On March 23, 2021, the Japanese cargo ship Ever Given became stuck in the Suez Canal causing major disruptions in the global export economy. As a first-time exporter, you might be asking yourself the following questions:
- Why not just ship by air freight?
- Do exporters still ship their products via ocean freight?
- How can I protect myself in case of incidents like the Ever Given and Suez Canal?
While there are many factors that go in to why you should pick one option (air vs sea) over the other, here are some general facts. Overall, sea freight is the less expensive option and still to this day the most utilized shipping option for international shipments. Air freight is still a viable option depending on your products and individual shipping needs. With either option, you should always use a trusted/licensed freight forwarder when exporting your products. The freight forwarder will be able to advise you on the best Incoterms® to use on your bill of lading or if ocean cargo insurance is a good idea.
The average ocean freighter shipping duration is 40-60 days. The incident at the Suez Canal incident had over 400 freighters backlogged and were unable to move their ships for over a week. As an exporter, learning your products are stuck on the ocean freighter would certainly provide a lot of heartburn. Fortunately, both the private sector and the Export-Import Bank of the United States (EXIM) offer Export Credit Insurance (ECI), an insurance policy that empowers you to offer extended payment terms (up to 180 days) to your international buyer. This ECI policy gives your foreign buyer the payment flexibility in case your product shipments are delayed, enables open account credit terms to keep you competitive, and protects you from the risk of nonpayment.
EXM has been working with U.S. companies for more than 87 years. By supporting U.S. jobs through the exports of American made goods and services, EXIM is helping the world buy American. If you are interested in learning more about EXIM and how we can help start your exporting journey, please request a free consultation here and one of our trade finance specialists will be happy to assist you.