Go to TOP

Import from China Mini-Course - Part 4 - Section 1

"Logical Logistics"

So, you've found a good supplier and you're going to import some products. How are you going to get them from the Chinese supplier's warehouse to your door? If you are importing from China, your goods will come to you either by air or sea. Air shipments could be express post, courier delivery, or air-freight-containers. By sea it could be "snail" post, or container shipping.

Air shipping is fast but expensive, whereas sea shipping is always the cheaper, slower option.

You will know for your business how important -- or unimportant - time is.

You may think your goods aren't time critical so they can go by sea, but what about price fluctuations and local fixed costs during the month-long voyage? Or you may be opting for fast air delivery when actually your profit margin could be better with a slightly longer delivery time by sea.

Overall you should look at different options for each different importing project... and always view the shipping quotes you receive as very open to negotiation!

One of the reasons shipping costs are always open to a bit of bargaining is because there are so many variables, premiums, and concessions that can be factored in. I can't give you a big tutorial about logistics here... in fact, some people I know studied logistics at university at Masters level for three years and they still can't explain things clearly to me!

But I will give you some pointers so at least you can think about the basics. These are the delivery stages that you need to be aware of because each will involve some costs which will affect your goods' prices:

  • Warehouse storage in China.

  • Packing in China.

  • Loading and inland freight in China.

  • Terminal charges in the port or airport.

  • Loading and freight by air or sea.

  • Unloading charges and documentation fees (not including anything to do with tax!!)

  • Possible additional storage en route to you.

  • Inland freight & delivery to goods' destination.

When you look at the delivery process you'll see it's not just one simple step. It involves a lot of different people working together as your goods change hands and get closer to their destination. Because of the complexity of delivery your costs will increase the more stages are your responsibility. So making sure your price quotes are right, e.g. in your Proforma Invoice from a supplier, is a crucial business judgment.

 

Shipping and Incoterms

When you get a price quote from a supplier, you'll need to find out just how much of the journey they are paying for, and at what stage the shipping becomes your responsibility.

  • EXW
    Ex-works.
    This means the price quote is just for the goods, at the point of origin such as the factory. No shipping costs are factored in at all.

  • FOB [+ name of local port]
    Free on board.
    This means the price is for the goods delivered onto the container ship.

  • CIF [+ name of destination country port]
    Cost, Insurance, and Freight.
    Here the seller of the goods pays for them to be shipped to your country. Your price is for the goods plus the international carriage. (Typically CIF is for non-container shipments, and CIP Carriage and Insurance Paid to... is the equivalent for containers.)

  • DDU [+location]
    Delivered duty unpaid.
    The goods price covers their international delivery to a certain place, but does not include any unloading costs, clearance costs, or import taxes. (More about that later.)

It is not necessarily the best option to try to get your supplier to take responsibility for the shipping all the way down the line. They will simply pass on these costs to you in the invoice total, and you could be getting a better deal by arranging all the steps yourself with a forwarder or shipping agent.

 

Shipping from China -- important considerations

While I've been reading about logistics and reviewing some of the many questions readers of this mini-course have submitted, I've recorded a few assorted "things to consider" that I feel may be important for new importers from China:

  1. I can never get over how many people contact me at Chinavasion and ask about "Next Day Delivery".

    Start with realistic expectations.

    Maybe some great shipping options are available, but remember in your dealings with Chinese business people that you shouldn't expect to get the VIP No.1 best option offered to you at the very beginning of your relationship.
     

  2. "EMS" means Express Mail Service, and it is a fast, trackable postal service for packets offered by many countries' Post Offices. China has EMS as well. Unfortunately the system here in China doesn't allow people to send many types of items, e.g. certain categories of electronics. So if you can use it for importing samples and small quantity orders, you are lucky. But if the supplier says it's not possible, that is probably true.

  3. For different types of consignments and destinations, the major couriers often advertise quite different rates. And it is usually possible to find a way to pay less than the advertised rate.

  4. In the same breath you are talking about shipping you should also be discussing insurance. A lot could be written about this, but all I can say here is -- make sure you know who is responsible -- and who /what is covered -- if your goods get damaged or destroyed or stolen.

  5. Packaging for international shipping is an important consideration. The supplier may want to cut corners and save on costs, particularly if you are not on hand to inspect the packing, and the sellers responsibilities end, say, FOB.

  6. If you are in the early stages of dealing with suppliers in China, you may be "shopping around" for good quotes, including shipping. Try to help the suppliers by asking for specific quantities and delivery options. If you are not specific, and just ask for general shipping tables or a large number of different option quotes, you will be perceived as time wasting and may not get an answer.

RESOURCES:

  1. Fedex international freight calculator: http://www.fedex.com/ratefinder /home?cc=US&language=en&locId =freight

  2. UPS international freight calculator: http://wwwapps.ups.com/servlet /QCCServlet

  3. A forwarding company's online freight calculator:

    http://www.freight-calculator .com/wholeicr.asp

 

If you are using a freight company to collect your goods from a factory or warehouse in China and deliver to you, you're going to need the exact dimensions and weights of the cartons containing the products if you want the freight company to quote a price for you. And I do mean "exact" because a slight variance of a couple of mm here and there could increase the cubic weight calculation significantly. Don't be too surprised if the measurements submitted to you by the supplier turn out to be wrong when the freight company collect the boxes, because they might not have measured carefully, might not know how to measure properly, or might have given you a completely guessed carton dimension before the goods were finished and packed. It's just another thing you have to double and triple check especially when dealing with a factory / freight company combination. In such a situation it obviously pays to have a trusted representative on the ground in China, if possible.

Read on for an introduction to TAXES

continue

Shop By Category 