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.
1. Pre-Shipment Preparations
How shall the cargo be labeled?
If you are shipping from Asia to an Amazon fulfillment center, the cargo will be labeled with an address heading similar to a domestic heading, with a few slight changes. The address usually consists of four lines:
1 – the name of the unique Amazon.com distribution center;
2 – the name of the seller’s legal name, c/o FBA;
3 – the physical address; and
4 – the city, state and zip code of the cargo’s final destination. Each product type will also need a unique bar code.
Each box or pallet that you ship to an Amazon fulfillment center must be properly identified with a shipment label. The shipment labels, whether for boxes or pallets, can be created and printed with Shipment Creation Tool. You must create a login as an Amazon seller in order to proceed here.
The label must be 3-1/3″ by 4″, and each label is unique and must not be photocopied for any use on a box outside of the one that it was printed for. The label should not be placed over the opening of the box or on any of the box seams.
Both the FBA and carrier label must be on a flat side of the box without any folds over the corners or any of the edges. Each label should also be completely visible so that it can be scanned at every stage of the process.
If your goods are palletted, every pallet that is sent requires four labels, one label on each visible face of the pallet. If packets are being placed into a master carton, then the unique label should be applied to the master carton and not to any of the individual packs.
Which incoterm is suitable for FBA?
In order to ship to an Amazon fulfillment center, you must accept the DDP (Delivered Duties Paid) terms of sale (incoterms). That means that you, the shipper, must arrange all freight, payment of duties and customs clearance.
Amazon will not act as an Importer of Record for any shipper, meaning that you are also responsible for staying in compliance with international law and US law when shipping. You are responsible for any costs and risks that come with shipping.
2. Finding a Freight Forwarder
What kind of forwarder do you suggest for Amazon FBA?
Any freight forwarder that you use should be fully licensed and allow you to save on costs when compared to direct shipping to a fulfillment center. This broker should be able to clear your packages with customs.
The first characteristic of any freight forwarder is expertise. The forwarder should have specific experience in shipping the kind of goods that are being shipped by that particular client. A huge part of this expertise is the financial stability of the forwarder.
The forwarder is actually the final word on many of the payments that must be made to be sure that your shipment is released, and that company should also have the proper insurance to ensure that the freight is paid for if it is lost by accident.
Secondly, a freight forwarder needs a great reputation with a wide network of contacts. If one shipping pathway is blocked, a great forwarder will be able to redirect it through another option. The forwarder that a client uses should be enrolled in trade associations to this end, and membership is a great vetting tool that clients can use as well.
Finally, a great forwarder needs great customer service. The process of shipping from Asia to the United States does not have to be difficult. The difference is personal care with a person who is specifically dedicated to an individual shipment. Many forwarders will give clients a multi channel option for communications, and forwarders will always have the ability to tell a client where a package is along the route at any time.
How can you find an ‘Amazon FBA ready’ freight forwarder?
Word of mouth is also a great way to find a forwarder. Other Amazon sellers will have a great deal of information since they have gone through the import cycle before. There are forums, online groups where you can learn a lot not only about freight forwarders but also about other aspects about selling on Amazon.
Google is another great resource for finding freight forwarders that service areas where the fulfillment centers are.
You should always check reviews or ratings of any forwarders that you are placing on your short list. Fleet is a platform where thousands of shippers share their reviews about freight forwarders, and you can find plenty of information to make an informed decision here.
What information do you need to send to the freight forwarder?
Three very important documents must be sent to the forwarder: the Certificate of Origin, the Commercial Invoice and the Packing List.
The Certificate of Origin (CoO) is the document that shows the production location of the goods. The country of origin is important to discern to help finalize the tariffs and duties that apply to a certain shipment. A country that is under embargo from another may not be able to ship. The CoO must be verified by a local chamber of commerce or other verified body of issuance.
The Commercial Invoice (CI) is a document that the exporter receives with a package that is ready to ship. The CI resembles a payment request or a bill that is sent to the exporter by the seller.
The Packing List is an optional document, but it is usually attached along with the BoL and the CI. Most freight forwarders require this although state organizations do not. The Packing List is an especially important document for insurance purposes, and it also organizes many of the details that are needed to create the CoO. Sellers should do business with an exporter that is prepared to create a packing list upon request.
What kind of customs and tax preparations are needed?
The Harmonized Tariff Schedule (HTS) is the schedule that will determine the amount of duties that an importer must pay for a particular type of commodities. The HTS code will also tell the importer what trade agreements are in play and any other regulations you may need to know about your product.
You can find out what kind of tariff you might be looking at by searching a government data base here.
Find your commodity’s category on the left, click on it, and you’ll be able to see the duty rates for the countries of origin in the first column on the right, if that country has “Normal Trade Relations (NTR)” with the US.
Be careful to look for special sub-columns, as many countries will have special duty rates if they have trade agreements with the US. If the country does not have Normal Trade Relations with the United States, you’ll find it in the second column – some industry people refer to these countries as “Column Two” countries. Reading the HTS columns can be confusing, so the US government has written a helpful guide here.
Your product’s HTS code, which is a ten digit code, will be included on forms for CBP (Customs and Border Patrol) such as the customs clearance invoice. The freight forwarder you choose will use it to fill out paperwork destined for both the import and export country.
They will also arrange all the travel for your product, so your shoes will end up safely in the US. It’s funny to think of just how far your walking shoes have come before you even put them on.
Besides the tax and duties as identified from the HTS code, Harbor Maintenance Fees (HMF) are also applicable if the shipment is an ocean freight, and this fee is 0.125% of the value of the product.
Merchandise Processing Fees (MPF) are applicable if the importer is shipping via air or ocean, a fee that is 0.35% of the value of the product. This does not include any freight fees, insurance or other duties. The MPF has a maximum value of $485 and can never be less than $25.
3. Shipping Process
How is the process working, from handover from supplier to forwarder and then to the USA?
Once the supplier finishes properly labeling the products to be shipped, they are then handed to the freight forwarder. Typically, you will have to pay your freight forwarder upfront (wire-transfer) after going through credit check and credit application processes with them.
The forwarder will be responsible for booking and managing the following service providers: trucking (to move the shipment between locations), warehousing (to store shipments while waiting to be loaded or moved), ocean or air carrier to transport the goods from China to the US.
The freight forwarder will also be responsible for arranging insurance and customs clearance for your goods if you request for these services.
Once the shipment is loaded to the ship, the ocean carrier will issue Bill of Lading (BoL) to the freight forwarder, which is required to receive the shipment once it reaches the US.
4. Customs Procedures and Delivery to Amazon FBA
What happens once the cargo arrives?
As the goods arrive at the port, the transportation carrier will send you or the hired freight forwarder an Arrival Notice. Once the notice is received, the freight forwarder will have five days to prepare and provide CBP with all the necessary documents.
The freight forwarder can help you to file an Entry / Immediate delivery form. Certain freight forwarders or customs brokers can do that online. Filing Entry is highly recommended because it gives CBP advanced notice and speeds up the clearance process.
How can I pay for taxes and duties?
The Importer of Record – which is you, not your freight forwarder – will be responsible for paying all the taxes and duties. Within ten days after the entry submission, an Entry Summary must be filed together with payment for duties and taxes.
You can make the payment via ACH; while your freight forwarder takes care of the paperwork.
If Amazon is listed as the Ultimate Consignee, then the freight forwarder must contact the company at [email protected] in order to get the Tax ID number or the Employer Identification Number (EIN) that will help to clear customs.
How is the cargo forwarded from the port to the Amazon warehouse?
Once the customs clearance is taken care of, the shipment is ready to be delivered to Amazon warehouse. You have two options to make the delivery: using Amazon-partnered carriers (which may cost a little bit more), or use your own carriers (which your freight forwarder will be able to arrange for you).
With your own carrier, you need to provide your freight forwarder or carrier a BoL for each shipment you have so that they can schedule a delivery appointment.
You will need to complete the Amazon FBA booking form and email it with a Carrier manual to your carrier. From there they can schedule a delivery appointment via Amazon’s Carrier Appointment Request Portal (registration and login are required).
Fleet (Read more) is an online marketplace that connects shippers with freight forwarders and other logistics service providers.
Fleet revolutionizes the international commercial shipping industry by providing an easy-to-use platform, reliable shipments, fair pricing, and an unparalleled customer experience for shippers.
Fleet tackles the industry-wide inability to adequately serve small to medium-sized companies by bringing a steady stream of business to freight forwarders and competitive rates and superior service to under served importers.
Most recently, we’ve launched Booking & Payment platform where shippers can book freight forwarders’ services and pay for their shipment online.
The platform allows both shippers and freight forwarders to skip lengthy, time-consuming credit application processes, instead they can pay and get paid faster and more reliably.