Posted in Operations and Supply Chain Terms, Total Reads: 228

Definition: Freight

Freight is “a common medium of getting cargo moved from one place to another, or from one person to another”. It is the physical process of transporting commodities and goods merchandise from one location to another.

There are different modes of freight as under:

i) Land freight refers to transportation of goods by train or truck. Even in air and sea freight, ground transportation is necessary to move the cargo from its production facility to the seaport or airport and then further to its final destination as the production facility may or may not always be located near the ports.

ii) Freight by ships i.e. freighter is one of the most important modes of freight. It is referred to as merchant navy. Merchant navy is the lifeline of world economy as it carries more than 90% international cargo with approximately 102,194 commercial ships in operation worldwide.

iii) Air freight is done using specialised cargo aircraft and also in the luggage of passenger aircraft. This is the fastest but the most expensive mode of transport for long distance freight.

INCOTERMS are generally used in international freight which are published by the International Chamber of Commerce (ICC). They are generally used to clearly communicate the costs and risks associated with the transportation of goods. They were first published in 1936 and have been periodically updated with the eighth version published in 2010.

An important term associated with freight is the freight rate. It is defined as the price at which the cargo is transported from one location to another. It depends on several factors like the form of the cargo, its weight, the mode of transport (truck, rail, ship, and aircraft) and the distance between the source and delivery point.



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