Containers need to be transported to the port, before being loaded onto the vessel and subsequently from the port to the final destination. Both pre-carriage and on-carriage container movements can be arranged through the cargo owner’s appointed vendor or through the carrier.
Merchant Haulage is when the merchant, also known as the cargo owner, arranges the container transport through their appointed trucking company, whereas carrier haulage is when the container transport is organized through the ocean carrier.
In this article, we’ll delve deeper into the topic of carriage haulage compared to merchant haulage and discuss what the main differences are. We will also highlight the benefits of each, in order to give you a better idea of when a certain arrangement is more advantageous over the other.
What is Carrier Haulage?
Carrier haulage is a container transport arrangement whereby the ocean carrier is responsible for the on-carriage and/or pre-carriage. This basically extends the scope of the carrier from a port-to-port service to a door-to-port, port-to-door or a full door-to-door service.
This also means that the carrier does not hand over the container to a third party vendor (trucking company) after it arrives at the port of discharge. If carrier haulage is arranged at the origin, then the carrier also delivers the empty container and gates the laden container into port.
Keeping the above in mind, the cargo owner gives full control to the ocean carrier to arrange all its container transportation requirements at the origin, destination or both locations.
What is Merchant Haulage?
When it comes to merchant haulage, the inland container transportation (pre-carriage and/or on-carriage) is arranged by the merchant, which is most commonly the shipper or the consignee.
Merchants can work with multiple trucking vendors and if they have opted for merchant haulage, the ocean carrier releases the empty container at the origin and the nominated trucker picks the container up and gates it into the port of loading.
If the merchant haulage is arranged at the port of discharge for the on-carriage, the container is released from the carrier to the nominated trucker at the destination upon vessel arrival.
In a merchant haulage scenario, the carrier is only in charge of the sea freight and not the inland transportation.
What Are the Main Differences Between Carrier Haulage and Merchant Haulage?
As outlined above, there are various differences between merchant haulage and carrier haulage. In this section, we’ll be taking a closer look at the differences in terms of flexibility, responsibility, effort, cost, reliability, billing and availability.
|Features||Carrier Haulage||Merchant Haulage|
|Flexibility||Typically less flexible as merchant haulage. Do not always cater to complex or flexible arrangements.||Has established relationships with multiple trucking providers to service flexible export and import requirements.|
|Responsibility||Carriers are responsible for pre-carriage and/or on-carriage.||Merchants appoint vendors for pre-carriage and/or on-carriage.|
|Effort||Almost seamless. Place of receipt and place of delivery is effectively the carrier’s obligation.||Merchants have to interact with haulage providers and carriers separately.|
|Cost||More services from the carrier could mean less overall cost and monitoring time at the expense of flexibility||Haulage rates of trucking companies are typically higher than carriers, unless there is significant volume. However, merchant haulage is more flexible.|
|Reliability||Ocean carriers only work with a few trucking companies and may not be as reliable as independent truckers.||Customers have developed trust with a particular set of trucking companies that can offer a tailor-made service.|
|Billing||The charges for carrier haulage are commonly found on the freight invoice.||Invoices for merchant haulage are provided by each trucker separately.|
|Availability||Usually less availability as carriers work with their own selective trucking providers, which can be limited depending on the location.||Generally readily available as merchants are able to appoint their own trucking providers.|
Which Type of Haulage is Right for Your Business?
There is no clear-cut answer to this question, as it depends on various aspects of how your supply chain is set up. Generally speaking, merchant haulage seems to be more advantageous if you need flexibility, variety, availability and reliability.
On the other hand, carrier haulage seems to be more feasible for businesses who rely on more affordable options and prefer to invest less effort into planning. Below is a general guideline that can be followed:
Consider carrier haulage if you’re looking for:
- Less planning effort
- Lower cost
- Simplified billing
Consider merchant haulage if you’re looking for:
- More flexibility
- Higher reliability
- Greater availability
Can You Use A Combination of Both Merchant and Carrier Haulage?
Yes, it’s certainly possible and also common to use a combination between merchant and carrier haulage. Large multinational companies tend to split the haulage arrangements based on tradelanes.
They will carefully consider the costs, availability, ease of operations when making the decision. When booking a shipment the service type needs to be indicated. It will be either port-to-port, port-to-door, door-to-port, and door-to-door.
Depending on the service type the carrier will either arrange the pre-carriage or on-carrier or you as the merchant would have to do so using one or multiple third party trucking companies. Here’s a quick guide for further reference.
|Port-to-Port||Merchant Haulage||Merchant Haulage|
|Door-to-Port||Carrier Haulage||Merchant Haulage|
|Port-to-Door||Merchant Haulage||Carrier Haulage|
|Door-to-Door||Carrier Haulage||Carrier Haulage|
Will There Be a Difference on the Bill of Lading?
You’ll notice a difference in the bill of lading or sea waybill if a carrier is responsible for the haulage. When the port of discharge (POD) is different from the place of delivery on the master bill of lading, the carrier will move the container from the POD to the final place of delivery.
If the merchant is arranging their own on-carriage, the final place of delivery and the port of discharge will indicate the same location on the bill of lading or sea waybill.