You've sourced products from a trusted supplier. What's next? Now it's time to decide how you will transport the products to your destination.
Logistics and transportation involve more than just moving goods from one place to another. For those new to international trade, there is also a daunting array of regulations, rules and paperwork to think about. Dealing with customs, government authorities, banks and insurers, and learning how business is conducted in other countries, all play a big role.
There are hundreds of transport companies that can move products to their destinations, ranging from small freight forwarders to large, globally known brands such as FedEx, UPS, DHL, TNT and EMS. Your choice of shipping method and carrier will vary depending on how quickly you need the product to arrive, as well as the size and weight of your shipments.
As you assess different transportation services, the speed of delivery is probably the first and most obvious factor you consider. However, for the new or occasional importer, it's equally important to find a transportation provider that offers easy-to-use services and can assist you with all aspects of logistics. Don't make your decision solely based on price. Look for a company that can partner with you, has expertise in your target markets, and provides the support and services you need to enter the world of global shipping with confidence.
Global Transportation Options
Here's an overview of the basic global transportation options.
Express or Courier Companies
If you are shipping within the same continent, an express or courier company may be your best choice. Four global brands - DHL, UPS, FedEx and TNT - dominate the market. Each offers a range of services primarily focused on speed of delivery. These companies have extensive networks worldwide, providing you flexibility and choice as well as simplifying customs clearance. Because they are easy to use, fast and flexible, they are not usually the cheapest option, but if you are shipping weights under 100kgs, the price is usually competitive.
There are hundreds of air freight agents to choose from. Since many specialize in specific trade routes or have expertise and reputations in specific markets, it's important to do your research. Large air freight companies have offices in multiple countries, but most operate through local agency or partner agreements.
Air freight forwarders re-sell space purchased from airlines. This can lead to great deals, especially with heavy shipments, because you can consolidate them with other shipments. However, take care when considering the weight-based price, because there may be additional charges you need to take into account. These can include pickup and delivery charges, customs clearance charges and other handling charges.
Shipping products by sea is the slowest, but cheapest, method of transportation when shipping overseas. Sea freight agents operate similarly to air freight forwarders. In fact, many air freight forwarders offer a sea freight option, which, if it suits your needs, can give you considerable cost savings.
As with air freight, you can save money on sea freight by consolidating your shipments with others. And, as with air freight, you need to be careful when evaluating price. In addition to weight-based costs, there are typically additional charges for delivery to and from the port, as well as for storage and customs clearance, that you should factor in.
5 Factors to Consider When Selecting Your International Logistics Provider
In addition to the costs involved with your choice of shipping method, here are some other factors and potential costs to consider when choosing your logistics provider.
1. Terms of Trade
Incoterms 2010 (or International Commercial Terms) are a set of commercial terms designed to aid international trade by clearly defining the responsibilities of both buyers and sellers. Incoterms help eliminate any confusion between buyers and suppliers by clarifying which party is responsible for delivery, risk and costs associated with shipping. When comparing costs of logistics providers, make sure that the terms are agreed upon and then quoted on your invoice.
Here are some Incoterms you should know:
- Ex Works (EXW) indicates that the buyer will bear all of the cost and risk involved in the transfer of goods from the seller's site to a desired destination.
- Deliver Duty Paid (DDP) means that the seller is responsible for delivering goods to a named destination and covering duties, taxes and customs charges.
- Free on Board (FOB) applies to sea freight and means that the buyer is responsible for all costs and risks from the port of export.
- Cost, Insurance & Freight (CIF) applies to sea freight and means that the seller pays all costs, insurance and freight to a named destination.
- FOB and CIF are the most commonly used Incoterms among Alibaba buyers and sellers.
Exporters may provide insurance automatically, but Incoterms 2010 help clarify when risk transfers from the seller to the buyer. You may also want to consider purchasing Cargo Insurance to cover damage to, or loss of, goods in transit.
3. Customs Clearance
Rules and processes vary greatly across the world when it comes to duties, taxes and sales tax (VAT) being applied at the point of import. Your carrier will advise you on the appropriate paperwork needed for export and import. At the very least, this will include shipment value, product description, VAT number, and including the terms of trade on commercial invoices.
Depending upon the transportation method you have selected, you may need to find a customs broker to clear the goods on your behalf. However, most carriers will either recommend a broker or provide this service directly.
Researching import duties in advance has the advantage of giving you a "landed cost" (the cost of the transaction plus the duties and local taxes applicable to that import), which ensures you don't get any unpleasant surprises when the goods arrive. In fact, this step is essential if you plan to sell the products in advance of their import, or are researching the viability of importing certain products. Many nations have trade agreements that provide preferential import tariffs. These will be included in the landed cost calculation. Many carriers will handle payment of duties on your behalf, but they will charge a fee for doing so.
When an item is restricted, it means that customs controls the flow of these goods into and out of a country. Items may be restricted from leaving one country or from entering another. Restrictions may apply either to the type of goods being imported or to their potential use. Goods may be restricted due to the potential to cause harm (i.e., tobacco products, weapons or harmful chemicals) or because of national quotas, tariffs or embargoes. It's important to ensure your goods are not on the restricted list. If they are, then you may need an import license. Your carrier will be able to advise you on restrictions and prohibitions, but the ultimate responsibility lies with you.
5. Warehousing and Storage
The cost of warehousing and storing your goods before departure and upon arrival will depend on both the size and volume of your shipment and the method of transportation you have selected. Most carriers will provide short-term storage at reasonable costs, in both the country of origin and the destination country. Many provide bonded warehouses, which ensures that duty and taxes will not be payable until the item leaves the bonded facility. Bonded facilities are commonly used for goods that are subject to excise taxes.
Manage International Transportation With Help From Alibaba
With global leaders like FedEx, UPS, DHL, TNT, EMS and more as partners, Alibaba offers last-mile delivery and a selection of global shipping lines. Whether your goods were ordered on Alibaba.com or offline direct from the factory, Alibaba Logistics is open to everyone.
Alibaba Logistics offers you a Warehouse to Door Service and includes sea freight and Import/Export custom clearance. To learn more about how you can use Alibaba Logistics, visit logistics.alibaba.com.