What is Freight?
Freight refers to goods transported in bulk by road, rail, sea, air, or intermodal combinations. In practical terms, freight is the movement of pallets, containers, crates, and large shipments between factories, ports, warehouses, hubs, and major customers.
In e-commerce and modern retail, freight is the invisible backbone that gets inventory from suppliers into fulfilment centres, regional warehouses, and store networks before parcels are shipped to end consumers. The way freight is planned, purchased, and managed has a direct impact on margins, delivery promises, and customer experience.
Key Types of Freight in Modern Supply Chains
1. Road Freight
What it is: Goods transported by trucks, trailers, and vans over road networks, typically as pallets, cages, or bulk loads. It includes domestic and cross-border truck moves.
Best suited for: Short to medium distances, regional distribution, flexible delivery windows, and door-to-door transport between factories, warehouses, and retail locations.
Advantages: High flexibility, dense network coverage, door-to-door capability, relatively fast for regional movements, easy to combine with last-mile deliveries, and suitable for partial and full truckloads.
Disadvantages: Exposure to congestion and road restrictions, driver availability issues, fuel price volatility, higher emissions per unit than rail or sea for long distances.
Real-world application: Daily replenishment of fulfilment centres, store deliveries from regional distribution centres, milk-run collections from multiple suppliers, and cross-dock operations.
2. Sea Freight (Ocean Freight)
What it is: Goods transported in containers or as bulk cargo on ocean-going vessels. The most common form is containerised freight in 20ft or 40ft containers.
Best suited for: Long-distance international trade, high-volume shipments, non-urgent goods, and commodities where cost per unit is more critical than transit time.
Advantages: Very low cost per unit for large volumes, high capacity, suitable for almost every product category, and relatively low carbon emissions per tonne-kilometre compared with other modes.
Disadvantages: Long and sometimes variable transit times, port congestion risk, complex documentation and customs processes, and potential for delays due to weather or geopolitical disruptions.
Real-world application: Moving production from Asia to European or American distribution centres, seasonal stock builds, and replenishment of central warehouses for global brands.
3. Air Freight
What it is: High-value or time-sensitive goods shipped by aeroplane, usually in unit load devices (ULDs), pallets, or specialised containers.
Best suited for: Urgent replenishments, product launches, high-value electronics, pharmaceuticals, fashion drops, and shipments where speed is more important than cost.
Advantages: Fastest international transport mode, reliable transit times, lower risk of damage and theft, critical for short product lifecycles and emergency shipments.
Disadvantages: Highest cost per unit, strict weight and size limitations, strong environmental impact, and more complex security procedures.
Real-world application: Flying limited drops of new sneakers ahead of a global launch, moving critical spare parts to keep a factory or data centre running, urgent online orders with premium shipping options.
4. Rail Freight
What it is: Goods transported by trains, often in containers, tankers, or bulk wagons, over long-distance rail corridors.
Best suited for: Heavy or bulk commodities, long-distance inland routes, and corridor-based flows between major industrial or logistics regions.
Advantages: Cost-effective for large volumes over long distances, lower emissions than road for many corridors, high reliability on established routes, and suitable for intermodal connections with sea and road.
Disadvantages: Less flexible than road, requires access to rail terminals, potential capacity constraints, and dependency on rail network quality and timetable.
Real-world application: Inland container moves from seaports to landlocked distribution hubs, bulk raw material flows, and intercontinental rail connections such as Europe–Asia corridors.
5. Intermodal Freight
What it is: Freight moved in a single loading unit (usually a container or swap body) using multiple modes – for example ship + rail + truck – without handling the goods themselves.
Best suited for: International and regional routes where combining modes reduces cost and carbon footprint whilst maintaining acceptable transit times.
Advantages: Optimises the strengths of each mode, can reduce total cost and emissions, improves network flexibility, and simplifies handling through standardised units.
Disadvantages: Requires reliable handovers between modes, added complexity in planning, dependency on intermodal terminals, and potential for delay at transfer points.
Real-world application: Moving containers from Asian ports to European inland hubs via sea and rail, then final delivery by truck to regional warehouses and fulfilment centres.
6. Parcel & Express Freight
What it is: Small packages handled by parcel and express networks, often treated as a distinct category of freight with its own hubs, sorting centres, and linehaul routes.
Best suited for: E-commerce orders, small B2B shipments, and time-definite deliveries with clear delivery promises to end customers.
Advantages: High network density, strong tracking capabilities, predictable transit times, easy integration into online checkout flows, and scalable for peak seasons.
Disadvantages: Higher cost per kilogram than pallet or container freight, strict size and weight limits, and surcharges for oversized or remote-area deliveries.
Real-world application: D2C brands shipping orders from fulfilment centres to consumers, marketplace sellers sending goods via integrated carrier contracts, and subscription products delivered monthly.
Freight Service Models and Commercial Structures
Beyond transport mode, freight is shaped by how capacity is purchased and managed. Common service models influence risk, flexibility, and pricing.
1. FTL and LTL Road Freight
What it is: Full Truckload (FTL) dedicates an entire vehicle to one shipment; Less-Than-Truckload (LTL) consolidates multiple shippers’ pallets on the same vehicle.
Best suited for: FTL for high-volume lanes and consistent flows; LTL for smaller pallet shipments that do not fill a full truck.
Advantages: FTL offers speed and minimal handling; LTL provides flexibility and cost sharing across shippers.
Disadvantages: FTL requires sufficient volume to be economical; LTL introduces extra handling, potential damage risk, and sometimes longer transit times.
Real-world application: Big-box retailers using FTL replenishment to stores, whilst smaller B2B orders move via LTL networks.
2. Contract vs Spot Freight
What it is: Contract freight is secured at agreed rates and capacities over a fixed period; spot freight is booked case by case, usually based on current market pricing.
Best suited for: Contract models for predictable volumes and lanes; spot market for volatile demand, irregular lanes, and tactical gap-filling.
Advantages: Contracts give cost predictability and capacity assurance; spot market offers flexibility and can capture low rates in soft markets.
Disadvantages: Long contracts can become uncompetitive if markets move; spot-only strategies expose shippers to price spikes and capacity shortages.
Real-world application: Large brands securing annual contracts for core lanes whilst using spot marketplaces for overflow and seasonal peaks.
Comparing Freight Modes and Service Models
| Mode / Service | Typical Speed | Cost per Unit | Flexibility | Carbon Impact (Relative) |
|---|---|---|---|---|
| Road Freight | Medium | Medium | High | Medium-High |
| Sea Freight | Low | Very Low | Medium | Low |
| Air Freight | Very High | Very High | Medium | Very High |
| Rail Freight | Medium | Low-Medium | Medium | Low |
| Intermodal Freight | Medium | Low | Medium | Low-Medium |
| Parcel & Express | High | High | Very High | Medium-High |
Freight in E-commerce Fulfilment
E-commerce operations rely on freight at multiple levels of the network, from inbound containers to outbound parcels. Visibility and planning across these layers are critical for a consistent customer promise.
Inbound Freight: Ocean, rail, and road freight move inventory from manufacturers and suppliers into regional warehouses and fulfilment centres. Poor inbound planning leads to stock-outs, emergency air shipments, and inflated landed costs.
Inter-facility Freight: Transfers between warehouses, micro-fulfilment centres, and return hubs balance stock levels and support next-day or same-day delivery promises in key regions.
Outbound Linehaul: Palletised freight moves orders from fulfilment centres to carrier hubs and postal gateways, feeding parcel networks that handle last-mile delivery.
Data-Driven Optimisation: High-performing e-commerce brands use demand forecasts, inventory policies, and carrier performance data to decide where to position stock and which freight options to use for each lane.
Freight in Traditional B2B and Industrial Logistics
In B2B supply chains, freight is central to production continuity, distributor service levels, and cost competitiveness.
Supply to Production: Raw materials and components must arrive on time and in full to avoid production stoppages. Just-in-time strategies amplify the importance of reliable freight partners and contingency plans.
B2B Distribution: Pallet and full-load freight connect plants, central warehouses, and regional distributors. Routing, load consolidation, and backhauls can dramatically reduce cost per unit.
Aftermarket & Spare Parts: Service operations depend on a mix of scheduled freight and urgent premium services to keep equipment running and minimise downtime for customers.
Implementing a Freight Strategy Successfully
Start with Network and Demand Analysis: Map your current network of suppliers, facilities, and customers. Analyse demand patterns, order profiles, and seasonality to understand which lanes and products truly drive freight spend and service risk.
Design Modes and Lanes Intentionally: Assign freight modes based on product value, service promise, and distance. Use sea or rail for base volumes, road for regional flows, and air only where the business case is clear.
Align Contracts and Spot Strategy: Balance contracted capacity on core lanes with a structured spot strategy for volatility and growth. Review contracts regularly against market benchmarks.
Enable with Technology: Transport management systems (TMS), rate engines, and AI-based planning tools make it easier to compare options, simulate scenarios, and orchestrate multi-leg moves in real time.
Continuously Optimise: Freight networks should evolve with product mix, geographies, and customer expectations. Set regular cycles to review carrier performance, costs, and lane design, then adjust accordingly.
Common Freight Management Mistakes to Avoid
Organisations that treat freight purely as a cost line often overlook structural opportunities. Typical pitfalls include:
- Mistake: Buying only on lowest rate per shipment
Impact: Leads to unreliable service, hidden surcharges, and higher total landed cost over time. - Mistake: Overusing premium modes like air freight
Impact: Erodes margins and trains customers to expect unsustainable service levels. - Mistake: Lack of visibility across modes and legs
Impact: Makes it difficult to manage exceptions, communicate delays, or identify structural inefficiencies. - Mistake: No clear playbook for peak seasons
Impact: Capacity shortages, emergency spot buys, late deliveries, and damaged brand reputation. - Mistake: Ignoring sustainability metrics
Impact: Missed opportunities for mode shift, customer differentiation, and compliance with emerging regulations. - Mistake: Fragmented freight purchasing across departments
Impact: Lost volume leverage, inconsistent terms, and limited ability to standardise service levels.
Measuring Freight Performance
To know whether freight strategy is working, organisations need a focused set of KPIs combining cost, service, and sustainability.
- Freight cost as a percentage of sales or cost of goods sold (COGS)
- Average freight cost per kilogram, pallet, order, or container
- On-time in-full (OTIF) delivery rate by lane and mode
- Transit time reliability and deviation from planned lead times
- Damage and claim rates per thousand shipments
- Use of premium modes (e.g. percentage of shipments by air)
- Carbon emissions per shipment or per tonne-kilometre
- Container and trailer utilisation levels
- Carrier performance scorecards combining cost and service metrics
Future Trends in Freight
Freight is undergoing rapid transformation driven by technology, regulation, and changing customer expectations.
AI-Driven Planning: Machine learning models help predict demand, choose optimal modes, build better loads, and select carriers based on performance, not just rate tables.
Real-Time Visibility: IoT devices, GPS tracking, and digital platforms provide end-to-end visibility across modes, enabling proactive exception management and more accurate delivery estimates.
Green Freight: Regulations and customer pressure are accelerating the shift to lower-emission modes, alternative fuels, and network designs that reduce empty miles and unnecessary movements.
Platform and Marketplace Models: Digital freight marketplaces and broker platforms are changing how shippers access capacity, compare options, and collaborate with carriers and 3PLs.
Urban and Micro-Freight: Growth in same-day and instant delivery is reshaping linehaul and last-mile design, with micro-fulfilment sites and new vehicle types entering the mix.
Conclusion
Freight is far more than trucks and containers; it is the structural link between your supply, your stock, and your customers. The choice of modes, service models, partners, and technology directly shapes cost, reliability, and sustainability.
Whether you operate a fast-growing e-commerce brand, a traditional distribution network, or a global manufacturing supply chain, mastering freight means understanding the trade-offs between speed, cost, and risk. With clear data, intentional design, and continuous optimisation, freight becomes a strategic lever – not just an unavoidable expense.
FAQ about Freight
What is freight in simple terms?
Freight is the term used for goods transported in bulk by road, rail, sea, air, or a combination of these modes. It usually refers to pallets, containers, and large shipments moving between businesses rather than individual consumer parcels.
How is freight different from parcel shipping?
Parcel shipping handles small, boxed shipments through courier and postal networks, often one order per package. Freight focuses on larger, heavier, or palletised loads, typically moved via trucks, containers, or rail, and often serves warehouses, factories, and retail networks.
What factors determine freight cost?
Freight cost is influenced by distance, weight and volume, mode of transport, service level (standard or express), fuel prices, tolls, handling requirements, surcharges, and how efficiently loads are consolidated and routed.
Which freight mode is best for e-commerce brands?
Most e-commerce brands use a mix: sea and rail for cost-effective international replenishment, road for regional distribution, and parcel networks for last-mile delivery. Air freight is reserved for urgent or high-value shipments where speed justifies the extra cost.
What does a freight forwarder do?
A freight forwarder organises the movement of goods on behalf of a shipper, choosing carriers, booking capacity, arranging documentation, and coordinating multi-leg journeys. They often combine volumes from multiple customers to secure better rates and service.
How can companies reduce freight costs without hurting service?
Typical levers include better load consolidation, optimised routing, shifting suitable flows from air to sea or rail, redesigning the warehouse network, improving forecasts, and using data to negotiate smarter contracts with carriers and 3PLs.
What is meant by “total landed cost” in freight?
Total landed cost is the full cost of getting a product from its origin to the point of sale or use. It includes freight charges, duties, taxes, insurance, handling fees, and sometimes warehousing and last-mile delivery costs.
Why is freight so important for customer experience?
Freight reliability determines whether products are in stock and whether promised delivery dates can be met. Poorly managed freight leads to stock-outs, delays, and inconsistent delivery times, which damage customer trust and brand loyalty.
