It is the most difficult, however the most cost-effective way of sending a large shipment of goods beyond 2 or 3 pallet. Practice matters a great deal and a lot of money can be misused here.
Most of the people think that this facility is very consistent and all cargo forwarders are same. Actually it is not the case. Few of them are 50 percent more costly than others. It is already wrote on managing carriage and customs concerns.
Sea cargo can be divided in three phases for the sake of our study.
1. From factory to seaport – EXW Ex Work to FOB – Free on Board
In most of the cases it is suggested to let the factory arrange this for a few hundred dollars additional. It will save the importer a lot of bother and amount. Enquire your dealers for a price based on the FOB (Free on Board) incoterm rather than EXW (Ex-Work) for this.
This phase includes truck charges to the port, customs authorization and ship filling, along with some extra paperwork and subscriptions. The amount does not increase much with higher capacities, that is why many importers try to transport full containers.
2. From port to port (FOB -Free on Board to CIF – Cost, Insurance and Freight)
This is the actual shipping price. It is based on capacity generally. The price to the United States can differ from 30 to 100 USD per cubic meter, liable on the time of the year and the supplier. This module of the price can usually be assigned.
Insurance is also included in this stage, normally it is 0.3% of the commercial value that was acknowledged.
3. From port to final destination (CIF Cost, Insurance and Freight to DDU –Delivered Duty Unpaid or DAP – Delivered at Place)
This phase includes taking the products from the ship to the door, with paperwork, customs authorization, and last – mile trucking. Getting the shipment to its final destination will include having to enlist the services of a trucking company like CSA Transport to complete the final leg of the delivery.
Various freight forwarders will quote massively different values, some will be up to four times more costly than others! The major reason for those differences is that most suppliers subcontract this phase to a local provider that frequently they even don’t know.
Would anyone like to use the same supplier for the complete shipment i.e. door to door? It is more suitable. But will never bother free if an experienced team is working on this for us. In difference, discover a broker and a shipper locally will usually save our money but might make coordination more difficult.
One more way to cut prices is to discover an international freight forwarder that is particularly devoted to a definite zone e.g. US west coast. Though, they might be difficult to search, depending on our zone.
At the end, this phase holds the highest number of surprises in store expect difficulties with the bill of lading, the bonded number, and customs authorization.
4. Should we worry about anything else?
Yes! Chinese logistics suppliers are among the most creative when it comes to outcome a reason to raise their values. Here below the list of common reasons for bumping up the rate:
- The shipping company whether the boat/airplane owner just increased their rate after we gave you a quotation and we just shipped the goods to the harbour.
- We have to pay duty tax in advance so that they put on the worst case tax before they know how much tax will be paid.
- The wrapping capacity or mass is higher than initial estimate and their data are up to 20% higher than what they measured.
- There are special facilities for batteries, lighters, scissors and other hazardous goods.
- There is also a fee for particular shipping company and it was declared in the fine print on the back of the quote.
Would we expect transparency from logistics suppliers? Inappropriately, this is not genuine their margin depends on unawareness from their customers. This is the same as asking a producer to give us a detailed breakdown of their prices.
Skilled shippers tend to confirm everything in advance with freight forwarders, in order to elude last-minute astonishments. Then, if we are a large consumer, suppliers generally would not behave ethically and we might have to switch to a new supplier after a few months or years.
More freight forwarders generally request more paperwork and have more difficult processes than their smaller contestants who often have poor or no English competences. Note, poor communication might lead to further problems.
As always in China, dealing with dealers including service supplier is much easier if we work in a large and famous corporation.
Note: All logistics companies based in China are not unethical, we are just writing that the huge majority of them resort to tricks to catch a client and then extract more money above the length of the relationship. It is something importers should know.