidate a number of LCL shipments to make use of the space on the boat and entirely fill up each shipping container.

If a container is full, the cost of the shipment will be charged based on the full container load, but if it’s LCL, it will be based on the volume of the shipment itself. Due to this, you would carry out the same process of measuring a shipment for freight, multiplying height, width and length of the shipment in inches before converting the measurement into CBM.

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What is freight forwarding?

For a freight service to work, a selection of factors needs to be considered to get the shipment to its destination. Any freight service has a place of origin and destination, but the method of transport and any applicable fees and requirements along the way all need to be catered for. This is where a freight forwarder steps in.

The role of a freight forwarder – or freight forwarding agent – is to operate as an intermediary between the person who requires the shipment and the relevant transportation services such as lorry, ship, plane or train. By doing this, they help to take away the stress involved in moving a shipment from point A to point B from the customer.

A freight forwarder will do this by working with every freight service provider to negotiate a sensible overall price for the person or company that ordered the shipment. This will take into account the speed, reliability and cost of the shipment, as well as any fees and legal matters that may arise.

How freight forwarding works

The freight forwarding process is made up of a number of stages:

  • when a freight forwarder has agreed to work on your behalf, they will move the shipment to a warehouse that is owned or leased by the forwarder’s firm. This stage is known as export haulage, and the location of the warehouse is often based on the chosen method of transportation
  • during the process of storing the shipment at the warehouse, the forwarder will check over the goods to ensure that none of it is damaged or missing
  • in preparation for the shipment to be moved, the forwarder will submit the necessary documents to custom agents if the shipment is being transported to a different country. However, some freight forwarders will request that you do this instead, and as these documents need to be signed by a customs agent before the shipment can be moved, it may take some time for approval
  • after the shipment has finished the transportation process, it will be received by custom agents. When the paperwork is completed and approved, all documentation is forwarded to the destination as proof of approval
  • it is at this point that the shipment is held by a warehouse that’s owned or leased by the forwarder and transported to the destination. This is known as import haulage and is sometimes passed on to a third party, especially if the freight forwarder is based in the country that the shipment came from.

What is a freight forwarding business?

Although a freight forwarding agent may be operating on a freelance basis, there are companies that specialise in providing this service. Freight forwarders are experts in the process of getting large shipments moved across countries and everything that it involves, but there are some benefits to using a freight forwarding company.

For instance, a freight forwarding company will usually have established infrastructure, such as owning a warehouse and the required equipment for handling shipments. They are also more likely to have solid connections to freight service providers and other necessary companies.

what is freight forwarding

How do freight forwarders make money?

During each shipment from origin to destination, a freight forwarder may charge you transportation costs, charges for moving, palleting and packing products, storage fees, the cost of documentation for importing and exporting, insurance fees, surcharges, admin and handling fees, and charges that are specific to the product, such as the cost of using a crane for larger products or the licences required for moving hazardous products.

Profit made from freight forwarding is primarily based on the overall price for completing all of these duties. Although it’s regarded as being more cost-effective to use a freight forwarder than to deal with shipping yourself, it may technically be cheaper to carry out all of these duties individually. However, as freight forwarders often hold relationships with the necessary contacts that you may not, it’s preferable for many companies to use a freight forwarder instead.

As well as maintaining useful working relationships, freight forwarders will also typically own or lease their own warehouses and possess all of the required equipment for handling and transporting goods in high quantities. Due to this, paying a fee for them to carry out this process for you is likely to be cheaper than paying for each service individually, renting the necessary equipment and space in a warehouse.

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What is freight?

Whether it’s on the road, by sea or by air, freight plays an important role in transporting goods, raw materials and produce to where they need to be. It’s a process that you may have been totally unaware of, but without it, the transportation of products would take longer, be more expensive and make getting hold of some overseas imports far more difficult.

The Department for Transport recorded a total of 483.3 million tonnes in freight handled by UK ports in 2018 alone and according to Statista, between 2006 and 2018, an average of 179,763 million tonne-kilometres of freight was transported by all inland modes of transport in the UK. Freight is used as a method of logistical transport across the world and the gradual growth in demand is met by companies that are capable of delivering freight solutions.

However, if you’re unaware of the term or simply never had to use a freight service, you may be wondering exactly what it is and how it plays such a large role in global logistics. In this blog, we explain what is meant by freight, how freight services work and show why it’s an essential operation for countless companies around the world.

What does freight mean?

The term freight is given to any goods that are being transported using a lorry, train, ship or plane. Often used commercially, freight transportation allows for products to be moved nationally or internationally in bulk.

Freight shipping is typically carried out by fitting the goods onto pallets, storing them in shipping containers, loading the containers onto the necessary form of transport and moving them to the required destination. The freight will typically start with the manufacturer or seller and change hands several times before reaching its destination, moving across different regions and possibly even countries in the process.

Despite the many considerations such as custom charges, custom clearance fees, several methods of transportation, handling costs and surcharges which naturally come with moving hefty items long distances, freight companies will often consolidate all of these fees into a single charge for their services. This approach is often far more cost-effective for companies that require items to be transported frequently.

What are freight services?

Operated by logistics companies, freight services allow you to move items across the globe in a way that suits your needs and caters to any and all potential restrictions. For instance, if you work on behalf of a business that provides large items or items in high quantities, freight services can be an ideal solution.

Not only will you often be able to create a long-lasting working relationship with a freight company that works alongside your business to ship products on a frequent basis, but you can also arrange for the deliveries to be made under specific time restrictions and via a method of transport that is best suited to you.

Many companies use freight services for transporting goods in high numbers and on a regular basis. One of the benefits of using a freight service is that operating in this way is better from a financial standpoint, as transporting a large quantity of the same item in one shipment may be more cost-effective than the total fee for shipping one item at a time.

A harbour full of freight shipping containers.

What is freight transport by road?

A common form of freight transportation is carried out via roads using motor vehicles that can withstand and cater to large, heavy loads. Often known as road freight, this process is designed for lorries and other heavy goods vehicles (HGVs) that can travel the length of the country through sticking to motorways and main roads.

Advantages from choosing the type of freight transport over moving products via sea or air are that it can be significantly cheaper and that a vehicle is more capable of reaching specific areas, especially in the countryside. However, there can be a mixture between road freight and sea freight, as some vans and lorries are required to transport goods across mainland Europe, for example, after being transported across the English Channel via a ferry.

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