Incoterms
Shipping Incoterms are international standard codes that decide and states when and where cargo shall be transferred between the supplier and the importer.
For example, FOB( Free on Board) includes transportation from the factory, to the port of destination. FOB also includes all export procedures, which are required to ensure that the cargo can be legally exported. However, from the port of destination, the importer must arrange to forward to the final destination. On the other hand, the importer can book DAP( Delivered at Place), which includes shipping from the factory in China, to a specified address overseas, such as importer’ s warehouse.
FCL and LCL Shipping
Sea freight is not excluding importers from importing small volumes from China. If importer buys by the container load, then FCL( Full Container Load) shipping is the right choice. FCL is also the cost-effective freight method available if counted by cost per volumetric unit and weight unit.
However, many smaller buyers don’ t buy full container loads. As already said, Air freight is then a viable solution for importing small volumes. However, some shipments are stuck in the twilight zone between air freight and FCL cost viability.
Then the solution spells LCL, or Less( than) Container Load which is basically shared container freight. Cargo from multiple buyers gets stored in the same container.
Freight Insurance
Insurance is included, by default, when importer select the incoterm CIF, standing for Cost Freight( and) Insurance.
If importer orders according to DAT( Delivered at Terminal) or DAP( Delivered at Place) then, the importer must inform his shipping company that the cargo must be insured. As shipping insurance is cheap, and rarely costs more than US $ 50 to US $ 100. Shipping insurance generally covers the value of the cargo, in case of transportation damage. It will not cover lost sales or product development costs.
Export Packaging
Cargo must be sufficiently protected, from the dusty factory floor to a damp warehouse, and finally stacked in a container for up to a month.
A lot can happen in this time, an importer needs to be sure that his export packaging is up for the task. To ensure that cargo is protected during transportation, the importer can use the following checklist:
Inner cartons layers – 5 Outer cartons layers – 5 Plastic wrapping( on Outer carton) Pallets( ISPM 15 EU Standard) Freight remark( Printed on outer carton) Be sure to provide the supplier with explicit and clear export packaging specifications and do not leave anything to their interpretation.
But there is more to export packaging. There are various export packaging regulations to take into consideration, such as ISPM 15 and Lithium battery restrictions. Before shipping from China, the importer needs to confirm which shipping regulations apply in this country, and to the product.
Should Importer get a Freight Forwarder or Let the Supplier Manage the Freight Process?
The importer has basically two options, either the supplier administers the shipping process, or importer itself do it via a freight forwarder.
Letting the supplier administer( i. e., book the shipment) the shipping process gives less transparency. However, then importer is far better off working directly with a reputable freight forwarder.
Freight forwarders are normally part of international trade, but many have their own offices in major Chinese port cities, such as Shanghai and Hong Kong.
A freight forwarder generally offers a wide range of shipping services, including FCL, LCL, and air freight. They also provide a designated contact person that keeps informed importer and answers his questions.
Do Importers Need to Pay any Taxes in China?
No, importer doesn’ t need to pay any“ export tax” when importing from China. However, they need to pay for transportation to the port of loading in China and the cost for export clearance papers. Both of these costs are included if importer order shipping according to the following terms: FOB, CIF, DAT, and DAP.
What Happens After the Cargo Arrives at the Destination port? And How it can be Accessed?
The importer will be notified a few days before the arrival. After the container vessel arrives, the containers are first unloaded. In some cases, some container may be inspected by the local customs authorities, but most are not.
Regardless of whether importer or the supplier managed the freight, importer’ s forwarder or customs broker starts customs clearance procedures. This process takes 1 to 3 days, depending on the cargo and the applied process. The importer has two options: either pick it up by them or by asking their shipping agent to load it on a truck and deliver it to a specific location. When the cargo arrives at the Port of Destination importer will be notified by the port agent. In most cases, the importer can book the transportation directly through the port agent.
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