Shipment vs. Cargo: What is the Difference?
The logistics and supply chain are only complete with Shipment vs. cargo. Both phrases primarily refer to the movement of goods. They are commonly used interchangeably as a result. To make a knowledgeable business decision, online vendors that deal with shipping and delivering goods must understand this distinction.
Even while cargo vs. Shipment falls under the same category of logistics services, numerous eCommerce merchants may need to understand a few key differences between the two. Any eCommerce merchant who processes logistics and shipping without knowing these subtle risks fails or shows operational inefficiencies.
This article will clarify all the confusion around Shipment vs. cargo in this post so that you and an eCommerce vendor have better clarity regarding your company.
What is a Shipment?
A shipment can include one or multiple products being transported to a destination. Distribution centers often consolidate and repack goods to deliver a variety of items to retail stores or fulfillment warehouses. An advanced shipping notice (ASN) is used to provide details to the third party logistics (3PL) provider on what to expect when goods are shipped. The ASN and inspection of incoming shipments allows suppliers, distributors and customers to maintain accurate inventory counts.
Types of Shipments
Parcel Delivery
This is the most common type of shipment that consumers experience when placing online orders. Shipping companies like FedEx, UPS or DHL deliver items directly to your door. It's fast, convenient and effective for smaller packages.
Air Cargo
Air cargo is the fastest method for time-sensitive or high value goods. Although more expensive than other options, air freight is quick and reliable for items that need to arrive at the destination quickly.
Rail Transport
This method is commonly used for heavy, bulk items like coal, metals and grains. Rail can be a cost-effective solution for long distance transport but is less efficient for shorter routes.
Road Transport
Trucks transport goods locally over shorter distances. Road transport is versatile for various types of items but becomes less efficient over longer distances.
What is Cargo?
Cargo refers to the goods being transported. This can include raw materials, finished products, food, equipment, clothing, electronics and more. With the rise of e-commerce, delivering purchased items to customer doors makes cargo transportation more visible to consumers.
Types of Cargo
Raw Materials
These items like oil, metals and wood are inputs used to manufacture finished products.
Finished Goods
Completed products like technology, clothing and food that are ready for use.
Hazardous Materials
Dangerous substances like chemicals, radioactive materials and flammable liquids require special handling and regulations during transport.
Perishable Items
Foods like fresh produce, vegetables and meats can spoil if not properly handled during shipping.
Difference Between Cargo and Shipments
Transportation Method
Shipments are often smaller than cargo loads. They frequently use faster shipping services like FedEx or UPS. Cargo is typically larger bulk loads transported by ship, rail, air or truck. Cargo can be more cost effective for large quantities and long distances but the transit time may be longer.
Handling and Packaging
Parcel shipments have standard packaging sizes easy for carriers to handle. Cargo often needs more specialized handling and packing which increases costs. Customized crates, climate controlled containers and additional processing adds expenses.
Insurance and Liability
Basic shipment insurance is usually included with carrier services. Cargo has more complex insurance needs based on value, risk and mode of transport. Maritime insurance is required for ocean freight and hazardous materials need specialized coverage.
Regulations
Shipments have fewer rules than cargo transports. Standard labeling and packaging is required by parcel carriers. Cargo must meet regulations based on the type of goods, such as temperature controls for refrigerated items or hazardous materials handling procedures.
Benefits of Air Cargo Transport
- Fastest option for urgent delivery
- Lower insurance costs due to shorter transit time
- Eliminates need for local warehouse storage
- Shipment tracking available
Benefits of Ocean Freight Shipments
- More sustainable and lower carbon emissions than air transport
- Faster transit times with modern cargo ships
- Very secure method of transport
Sea Freight is More Affordable
Shipping by air costs 12-16 times more than ocean transport. For cost savings, sea freight is recommended when delivery schedules have flexibility. Consolidating less-than-container loads allows shippers to share space and increase efficiency.
Connection Between Freight and Cargo
While the terms are often used interchangeably, freight refers specifically to commercial transport of goods. Cargo is a broader term that can include personal items being moved for residential relocation. Understanding freight rates and selection of a freight carrier is important for businesses shipping products.
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FAQs
What are some key differences between shipments and cargo?
Key differences include size and scale (shipments are smaller, cargo is bulkier), specialized handling requirements (cargo needs more), and regulations (cargo has more compliance rules). Cargo also tends to use slower but cheaper transportation methods like ships, trains, trucks rather than air transit.
What kind of items are usually shipped as cargo?
Typical cargo items are raw materials like metal, wood, and oil as well as finished goods like clothing, food, and electronics. Cargo may also include dangerous or delicate substances that require careful handling.
What are the main benefits of transporting cargo by air?
Benefits of air cargo include speed, lower insurance costs, no warehousing needs, and shipment tracking. Air is the fastest way to transport freight long distances.
What are the advantages of transporting goods by sea?
Sea cargo transport is more sustainable, secure, accessible, and affordable. Recent innovations have also increased the speed of ocean shipping. Sea freight works well for high volume, heavy cargo.
Is cargo the same as freight?
Cargo and freight refer to similar concepts - the transportation of commercial goods. However, freight is specifically for business purposes while cargo can also refer to personal possessions. All freight shipped by air, sea, rail or truck is considered cargo.
What does an air waybill do?
An air waybill is a shipping document that provides details about cargo, origin/destination points, and freight charges. It allows the airline to track the shipment and accompanies the goods throughout transit.
How are shipments tracked?
Parcel delivery services allow customers to track shipments in real-time through automated systems and shipment tracking numbers. Barcodes, RFID, and GPS provide updates on the location and status from pickup to final delivery.
