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Incoterms When Shipping from China: A Complete Guide

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An Incoterm is a three letter code (i.e., FOB or CIF), defines when the cargo is transferred from the buyer to the seller. Incoterms is the main pillar of international shipping, and without a basic understanding of them, you may end paying a lot more for your shipments, than you should.

In this comprehensive guide, you will learn what Incoterms are, and which code you should select, when importing products from China (and elsewhere in Asia).

In addition, you will also learn which Incoterms to avoid, and how the ‘wrong incoterm’ can cost you a fortune.

An introduction to shipping Incoterms

Incoterms may look a bit confusing at first sight, but they are not hard to get at all. Basically an incoterm consists of two components: a three letter code and a city name. Let’s begin with the first part.

The three letters incoterm code specifies “how far” the supplier shall ship the cargo. Basically, how much of the shipping you pay the supplier to handle. Based on the incoterm you select, you can let the supplier handle the shipping of products to a nearby port in China or all the way to your front door.

A price quoted by a Chinese supplier is always based on an incoterm. Without an incoterm you have no idea how far the supplier will ship your cargo. Continue Reading →

FCL & LCL Shipping from China: A Complete Guide

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Sea freight is the most cost effective way to transport your goods from the factory floor in China, to your warehouse – especially when shipping larger volumes according to FCL (Full Container Load) terms.

That said, many buyers don’t purchase large enough volumes to fill an entire container with goods. For this category of buyers, the LCL (Less than Container Load) options remains.

In this article, you will learn what LCL and FCL is, and how they differ in terms of cost and process.

In addition, you will also learn how you can save thousands of dollars, by consolidating your LCL shipments into one FCL shipment.

Definition of FCL (Full Container Load)

FCL is an international ISO standard referring to one (full) container load (20” or 40”) containing cargo for one consignee (one importer). FCL shipping is the cheapest mode of transportation when importing from China.

However, in order to be a viable freight option it requires the importer to purchase a relatively large quantity of products. Continue Reading →

Shipping Costs When Importing from China – A Complete Guide

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What makes the topic of shipping and logistics complicated is not really the process itself, which is the case with most other procedures importers need to deal with when importing from China. It’s the shipping costs.

Moving cargo from Country A, to Country B, involves a myriad of companies and government authorities, on both sides. For small to medium sized enterprises, especially those without previous experience, there are plenty of pitfalls.

In this article, we explain what you must know about the main shipping costs that arise from the factory floor in China, to final delivery in your warehouse.

This article refers repeatedly to Incoterms. If you wish to fresh up your memory, first read our guide on Incoterms when shipping from China

Local Transportation (Factory to Port of Loading)

When production is completed, and the batch is approved by the buyer, the supplier shall arrange for transportation from its warehouse to the nearest Port of Loading.

The shipping cost for transporting an FCL 20’’ container range between a few hundred, up to around RMB 3,000 (Around $480), depending on the distance.

As most export oriented manufacturers are still based around the coast, and thanks to China’s infrastructure, a port is rarely more than a three to four hour drive away. Continue Reading →

Sea Shipping Documents When Importing from China: A Complete Guide

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About to ship your products from China? In this article, we explain what you must know about shipping documents – including the Bill of Lading, Commercial invoice, Packing list and Form A.

Keep reading, and learn more about how to check that the customs value is declared correctly (and what might happen if it’s not), why you need a Form A – and much more.

Bill of Lading

The Bill of Lading (B/L or BoL) is issued by the freight forwarder, and sent to the Importer. The Bill of Lading serves as a receipt for the shipment, and includes the following information:

  • Shipper (i.e., the supplier)
  • Importer
  • Delivery address
  • Special instructions
  • Bill of Lading number
  • Carrier name
  • Freight charge terms (i.e., FOB or CIF)
  • Commodity description
  • Quantity
  • Number of packages

Continue Reading →

Shipping from China to the USA: 9 Ways to Save Time and Money

Max Lock

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This article is written by Max Lock, CEO of Fleet

No one has said that international shipping is easy. In fact, figuring out how to ship goods from China to the US in the most economical way possible can be pretty complex. When it comes to the China-US trade route, a small business can often improve their shipping methods in order to save time and money.

Vetting a freight forwarder, in order to find one with combination of experience you’re looking for, and adjusting several things, such as container size or packaging, can work wonders.

Tips To Save Time

Losing valuable time due to shipping delays is a common problem that can plague small business owners. Inconvenienced customers will be calling and asking about their orders, meanwhile the delayed products will be sitting overseas or even at port just miles away. It can be a frustrating situation for everyone. But there are definitely ways to curb this type of problem.

Because most small businesses cannot regularly visit their suppliers, it can be hard to curb delays on that side of the ocean. However, a few simple things can help improve your shipping times. Continue Reading →

Finding the Right Freight Forwarder in China: A Checklist

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The role of the freight forwarder is to move cargo from the factory floor, to your warehouse or basement. When importing from Asia, the freight forwarder can be part of what make – or break – your business.

In part due to relatively low barriers of entry, there are literally tens of thousands of freight forwarders out there. Some are good, most are average – and then there are the scammers that will take your money and run.

To help you navigate this (naval) minefield, we’ve prepared a 12 part checklist, that can help you identify the freight forwarder that is just right for your scale, product category and market.

1. Is the forwarder primarily based in your market, or in China?

As said, the role of a freight forwarder is to move cargo from point A to point B. To do so, the forwarder needs local representation in both the country of origin and destination.

Assuming that the forwarder did everything from the pickup, to shipment, unloading, customs clearance – and final delivery – there would probably only be a few forwarders in the entire world, given the huge resources an end to end supply chain requires.

But that’s not how the shipping industry works. Instead, the forwarder is part of a large network.

In most cases, it is easier to work directly with a freight forwarder based in your own country. Getting cargo out of China is normally less complicated than getting the cargo into your country.

As such, you want to work with a freight forwarder that is experienced with local importing and customs procedures. In addition, you have somebody speaking your language, that is held accountable to the regulations in your country.

If you work with a Chinese forwarder, they’ll use a forwarder in your country, that is part of their network. Still, you will for the most part communicate with the forwarder in China. Continue Reading →

Sea Freight & Shipping from China: A Complete Guide

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Sea freight shipping from China is perceived as a major hassle when importing products. As a professional in procurement, I can state with confidence that sea freight and shipping is not what should keep you up at night.

There are far more complex issues when importing from China. However, Importers still have reason to be concerned about freight related issues.

While the process is straightforward, and part of an established and functional international system, the learning curve can be pretty steep.

Incoterms, FCL, LCL, Bill of Lading. For starters, the terminology can be discouraging just by itself. On top of that, most people in the industry can barely explain, in plain English, how the sea freight process works from A to Z.

Keep reading, and learn how sea freight works when shipping from China. In this article, we cover everything from shipping costs and insurances, to incoterms, FCL and LCL shipping.

Incoterms

Shipping Incoterms are international standard codes that decides when and where cargo shall be transferred between the supplier and the importer.

For example, FOB (Free on Board) only includes transportation from the factory, to the port of destination (i.e., Hong Kong). In addition, FOB also includes all export procedures, which are required to ensure that the cargo can be legally exported.

However, from the port of destination, you must arrange forwarding to the final destination.

You can, on the other hand, book DAP (Delivered at Place), which includes shipping from the factory in China, to a specified address overseas. Such as your office or warehouse.

When you get a quote from a supplier, you must always specify the incoterm you want. The unit price for FOB Hong Kong is, for example, lower than a unit price based on DAP Los Angeles.

Read this article to learn more about Incoterms

Shipping to an Amazon FBA Center from China

Today, many Importers ship their products directly from the factory in China, to an Amazon FBA warehouse. From there, Amazon manage the storage and distribution of the products.

Amazon is operates according to strict principles, and as a seller, you have now choice but to comply with their rules. This is what you must know about shipping to an Amazon FBA center:

1. The cargo must be labeled according to Amazon’s cargo labeling rules.

2. The cargo shall be palletized, for quick unloading upon arrival. Each side of the pallet must be labeled.

3. The cargo shall be forwarded to the Amazon address, according to DAP or DDP terms.

Notice that Amazon does not manage any shipping or customs clearance procedures. This is entirely up to you as a seller to take care of.

However, you can book DAP or DDP shipping from your freight forwarder Continue Reading →

Amazon FBA: A Practical Shipping Guide for Importers: By Ron Berger

Ron Tryfleet

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Amazon FBA (Fulfillment by Amazon) enables e-commerce companies to completely outsource storage and delivery of goods, domestically. Amazon applies a strict set of rules and procedures, to ensure this their massive operations runs smoothly.

Many questions about the logistics aspects of Amazon FBA is answered by Amazon themselves on their site. However, things get slightly more complicated for importers, facing the task of moving goods from a factory floor in China – to a fulfillment center in the United States or elsewhere.

There are many things to consider. Insurance, incoterms and packaging labeling. The lists goes on.

So we decided to an ask expert; Ron Berger, COO of Fleet, an online marketplace that connects shippers with freight forwarders and other logistics service providers.

In this article, Ron explains the entire process in a step by step manner. Keep reading, and learn more about packaging labeling requirements, customs procedures and how you can find an ‘Amazon FBA ready’ freight forwarder.

Ron, please tell us a bit about yourself and your role at Fleet

I am the COO at Fleet. With over 30 years of experience through different executive positions in the logistics industry, now at Fleet, together with the CEO and CTO, I develop the overall strategy and direction for the company. I oversee the daily operation, lead the processes that engage freight forwarders with our platform and curate the partnership with them.

As Fleet is a startup, I also do anything that needs to be done in the company: help out with marketing, sales, HR, phone, internet. Etc. And I also cut-up and recycle our inflow of Amazon boxes.

Continue Reading →

Air Freight When Importing from China: A Complete Guide

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Air freight can bring your cargo from a factory floor in China, to your warehouse, in a matter of days. However, Air freight is not a viable option for all sorts of cargo.

In this article, you will learn more about Air shipping costs, customs procedures, cargo restrictions and insurance options when importing from China.

1. Air freight is the fastest mode of transportation

Air freight is superior to Sea freight in many ways. However, the primary reason to get your cargo delivered by air, is shorter delivery time.

While Sea freight can take a month from port to port (that depends of course on the destination), with a few more days spent on administration and wire transfers – Air freight can get your product from the factory floor, to your office, in only 5 days.

The specific delivery time depends, as there are various classes of Air freight, such as express and economy. Regardless, you will save plenty of time.

An interesting fact is that only 5% of the world’s international transportation, in terms of cargo volume, is delivered by air. However, if we instead look at the total value, that figures jump up to 30% of the world’s total. Continue Reading →

Customs Value 101: What Importers Must Know

Customs Valuation

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How much should you pay in Import duties and taxes? That depends on the Customs valuation. If incorrectly declared, you’ll pay too little – or too much – in Import duties, VAT or other taxes.

In this article, we explain what every Importer must know about Customs valuation when buying from Asia.

Keep reading, and get the answers to the following questions:

1. How do I calculate the Customs value in my country or market?

2. How can I be sure that the correct Customs value is declared?

3. Why do many suppliers deliberately reduce the Customs value?

4. What kind of risks do I face if the Customs value is too low?

What is the Customs Value?

The Customs Value is the number used by the Customs authorities to calculate Import duties, fees and other taxes.

Normally, the Customs Value is declared on the Bill of Lading.

How can I calculate the Customs Value?

That depends on the market. For example, the Customs value is based on the FOB (Free on Board) price in the United States. The FOB is basically the unit cost.

In the European Union, however, the Customs value is based on the CIF cost – which includes the freight cost and insurance (in addition to the unit price).

Hence, the shipper must declare the value based on the destination, which of course also requires the shipper to know (or, more accurately, be informed) of the correct Customs valuation method. Continue Reading →