To the uninitiated (which included me at one stage), these industries are same or similar and it might come across that there is no difference between Maritime, Shipping, Freight, Logistics, Supply Chain and Trade..
But once you are involved in the business or know about these businesses, you will very soon understand that these are very different industries with different workings, assets, architecture, requiring very different sets of qualifications, experience, expertise, knowledge and attitudes..
In this article I unpack the difference between Maritime, Shipping, Freight, Logistics and Supply Chain and how it is all connected, starting with some simple definitions of these terms..
- Maritime Industry = anything related to the ocean, sea, ships, navigation of ships from point A to point B, seafarers, ship owning and other related activities..
- Shipping Business = the act of carriage of cargo from point A to point using the ships which falls under the Maritime industry..
- Freight = the cargo that is carried using the shipping services offered by the shipping lines using the ships which falls under the Maritime industry..
- Logistics Services = the processes involved in getting the cargo from the manufacturers warehouse to the receiver’s warehouse including arranging for shipping services offered by the shipping lines using the ships which falls under the Maritime industry..
- Supply Chain = the whole granddaddy process comprising of all aspects in a product cycle, from sourcing of raw materials, production, packaging, distribution till delivering the goods to the shelf using all of the above-mentioned industries, businesses and services..
- Trade = is the basic economic concept involving buying and selling of goods and services, with compensation paid by a buyer to a seller, or the exchange of goods or services between parties.. Trade is the reason all above businesses from 1-5 exist..
It is fair to say that Maritime Transportation has been and still remains the backbone of global trade and has been so since the Egyptians, Greeks, Romans, Arabs, Indians, Chinese, Europeans all started sailing and improvising the sailing methods from sailboats, dhows, long boats, dragon boats, steamships to the current ULCVs, VLOCs, VLCCs etc..
Maritime transportation is a derived demand whose main purpose is to support trade, business and commerce – whether global or domestic, whether cargo or people..
An estimated 89.5% of global trade is carried by sea.. As per UNCTAD figures, in 2019, although the maritime trade growth and port traffic growth were down, world seaborne trade reached a volume of 11 billion tons with a predicted growth of +2.6% in 2019 and an annual average growth of +3.4% for the period 2019-2024..
An estimated 793.26 million TEUs were handled in container ports worldwide in 2019 and as of now there are 6,145 active ships carrying 23,657,724 TEUs around the world..
The growth, numbers and the volume involved makes the maritime industry one of the most globalized industries in the world in terms of ownership and operations..
Not just in terms of ownership, the Maritime industry also provides employment for an estimated 1.65 million seafarers working in the global merchant fleet across the world..
Here are a few stats for you to think of, about the Maritime Industry (all stats compiled/shared from UNCTAD)..
Which country owns the most number of ships..??
By number of vessels
China overtook the grouping of the Rest of the World countries to reach the highest number of vessels in the world in 2019..
By Deadweight Capacity
Top 10 Countries supplying seafarers
Top 10 Countries supplying seafarers
Crew (also known as Ratings)
As briefly defined above, Shipping is the act of carriage of cargo from point A to point using the ships which falls under the Maritime industry..
Cargoes are carried by various types of ships all around the world..
- Oil Tankers
- Dry Bulk Carriers
- General Cargo Carriers
- Container Carriers
- Gas Carriers
- Chemical Tankers
- Off Shore Vessels
- Ro-Ro ships
- Ferries/Passenger Ships
All these ships are operated by shipping lines for commercial gain.. A lot of these ships are owned by the shipping lines operating them and a lot of them are chartered by the shipping lines from the ship owners..
These shipping lines may be operating a liner service or a tramp service.. On the liner service the majority of the business is handled by container shipping lines..
There are many container shipping lines operating “shipping services” around the various trade lanes in the world, and the Top 50 shipping lines around the world derived from Alphaliner are as below..
The top 10 container lines above have a combined market share of 82.3% in the containerised trade leaving only 17.7 % for the rest of the container lines..
Well anyway, shipping includes (but not restricted to) activities as below :
- Booking cargo for specific vessels, sometimes weeks and months in advance
- Ensuring that all cargo booked is planned on the intended vessels
- Ensure that the cargo that is planned on the vessels is actually shipped
- Ensure that the stowage planning is done properly on the vessel to optimise the vessel loading
- Ensure that all containers loaded have their VGM
- Ensure safe loading and discharging of the cargo
- Issuing bill of lading and other documentation for all cargo loaded
A typical shipping line or shipping agency office have various departments such as planning, marketing, sales, container department, vessel operations, documentation, finance, administration, procurement etc.
Shipping involves planning and identifying the most profitable trade routes around the world, the volume of cargo available on these routes, the number of ships that must be employed on these routes, the ports that this service must call in order to maximise business, the transit days that a ship will take for a round trip, the cost per voyage including operational costs, port costs, fuel costs, the man power required etc for each voyage……………………………… phew, am out of breath even writing about the processes involved..
Many of us in the business relate to freight as “money”.. Freight is what the entire global trade revolves around, but also has a different meaning to money..
In simple terms, FREIGHT refers to CARGO that is carried by a carrier (ship, road, rail, air) in exchange for commercial gain..
In the context of waterborne freight, freight refers to the cargo that is carried using the shipping services offered by the shipping lines using the ships which falls under the Maritime industry..
There are various types of cargoes that are shipped around the world..
Dry Bulk, which covers five major bulk commodities (iron ore, coal, grain, bauxite and alumina, phosphate rock), minor bulks (forest products and the like), Containerised Cargo, General Cargo/Break Bulk accounts for about 70.2% of global trade and Wet Bulk such as tanker cargo (crude oil, petroleum products and gas) of about 29.8% accounts for the balance..
If you notice, bulk and break bulk is shown separately (although as part of dry cargo) because there is a discernible difference between bulk and break bulk..
Freight may be carried in different parcel sizes ranging from 500 gms using a bicycle courier to more than 400,000 tons using a Valemax ship..
Of course different freight types have different characteristics and susceptible to different types of cargo damage and needs expert handling in all cases..
The term logistics is said to have originated from the military and is said to have been initially used to define troop and equipment movement in the various areas of military operations..
Logistics is the process involved in getting the cargo from the manufacturer’s warehouse, point of origin, mine site, farm etc to the receiver’s warehouse, door, store etc..
The process of logistics actually begins way before the actual shipment takes place as it involves discussing and deciding on the delivery schedules suitable to both the buyer and the seller..
Once these are decided, then the logistics services provider needs to decide on the best method of moving the cargo from the seller’s door to the receiver’s door..
A LSP (Logistics Services Provider) should have the expertise to choose the best solution for the movement of the cargo.. Cargo is moved using road, rail, air and sea and each of these modes of transport have their own peculiarities and characteristics..
Air freight may be quicker than sea freight, but much more expensive.. Rail freight may offer more reliable transit times and schedules than road freight and may also be better for the environment.. Road freight has the capability to offer complete door-to-door service and can be considered as one of the more economical means of transport.
The planning, implementation and execution of the various aspects involving the movement of cargo such as materials, services, information, shipping, documentation, scheduling, tracking and delivery is the main function of logistics..
Supply Chain is the whole granddaddy process comprising of all aspects in a product cycle, from sourcing of raw materials, production, packaging, distribution till delivering the goods to the shelf using all of the above-mentioned industries, businesses and services..
Supply chain involves a network of suppliers, transporters, warehouses, distribution centers, shipping lines, logistics services providers all working together from the creation and sale of a product till its delivery to you and me..
Supply chain management is the management of all the supply chain activities in developing and running the supply chain as effectively and efficiently as possible..
This management may involve product development, sourcing, production, logistics, and all the system required to coordinate and delivery these activities..
*** UPDATE ***One of the readers was not clear on the differentiation between Supply Chain & Logistics, so I added below..
A simple supply chain may be made up of few different processes that are linked to the movement of products along the chain.. A typical supply chain starts and ends with the customer..
- Customer places sales order with the company that will supply the products that they are interested in..
- Based on this sales order, the supplier will go the planning stage.. The supplier will create a production plan (if the products needs to be manufactured) or sourcing plan (if the supplier is sourcing the product from somewhere) or supply plan (if the supplier already has the product can supply straightaway)..
- The procurement process follows the planning process wherein the supplier will need to procure the raw materials in case they are manufacturing or source/procure the product itself from elsewhere..
- The next process will be the production process where manufacturing is involved wherein the order is produced..
- This is followed by an inventory process which will include receiving the goods from the various suppliers at the suppliers warehouse, its storage and stock monitoring.. Depending on the type of business, this could be the start of the logistics process or could form part of the logistics process..
- Last but not the least is the transportation process which involves logistics and shipping..
- Customer receives the goods and that is the end of that particular chain..
The act of managing all of the above mentioned is termed as Supply Chain Management..
Trade is the basic economic concept involving buying and selling of goods and services, with compensation paid by a buyer to a seller, or the exchange of goods and services between parties..
Trade is the reason all the above businesses exist..
Global trade, also known as International Trade and World Trade is simply the import and export of goods and services across international boundaries..
Goods and services that enter a country for commercial purposes are called imports and goods and services that leave a country for commercial purposes are called exports..
There are many reasons why countries conduct trade globally
- Unavailability of certain products domestically
- Comparative Advantage
- Market expansion
- Earn Foreign Exchange
- Achieve economies of scale
- Improving political relations
- Procure good quality at reasonable rates
Here are some interesting facts and statistics to help you understand the reach of global trade..
As per the WTO, the current World Merchandise Trade is in excess of US$ 19,670,000,000,000 – that is US$ 19.67 Trillion.. The value of global merchandise grew by 10% while the volume of global merchandise grew by 3% in 2018.. In 2019, the merchandise trade volume growth will fall to 2.6% but will rebound to 3% in 2020..
As per WTO statistics, almost 70% merchandise exports are manufactured goods.
Image 1 – Source : World Trade Organisation
Image 2 – Source : World Trade Organisation
Image 3 – Source : World Trade Organisation
The top ten economies represented 53.3 per cent of world trade while the top five leading economies accounted for 38.1 per cent of total trade.
Growth in the volume of world merchandise trade, as measured by the average of exports and imports, was 3.0 per cent in 2018, down from 4.6 per cent in 2017, amid rising trade tensions.
Image 4 – Source : World Trade Organisation
Image 5 – Source : World Trade Organisation
As you can see, there is a vast difference between Maritime, Shipping, Freight, Logistics and Supply Chain and I haven’t even covered the other related industries such as Ports, Terminals, ICDs etc..
There are different career opportunities in maritime, shipping, freight, logistics and supply chain and each of them requires different qualifications, skill sets, expertise and experience..
I will be writing about these career opportunities in due course, so stay subscribed so you don’t miss out on these important tips..
Article reposted with latest statistics updates..
thank Appreciation and respect for the information you provided
Thank you for this valuable information…I appreciate your effort. With great regards
The information you’ve shared in this blog is highly remarkable. Thanks for sharing such quality information.
informative. good work
Great Article! Shipment means the product you want to ship AND Logistics means the process of shipping or moving your shipment from the point of origin to the point of destination
logistics is a part of the supply chain which already have a different kind of activities such as ordering, purchasing, forwarding, warehousing. from the point of manufacturing until the product is consumed you will have to undergo the process of the supply chain.
Very useful and interesting article. .thanks author
Hi There, Thank you for your overwhelming article.
I’m final year student with thesis but right know I was work in chemical industry. my first experience is joining Order Management, then I move to Transportation Management in the same office.
Your article above so relateable with i’m doing right now ( read : my daily activities ).
Could you suggest me a guide book for Supply Chain for beginner? due to i’m interest to learn Supply Chain Management so far. if I can make it happen, I want to continue my postgraduate with majoring Supply Chain Management.
Thanks for the article, very useful. I am a chemical engineer looking into starting a career in the shipping industry; currently reading as much as I can on supply chain management and it’s inner-workings.
Can you recommend books to read on the latest standards and procedures in maritime/shipping industry? I believe those would be very useful to me at this stage.
Very interesting and instructive article! The only slight quibble I would have is when you talk about the owners of ships as “Shipping Lines”. A Shipping Line is a service running (as the name suggests) ships on a regular route or line. For non-liner ships, I would use the term Shipowner. For example, the owner of a cargo ship not on a regular service would be called a ‘shipowner’, abbreviated in a charter party to Owners (as opposed to Charterers, who are – generally – the shippers of the cargo).
Hi Tony, thanks for the comment.. I have not referred to owners of ships as shipping lines..
As I have mentioned “A lot of these ships are owned by the shipping lines operating them and a lot of them are chartered by the shipping lines from the ship owners..” which is the fact..
Whether liner or non-liner, a ship owner may or may not be involved running the actual service..
Freeze container setting 20oC+-5 if from Door to CY don’t connect generator, how many time can maintain the celcius from 20oC to 25oC inside freeze container Thank you
Hi Le, it depends on the actual commodity, temperature settings and where the container is geographically..
Is there a term that includes Maritime, Logistics, Freight, Brokerage and Shipping ?
Because I am currently looking for an internship in the Maritime field so I dont wanna write “Shipping” in my resume if it closes the door to freight, logistics, etc
Hi Aaron, there is no ONE definition or term.. The closest would be Supply Chain or Freight Industry..
Impressive,Thanks for the post. Got new information from your post, you are doing a great job.Good Luck!
Quite Impressive work. Being a novice in this field this article has helped me to get a head start in Logistics and Shipping related activities. Right now I am looking forward to cover more of your articles and get more insight in this field.
Thanks for sharing the article . Keep up the good work.
Thanks For sharing the article. Keep Updating the good work.
As you have prior experience in customer service, I would advise you to apply for similar position in the shipping industry. As customer service is a very important part of the business. You can do a diploma course in logistics and import/export which will add a lot of value to your CV.
Hi Hariesh, It is indeed an opportunity to share experiences in the industry and at the same time to learn on matters that call for clarifications. Recently we have had an experience where the Customs Authorities refused to process B/Ls that were consigned “To Order of..” and hence we were forced to intervene being the Secretary General of the National Shippers Council. We informed Customs that such refer to goods under specific Letter of Credits and their delivery is guaranteed by both the Importers and Exporters Banks, since the goods will be paid by Importer who whoever, at the delivery point.
B/Ls therefore will not read the name of the Consignee other that the relevant Bank, which is supposed to endorse the respective B/Ls at the back, upon realization of the amount due, being the value of the goods shipped.
After arguing to the authorities, I was asked to give specific INCOTERMS references i.e. UPC 600 which allow B/Ls to go unnamed but for the respective Importer’s Bank, where the intended consignee to feature as notify party.
Kindly refer to me specific sections as per the ICC under the WTO facilitation of International trade.
Sallu Johnson CMILT
Sallu, what details go on the bill of lading especially with shipper/consignee/notify information is not regulated by ICC.. There may be some countries like USA/India where the manifest must contain the details of the actual consignee and that consignee should be from that country.. Even if the bill of lading shows To Order etc, the consignee detail must be submitted to customs..
Very elaborated content. Thanks for sharing this blog.
Thank you very much Hariesh for the detailed explanation.
Thank you for this article, very simple and well explained
Hi Hariesh, thank you very much for this article.
I would like to know more about the meaning and difference of the various shipping terms such as:
a. Shipping line operator
b. Shipping line agent
d. Carrier agent
f. Surveyor/ Shipping representative
g. Container operator, etc
Thanks for putting up this article. I am trying to get into any aspect of the business. I have bachelor’s degree in communication and I have extensive call center and customer service experience. I have tried applying for maritime related jobs but so far I am yet to be called back for any job opportunities. Can you please direct me to any company that is hiring. I live in Roosevelt new York.
Dee! I’ve been trying to get in contact with you. Can you please call me? I have the same number.
Please write about the career opportunities and the skill sets required for each.
your blog is great source of information for anyone in the field of shipping. Thanks a lot for keeping it free.
Thank you for sharing this wonderful information esp on container stowage now I understand it better
Mr Hariesh your article is great! I am about to use your blog as a complimentary to my course in import export as it is so clear and simple to understand very complex subjects. I have a question, I would you define a cargo? Thanks
Thank you for your kind words Luisabel.. Glad you asked about definition of Cargo.. There is an article for that as well.. 🙂 Read this https://www.shippingandfreightresource.com/difference-between-commodity-and-cargo/..
Hi Luisabel, thanks for your comments.. You can read the definition of cargo here.. https://www.shippingandfreightresource.com/difference-between-commodity-and-cargo/
I love how well this article is written. Thanks for sharing with us!
Thanks for such an useful and informative article
Very useful article, thanks for posting,
I make myself clearer on the concept now. Thanks!
How does one define Transport Logistics?
The logistics of organising various modes of transport required for the movement of goods or passengers..
Thanks for the response so therefore we can’t always say Logistics if the service being provided relate to Transport Logistics right?
Well logistics is an activity covering the “movement”.. We even use this in day to day conversation not relating to cargo or goods like “I will take care of the logistics of getting everyone to the wedding” which means I will do the necessary to make sure everyone is transported to the wedding in time..
OK…. Thanks for clarifying since being in the industry if I say Logistics sometimes clients get confused… .
Very good article full of precious information
Fantastic post on the differences and connections of the itens.
Thanks Luiz.. 🙂
Great article! However when we talk about these topics it should include movement of cargo via Air as well.
Great ???? thanks a lot
No doubt it’s a great article worth of reading
Thanks Ahmed.. 🙂
As usual, great articles. I feel like doing certification in shipping while reading your articles one by one. It has given me clarity in many concepts which I was not clear and struggling to find the answers.
Just one point – I couldn’t get clarity for difference between logistics and Supply Chain. I believe Example may help to differentiate.
Hi Nirav, glad you found it inspirational.. 🙂 As regards the clarity between SC and Logistics, I added on some points under Supply Chain.. Pls see that..
Very effective article..
Interesting Article . Keep it up. Regards / Manohar
Very educative articles for the Maritime, Shipping & logistics industry.
I especially loves the break down & links such that even novice could understand the metrics & details behind the bigger terminologies of the industry.
Harriesh, please Keep up the good work.
Your Articles make very interesting reading ,since the are explained in a simplistic manner. They are very useful too.
Great stuff, I’m using this note tonight to ‘initiate’ a new group into some shipping terms. I always tell my students to be very good at ‘industry talk’ especially when it comes to the word ‘freight.’ The term ‘freight’ in the industry is definitely used to denote the cargo carried, that’s why ships are called freighters etc. but I always caution that they must also have a good understanding that ‘freight’ in a business class relates to the payment due to the shipowner for the employment of his or her ship.
Thanks Dr.. Your comments are always valued.. 🙂
Excellent piece, thank you. I look forward to more articles explaining and detailing this type of information.
However slightly disagree about Logistics and Supply chain definition, having University education, 20 years experience in area and still working as Logistics and Supply Chain director. Supply Chain is manly considered as physical part of cargo movement. It can be whole up from raw materials down to final consumer or recycling. Same time logistics is more complex process, including movement of information, money, legal documents, necessary equipment, product itself and processes after physical carriage is finished. Supply Chain is static, Logistics is dynamic.
But probably Supply Chain sounds more serious. As result named as Supply Chain workers sitting in offices (white collars), while Logistics workers considered as guys from action field (blue collars).
Hi Alex, thanks for your comments.. That is why I have mentioned that “Supply Chain is the whole granddaddy process comprising of all aspects ……. using all of the above mentioned industries..”
Really refreshing reminding me of them days as a maritime supply chain student. Big up n thumb up.
Great, glad I could bring back memories.. 🙂
Please guide me about stowage planning of bulk cargo vessel
Very informative – as always. Points out precisely the finer points and the nuances of the business. Thanks a lot.
Thanks Rupnarayan.. 🙂
Love your article’s. Relaxing but informative, refreshing ones knowledge is great.
Keep up your great work. You are appreciated.
I was about to continue reading game of thrones but decided to read your article first. That’s saying something ????