This is a special guest contributor post by John Edmonds, a marketing director at Freightos.
When online retailers are ready to take their sales to the next level, sourcing and importing internationally is an incredible place to start.
A careful entrepreneur is a smart entrepreneur. We’ve gone through the most common freight mistakes that we’ve seen while working with over 1,000 companies that are now sourcing overseas. They pretty much boil down to eight points that new importers need to know. Listen up – these are import-ant (sorry, couldn’t resist).
1. Some Products Don’t Work As Imports
Most people are aware of import duties and prohibited imports. But most importers when starting out, don’t realize that these restrictions can sometimes apply to everyday items like sunglasses, leather linings, and even some packaging materials.
Common products, like battery toys, are also on air/ocean carrier lists of hazardous products. That means the product is either prohibited or there is a limit per voyage. Another type of restriction to watch out for are copyright and trademark laws. They don’t just apply to cheap designer knockoffs. You may be in breach if your product, even the wording on the package, is similar to another product.
Here’s how to find out if a customs, carrier or IP restrictions affect apply:
- Google your product for each type of restriction. If there’s any doubt with potential IP infringement, get legal advice before doing anything else.
- Check on special import restrictions and duty estimates and carrier hazardous material classification tools.
2. Don’t Zone Out On Incoterms, They Can Sour Your Deal
Most people have heard about “FOB” and “Ex-Works” without really knowing what they are (or what incoterms are in general). Agreeing to terms without understanding them is a recipe for importing disaster. The short of it is that incoterms are internationally standardized freight terms which must appear on the sales agreement, that define when the legal responsibility and liability for the shipment transfers from the buyer to the seller. For Ex-Works (EXW) that happens on the factory floor (therefore freight is completely up to the buyer). For Free On Board (FOB) that happens when the shipment is loaded on the ship or plane at origin.
You have to factor in incoterms in when negotiating with your supplier, or you may not end up with the good deal you were hoping for. For instance, you may be better off agreeing to a higher buy price on FOB (where you’re paying less freight costs), than agreeing to a lower price on Ex-Works.
Unless you feel compelled to understand incoterms in depth, for now only agree to either Ex-Works (EXW) or Free On Board (FOB).
3. There Is Such A Thing As “Too Much Packaging”
When it comes to ocean freight, even excessive packaging doesn’t have such a large impact: but when you’re using air freight, packaging adds serious cost. Start off by checking whether your supplier is using the smallest, standard box size, thereby optimizing how they fit on pallets.
Pallets aren’t light though, so don’t use on planes. They’re great for ocean freight, but you may be adding unnecessary risk by having your supplier palletize to Amazon’s requirements, if that’s where the shipment is going. Until you develop confidence in your new supplier, get any customised palletizing and prepping done by your forwarder or prepping company as the last stop before delivery. On this line, arrange for an independent quality inspection at the factory, at least for the first shipment (ask Sourcify about that – they know what they’re doing).
When it comes to fragile products, double-box them with bubble wrap between the boxes. Styrofoam peanuts work well too, but watch out – many warehouses, Amazon included, won’t accept boxes packed with them.
4. Cutting Out The Middleman Is A Bad Idea
International shipping isn’t like domestic trucking, but with more water. As we say at Freightos, ship happens. Don’t even think about saving costs by importing without a forwarder. Yes, they’re middlemen – most don’t own ships, planes, or even trucks – but they have been through it all a million times, and the good ones will take over nearly all of the organizing and most of the stress. The US tariff code alone is over 3000 pages long, which means that there are a lot of arcane regulations that will make you happy when you have an expert on your side.
How should you find your forwarder? Ask your friends or colleagues. Or, not to toot our horn, head to Freightos to instantly compare dozens of forwarders, then book.
Also, don’t rule out smaller forwarders. They aren’t as likely to be distracted by large customers, and they work with trusted agents in the big importing countries. If you’re shipping to Amazon, you’re not locked into using one of their partner truck carriers, but the forwarder must be experienced with prepping and making deliveries to Amazon.
5. Preparing Before Quoting Is Worth The Effort
Get ahead of the curve by preparing the details below before speaking to a forwarder. And if the forwarder doesn’t ask for these details upfront, cross them off the list.
- Contact details: Your official details, as well as pickup and destination.
- Total weight and volume. Calculate these from the measurements listed on the packing list (ask your supplier for this document).
- Product Description. Refer to the commercial invoice (again, ask your supplier).
- Mode. Determine whether you want an air freight or ocean freight quote. Air freight is quicker, but it’s also cheaper for smaller shipments. This freight rate calculator will give accurate freight estimates for each mode.
- Prepping contact details. Whether that’s your forwarder, the fulfillment center, or a third party.
- Insurance. You will be asked if you want insurance. Your answer is, “Absolutely, and it must be comprehensive cargo insurance”.
- Importer ID. All Customs agencies will require some form of identification. In the US, this is your company Tax ID.
6. Forwarders Earn Their Keep
This is really a follow on from “Cutting Out The Middleman Is A Bad Idea”. On top of taking over most of the stress, your forwarder will be:
- Booking transportation
- Arranging load consolidation
- Complying with customs processes
- Getting through a stack of paperwork
- Troubleshooting the shipment
- And keeping you advised.
Let’s expand on a couple of those points.
Load consolidation is where your shipment is “consolidated” with other shipments in a specialized warehouse near the origin port, and loaded into a container (for sea freight) or skids (for air freight). The same thing happens in reverse near the destination port. Smaller shipments often get mixed up at this stage, so make sure that your cartons and boxes are clearly marked – carton count, gross weight, net weight, country of origin and tracking labels (like FBA shipment labels).
Customs procedures are generally light for exporters, but importing has rigorous and unforgiving filing and clearance processes. If you’re importing into the US, you’ll need a Customs bond (you’re paying their payment insurance policy). Your forwarder will advise whether to get a Continuous bond or a Single Entry Bond (plus ISF bond for less than container load ocean freight). Another point about customs, forwarders generally don’t on-charge customs payment. Your forwarder will probably recommend that you set up an account with Customs if you’re planning on importing regularly.
7. If You Do One Thing Well, Make Sure It’s The Paperwork
Most shipments are routinely cleared, but even a minor data discrepancy might trigger a customs inspection, charges, and potentially penalties. You will need to pay these directly before the shipment can be collected.
That’s why checking documentation is your number one priority. It’s worthwhile, then, getting a general understanding of key freight documents like the bill of lading and the shipper’s letter of instruction, and how they may affect you.
8. Last Mile Delivery Makes For Complicated Trucking
It involves a lot more juggling of costs and timings, such as port pickups, delivery to warehouses for checking and prepping, and the final drop-off. Some fulfilment centers, like Amazon, have rigorous appointment and delivery requirements.
All this means buffers should be built in to allow for contingencies, in case things go wrong. For instance, the shipment may get held up in transit, or there is bad congestion at port. A forwarder will probably be a lot more experienced than a local trucking company at managing situations like this.
The Eight Things To Know For You (And Your Shipment) To Be Good To Go.
- Some products don’t work as imports.
- Don’t zone out on incoterms, they can sour your deal.
- There is such a thing as “too much packaging”.
- Cutting out the middleman is a bad idea.
- Preparing before quoting is worth the effort.
- Forwarders earn their keep.
- If you do one thing well, make sure it’s the paperwork.
- Last mile delivery makes for complicated trucking.
Importers who use Sourcify know that a lot of their sourcing issues are taken care of. Same goes with international freight. Next time you have a shipment to handle, it’s time to check out the Freightos Marketplace, a one-stop shop for instantly comparing quotes from 30+ forwarders.