section_path: Functions/Freight
section_name: Freight
paragraph_text: Freight
  
  Freight transport, or shipping, is a key in the value chain in manufacturing. With increased specialization and globalization, production is being located further away from consumption, rapidly increasing the demand for transport. Transport creates place utility by moving the goods from the place of production to the place of consumption. While all modes of transport are used for cargo transport, there is high differentiation between the nature of the cargo transport, in which mode is chosen. Logistics refers to the entire process of transferring products from producer to consumer, including storage, transport, transshipment, warehousing, material-handling, and packaging, with associated exchange of information. Incoterm deals with the handling of payment and responsibility of risk during transport.
  
  Containerization, with the standardization of ISO containers on all vehicles and at all ports, has revolutionized international and domestic trade, offering a huge reduction in transshipment costs. Traditionally, all cargo had to be manually loaded and unloaded into the haul of any ship or car; containerization allows for automated handling and transfer between modes, and the standardized sizes allow for gains in economy of scale in vehicle operation. This has been one of the key driving factors in international trade and globalization since the 1950s.
  
  Bulk transport is common with cargo that can be handled roughly without deterioration; typical examples are ore, coal, cereals, and petroleum. Because of the uniformity of the product, mechanical handling can allow enormous quantities to be handled quickly and efficiently. The low value of the cargo combined with high volume also means that economies of scale become essential in transport, and gigantic ships and whole trains are commonly used to transport bulk. Liquid products with sufficient volume may also be transported by pipeline.
  
  Air freight has become more common for products of high value; while less than one percent of world transport by volume is by airline, it amounts to forty percent of the value. Time has become especially important in regards to principles such as postponement and just-in-time within the value chain, resulting in a high willingness to pay for quick delivery of key components or items of high value-to-weight ratio. In addition to mail, common items sent by air include electronics and fashion clothing.