Today, let’s discuss trade export freights, customs clearance, and export documents. This process is quite well known among any exporter or trader of commodities, locally or internationally. Typically, freight can be transported by road, air, or sea, depending on the type of commodity.
You can ship a lot of containers around the world, but if you don’t understand Trade, Export freight, Customs, and Documentation, you might be losing a lot of money and sometimes even your competitive edge. Thus, calculating and knowing the probability of changes.
First, let’s talk about Ocean Freight. Ocean freight accounts for more than 90% of the transit of goods around the world. There are multiple modes of how one can transport goods in a vessel, but the most commonly used is a container, usually called containerization; these can be of 20 or 40 feet, dry or reefer. The usual time for ocean freight is anywhere from 3–7 days. You can certainly do air freight, but that’s pretty expensive unless you have a fixed commodity with precise PROFIT margins. You might want to check there! Anyway, back to understanding ocean freight: There are actually many lines that operate, and one of the largest shipping lines is Maersk, which has been in business for 118 years and has quite a few scheduled routes defined all over the globe. But again, mind you, it’s not the Maersk line that makes a lot of difference; it’s how you organise your shipments. We will come to that…
What is the usual size of a container?
20’GP = 20’DV = 20FT = 20′ = 20 feet
40’GP = 40’DV = 40FT = 40′ = 40 feet
40′ HC = 40′ HQ = 40 feet high cube
Now, going further, a little insight on types of containers: LCL means Less than Container Load, and FCL means Full Container Load. Now, moving towards a little more connected topic, the terms usually used are Incoterms, which refer to International Commercial Terms.
Then the most commonly used are: FOB (Free on Board), which means both buyers and sellers discuss the responsibility until boarding, which will include Customs Clearance; EXW (Ex Works), which means the entire contract responsibility is under the buyer until destination; DDP (Delivery Duty Paid), which means the seller will be responsible for shipping costs, good insurance, and transportation; and CIF (Cost, Insurance, and Freight), which means it’s the seller’s responsibility for good transport, customs clearance, and ocean freight until port
Steps that are included during ocean freights:
- Export Haulage (Transit from Seller’s Warehouse to Freight Forwarder’s Warehouse)
- Export Customs Clearance (Declaration of Cargo and Documentation)
- The charges that are usually to be seen on the documentation invoice
3.a. LCL or FCL fees
3.b. Port of Origin Transportation and Terminal Handling
3.c. Cargo Custom Declaration
3.d. Port-of-Load Fees
3.e. Ocean freight
3.f. Marine Insurance
3.g. Port of Destination Fees
3.h. Import Custom Declaration
3.i. Custom Duty
3.j. Port of Destination to Final Delivery
3.k. Port of Destination to Terminal Handling
3.l. Any Other Agent Fee to Be Discussed
The above fees may look like they must be paid, but if you don’t know the terms and explanations for them, you will simply be losing money. Customs agents and shipping lines are quite well versed on the variable play, and you will end up paying more than actual. It’s best to get multiple ocean freight quotes before you can actually finalise one. Most importantly, you need to realise you have trustworthy customs agents. We will cover these points in our next post, “How Customs Handling Agents Can Take You for a Toss.”
Now, moving on to other modes of freight transport that include air and road transport, these can be comparitively expensive as the travel consumption is at least 3x that of ocean freight. Air cargo is often used for commodities with a short shelf life, such as meat, short-shelf-life fruits, and many others. Road transports are usually the base for local transportation; however, inter-country road transportation can be quite expensive.
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