Freight, intermodal and multimodal transport operations
This domain tests the commercial and operational mechanics of moving freight: who bears risk and cost at each point, what documents do, how unit loads interchange between modes, and how mode choice is justified numerically.
Terms and risk transfer
Incoterms 2020 define cost and risk at a named point. EXW leaves everything to the buyer; FCA suits containerised cargo (FOB is designed for conventional ships and is commonly misapplied to containers); CIF obliges the seller to insure to minimum Institute Cargo Clauses (C) cover; DAP places goods at destination ready for unloading; DDP adds import duty. Payment terms (letter of credit) are separate from Incoterms - a frequent confusion.
Documents and liability
A bill of lading is simultaneously receipt, contract of carriage and document of title; a sea waybill and an air waybill are non-negotiable. House bills cover the forwarder's contract, master bills the carrier's. Carrier liability is limited per package or per kilogramme under the applicable regime, so cargo insurance is priced off the gap. Demurrage accrues inside the terminal beyond free time; detention accrues on equipment held outside it.
Unit loads and interchange
TEU ≈ 33 m³ internal, roughly 21.7 t payload; FEU is double the length; high-cube, reefer, tank and flat-rack variants handle special cargo. LCL groupage is consolidated at a container freight station; FCL moves container-yard to container-yard. Intermodal means one unit load crosses modes; multimodal means one contract covers the whole journey. Transshipment relays cargo through a hub without entering the hinterland.
Worked example
A 12,000 kg shipment worth USD 300,000: sea freight USD 1,800/FEU, 30 days transit; air USD 4.50/kg, 3 days; inventory carrying cost 20%/yr.
- Sea: inventory in transit = 300,000 × 0.20 × 30/365 = USD 4,932; total USD 6,732.
- Air: freight 12,000 × 4.50 = USD 54,000; inventory = 300,000 × 0.20 × 3/365 = USD 493; total USD 54,493.
Sea wins by about USD 47,800. Break-even: air freight would need to fall below USD 1,800 + (4,932 − 493) = USD 6,239, i.e. about USD 0.52/kg, for air to compete on cost alone.
Traps that cost marks
- Using gross weight where volumetric (chargeable) weight governs - 1:6,000 for air, 1:1,000 for LCL.
- Assuming demurrage is free or that free time is unlimited.
- Quoting FOB for container cargo or ignoring the CIF minimum-cover rule.