Painless Outsourcing to China: Why and how to use a freight forwarder to ease the process and lower your shipping costs
February 9, 2016
You have a great product and have found a factory in China who can manufacture for you. And now what? Can the factory take care of the shipping? Here is usually what happen: (we are talking about high volumes, not small packages that factories could send by express mail.)
The factory knows nothing about international shipping and thus has to work with a trading (import & export) company in China. The trading company buys the products and sells to you. They will take care of shipping. Sounds not bad, right? Let’s look at the costs for you:
Trading companies in China usually use FOB term. Under this term, the seller will only be responsible for the costs incurred before the products are loaded on vessel/airplane in port of China. When the trading company charges you, they will add the air/ocean freight fees and all the costs that are generated in your country.
They will add their handling fee and all types of documentation fees to the price as well.
Don’t forget that they do business to make money, therefore they will certainly add markup to the price at which the factory sells to them.
The factory sells directly to you and uses a local freight forwarder to handle the shipment. The most obvious benefit of this is that there is no trading company between you and the factory to steal your margin. Let’s look at the costs for you:
Unlike the trading companies, the factory usually expects you to be responsible for ALL THE COSTS, which means you need to pay all the logistics fees in China and in your country.
The freight forwarder in China makes sure that the freight goes to the port of your country. Now you need to think about customs clearance and how the products could be shipped from the port to your company/home when they arrived in your country. Sometimes the freight forwarder in China already partners with freight forwarders in your country and can get things done easily. But sometimes you need to find a freight forwarder in your country by yourself. The communication between the freight forwarders (in China and in your country) is vital. Miscommunication and problems in the transfer of documents will lead to delay of freight release and customs release, and can generate significant extra charges.
The factory wants to sell directly to you but has never worked with any freight forwarder before. This happens a lot. Factories are tired of letting trading companies take the biggest part of profits from them and are eager to find way to work with international customers directly. In this case, you need to find a freight forwarder in your country. The freight forwarder should have an oversea agent (local freight forwarder) in China. You will be provided with a ONE-STOP SERVICE, which means that as soon as you have provided the factory’s contact information, your freight forwarder will contact the factory, arrange pickup, take care of the shipment/document filing/customs clearance, and delivery. What you should do? NOTHING. Let’s look at the costs for you:
The freight forwarder in your country will charge you freight fee, handling fee, trucking fees, and other fees if applicable. It is very important that you are working with a freight forwarder who has a powerful network (with oversea agents, steamship lines, customs brokers, trucking companies, warehouses, etc.) who can find the fastest and most cost effective delivery for you. As mentioned above, delay in freight release and customs release could cost you a fortune. It’s essential to find a freight forwarder who can treat you as a priority and follow up closely with you. Air/ocean freight fees and trucking fees vary and you can make a significant difference by choosing a great freight forwarder who has bargaining power and who is motivated to find the lowest price for you.
Any other costs? No other costs besides (1) and the purchasing costs.
Need ONE-STOP SERVICE, visit http://www.cslllogistics.com/ , Csll Logistics Inc. maintains a powerful network of steamship lines, trucking companies, warehouses and has agents around the world. The specialists get quotes from different steamship lines, trucking companies and warehouses, calculate and find the fastest and most cost effective delivery for the customers. ALL YOU NEED TO DO is to send Csll Logistics Inc. the contact information of your manufacturer, and then you can just rest assured knowing your cargo will get to its destination without any problems.