Freight decisions get made on a single number — the rate — and then everything else about them costs money for the rest of the year. The mode determines your cash-flow cycle, your minimum order size, your exposure to port congestion and your ability to react to a sales surprise. This guide covers how each mode bills, what the Incoterm is really deciding, and the document set that makes the difference between clearing customs and paying storage.
The three modes, honestly compared
Ocean
Full container load (FCL). You buy the container. Billing is per container by size (20’, 40’, 40’ high-cube). Cost per unit is lowest when you can genuinely fill the box; if you cannot, the economics collapse quickly. FCL avoids the deconsolidation step and generally moves faster on the ground at destination than LCL.
Less than container load (LCL). You buy space in a shared container. Billing is per cubic metre or per 1,000 kg, whichever is greater — the “revenue ton”. This is the detail that surprises people: a dense, heavy shipment is billed by weight, a light bulky one by volume. LCL adds consolidation at origin and deconsolidation at destination, both of which add days and both of which add handling fees that are often quoted separately.
Ocean transit from major South China ports to the US West Coast is the fastest ocean lane; East Coast routings, whether all-water or via land bridge, take meaningfully longer. Add to any transit time: booking lead time, port cut-off before vessel departure, and destination dwell.
Air
Billing is by chargeable weight — the greater of actual gross weight and volumetric weight, where volumetric weight is computed from dimensions using the carrier’s divisor. Air is priced per kilogram with the rate stepping down at weight breaks, so the cost curve is not linear.
Air makes sense for high value density (value per kilogram), for replenishment when a product is selling faster than the ocean cycle can support, and for launch quantities where being late costs more than the freight does. Airport-to-airport transit is short; the door-to-door timeline includes trucking, terminal handling, customs and delivery, which is where most of the calendar actually goes.
Express
Integrated carriers (the familiar international couriers) move door to door on their own network and typically handle the customs entry as part of the service. Billing uses dimensional weight with the carrier’s own divisor, and rates step by weight band.
Express is the right tool for samples, for very small first orders, and for anything urgent and light. It is the wrong tool for volume: the per-kilogram cost is the highest of the three modes, and low-value entries handled by the carrier’s brokerage can obscure the classification and duty picture you should be controlling yourself.
Choosing
Instead of comparing headline rates, compute all three per landed unit inside the model from Landed cost math. Then apply three filters:
- Value density. High value per kilogram tolerates air. Low value per cubic metre almost never does.
- Cash-flow cycle. Ocean ties up cash for weeks longer. If capital is your binding constraint, a more expensive mode with a shorter cycle can be the cheaper business decision.
- Demand certainty. A slow, cheap mode is a bet that you know what will sell. Splitting a launch — air a small quantity, ocean the balance — buys information and is standard practice, not a sign of indecision.
Incoterms: what you are actually agreeing
Incoterms® rules allocate cost, risk and obligation between seller and buyer. They are not shipping methods and they are not payment terms. Four matter most to importers buying from China.
EXW (Ex Works). The seller makes goods available at their premises. Everything after that is yours, including export clearance — which a foreign buyer cannot always perform in practice, so this often ends up handled by your forwarder’s origin agent. Maximum control, maximum administration.
FOB (Free On Board, named port). The seller delivers the goods on board the vessel at the named port and handles export clearance; risk and cost transfer there. FOB is the most common basis for containerised China purchases and is the practical default for buyers who want to control the main carriage: you choose the forwarder, you see the real ocean rate, you control the destination relationship.
CIF (Cost, Insurance and Freight). The seller arranges and pays main carriage and insurance to the named destination port. Convenient, but the seller chooses the carrier and the destination agent — and destination charges levied by an agent you did not select are a well-known source of surprise invoices.
DDP (Delivered Duty Paid). The seller delivers cleared for import, duties paid. Superficially simple. Three cautions: you lose visibility of the classification and duty being declared on your behalf; the party acting as importer of record may not be clearly established; and the compliance obligations attached to importing do not evaporate because someone else quoted an all-in number. For anything ongoing, structure the relationship so you know who the importer of record is.
A practical rule for a growing importer: buy FOB, control your own forwarder, and own your customs entry. It costs more attention and gives you the data you need to manage cost.
The document set
Missing or inconsistent documents cause more delay than customs inspections do. The core set:
- Commercial invoice — seller, buyer, description, quantity, unit price, total, currency, Incoterm and named place, country of origin.
- Packing list — cartons, units per carton, net and gross weight, dimensions, marks.
- Bill of lading (ocean) or air waybill (air). Ocean B/Ls come as originals or as a telex/express release; which one you have determines how cargo is released and is a payment-security question as much as a logistics one.
- Certificate of origin, where required for a preference claim or by the buyer.
- Product-specific documents — test reports, certificates, or agency filings where the goods fall under a partner-government agency’s requirements.
- ISF filing for US ocean imports — an advance security filing that must be submitted before vessel loading, with penalties for late or inaccurate filing. Your broker files it; you supply the data. Details at cbp.gov.
Three consistency rules that prevent most problems: the description on the invoice matches what is in the box; the weights and dimensions match the packing list; the value declared is the real transaction value. A supplier who volunteers to under-declare value to “save duty” is proposing that you commit customs fraud, with your name as importer of record on the filing.
Destination-side costs and the two words that cost the most
The freight rate is not the freight bill. Expect, depending on mode and Incoterm: origin handling, documentation, terminal handling at both ends, customs brokerage and entry filing, ISF filing, drayage and chassis, deconsolidation for LCL, and delivery.
Two destination charges deserve special attention because they are avoidable and expensive:
- Demurrage — charged by the terminal when your container sits at the port beyond free time.
- Detention — charged by the carrier when you keep the container outside the terminal beyond free time.
Both are driven by the same failure: nobody was ready to receive the container. Book the delivery appointment before arrival, make sure your broker has the documents days in advance, and confirm your warehouse can take it — see US warehousing and 3PL for how receiving appointments work in practice.
Insurance
Cargo insurance is cheap relative to the value at risk and is not included by default in most quotes. Check the basis of cover, the deductible, and whether it runs warehouse-to-warehouse or only port-to-port. Carrier liability under transport conventions is limited and is not a substitute for insurance.
Timing
Build the shipping calendar backwards from the sellable date, and put these items in it explicitly:
- booking lead time (tighter in peak season);
- cargo ready date vs port cut-off — cargo ready is not departure, and missing the cut-off costs a week;
- transit;
- customs clearance, allowing for the possibility of an exam;
- drayage and warehouse appointment;
- receiving and prep at the warehouse.
Two seasonal realities dominate the year: the Chinese New Year shutdown, which compresses production and then floods the export market, and the pre-holiday peak season, when space tightens and rates rise ahead of Western retail demand. Both are on the calendar every year; neither should surprise a planner. See MOQ, sampling and lead times for working backwards through the production side.
A short mode-selection cheat sheet
| Situation | Usual answer |
|---|---|
| Samples, artwork proofs, urgent small parts | Express |
| Launch quantity, high value per kg, deadline-driven | Air |
| Replenishment while a product is selling well | Air for the gap, ocean for the base |
| Regular volume, predictable demand, low value density | Ocean FCL if you can fill it |
| Volume too small to fill a container | Ocean LCL — check whether weight or volume bills |
| Very large, very light cargo | Ocean, and re-examine packaging; volume is your cost driver |
The mode is a consequence of the cargo, the calendar and the cash. Decide it in that order, and the rate becomes the last input rather than the first.
