Global Freight Basics (or How to Sound Smart When Talking Freight)

Global freight.

*Goosebumps*

For most importers, these two words evoke a sense of dread. Like a trigonometry question popping up on a quick math quiz, it’s strange, complicated, and just plain scary.

Well, we can’t help you with cosines – and let’s be honest, they’ll really never help you in your life. But we can make freight a little bit less imposing.

A word of warning first: freight, like great tango, looks easy when you’re watching a professional. But try it yourself and you’ll end up tangled on the floor. Getting to be a true freight expert takes many years of experience. So don’t see this guide as your key to total freight independence; use it as more of a guide to learn which questions to ask.

Ready? Let’s go.

Getting started

You’ve sourced your product, gotten a sample (likely express shipped to your home), and you’ve vetted the vendor. Heck, you’re so thorough, you’ve even made sure it complies with safety and regulatory standards. 

Haven’t ensured compliance? Don’t panic. All that means is making sure you’re not in violation of any copyright issues, have confirmed you’re down with relevant FCC, UL, and ETL regulations for electronics, CPSC standards for chemicals, and any mix of other alphabet soup standards. Google them.

Still sound daunting? Check out the US government’s site on just this topic. You can also typically purchase ASTM standards, a set of non-governmental standards that help regulate manufacturing for products across multiple industries. These are typically used in large corporate contracts but can also be a valuable shortcut for ensuring product complicate with larger retailers.

Done? Let’s talk freight.

Nearly every company, including the 500K+ US businesses that import or export, uses a freight forwarder. A forwarder is basically a travel agent for international freight, helping you navigate the murky waters (or air) of trucking, global freight, customs, duties, and regulations, finding the right combination of carriers (the actual trucking, ocean, and airline companies that move the goods), as well as the customs brokers.

Get one.

You can find a great one on Freightos.com, the freight marketplace, or just ask around. Either way, don’t go at it alone.

Your supplier is likely to have forwarder recommendations as well. For the most part, it’s best not to rely on them, as your supplier likely gets kickbacks or may pad the cost to upgrade their posh Mazda Miata. However, if you’re the trusting sort (or the sort that just wants to avoid headaches), it’s not a bad idea. Just make sure that the cost includes full delivery all the way to your import destination.

Choosing A Forwarder

Not all forwarders are alike. 

You’re going to want to make sure a few things come together when you choose your forwarder:

  • Are they legit? Take a look at a site like freightdeadbeats.com to see if there are forwarders you should avoid. Look for reviews, ask a friend, check out TrustPilot, and ask on Reddit. Word of mouth is the best recommendation you can get.
  • Do they specialize? Are you shipping to an Amazon FBA warehouse? Shipping items with special requirements, like lithium batteries? Moving liquids? Make sure you use a forwarder that is prepared to handle your goods. 
  • Do they use technology? Even though you may be used to FedEx or UPS-like on-demand tracking, freight is not always as advanced. Which means for some forwarders, you’ll actually need to call to get your shipment status. If you don’t want to make those phone calls, choose a provider with good tracking on their website.
  • Are they priced right? Shop around. When you do, make sure you’re comparing apples to apples by making sure every surcharge is critical. Be prepared to spend some time on this research – the average shipment has 20 surcharges or so.

Oh, The Places Your Freight Will Go

Your freight needs to go places. But first, you need to know how it will get there.

Fundamentally, there are only a few ways to ship goods internationally:

  • Trucking across the border. Typically, regional trade agreements, like NAFTA, make this less complicated than air/ocean freight.
  • Express shipping. This is easily the most expensive mode, but it’s also the most automated and reliable. Think: using FedEx or UPS. It works for small quantities or small items but it’s not how you play the freight game.
  • Air: Air cargo is a huge industry (10% of all airline revenue) but it’s super expensive. Typically, smaller and more expensive items are shipped by air, like computers, roses for Valentine’s Day, and smartphones. Airplanes also tend to have far stricter guidelines around hazardous shipments, a category that includes items like paint, lithium batteries, and more. Regardless of the mode, you’ll need to declare it with a HazMat declaration…but ocean freight is more forgiving. 
  • Ocean Freight: There’s a reason 90% of all goods are moved by airline. Like the famed tortoise, it’s slow but it gets the job done well. And because of economies of scale (21,000 containers on a ship!), it’s dirt cheap. A 40′ container from China to the US can cost just about $1,000 (for the ocean cargo alone). Since this takes thirty days or so, shipping goods around the world can be cheaper than storing them in a warehouse.

If speed is your game, it will ultimately determine your mode. Express shipments go door-to-door from China to the US in 3-5 days, air cargo can take 7-14, and ocean freight can easily take a month and a half. It’s all a matter of how big and heavy the shipment is (or CBMs, as the pros call it), and how badly you need it.

Regardless of the mode, pick up cargo insurance. Default rates from providers when you don’t have insurance are around $2.00/kg (2.2 lbs) for air freight and $500 per customary freight. In other words, if you don’t get legit insurance, which is not so expensive, you could pay pretty heavily.

Ready to ship?

Every forwarder in the world will ask for some key documents, namely your commercial invoice, certificate of origin, and a power of attorney. 

Once you book, during the course of the shipment you’ll be given the booking confirmation, which shows which container or airplane is moving the goods, the Bill of Lading or AWB, which is legal proof that the airline or carrier has your goods, and the packing list, which is your receipt of goods at delivery.

A Word on Customs and Incoterms

Two of the more complex shipping issues people deal with are customs and incoterms. Neither is rocket science, but they can be a little tricky.

Incoterms

An Incoterm basically refers to the terms of service. In other words, it states who is responsible for the cargo and until which point in transit. Here are the three most important ones to know:

  • EXW: You, the shipper, take full responsibility for arranging for a forwarder to pick up goods from the factory and bring them on home.
  • FCA (Free To Carrier): The factory will bring the goods to the carrier for consolidation at the port.
  • FOB (Free On Board): You take responsibility for goods once they are loaded onto the ship. Since LCL (less than container loads) and air cargo typically need to be consolidated, FCA is used more often for these modes.
Customs

You’re typically going to be the Importer of Record for the goods you ship. Not only does this mean you’re going to be writing the customs duties check, but it also means that you’re on the hook to take reasonable care when reporting customs to the US Customs (Customs & Border Protection, or CBP).

Customs fees are determined based on product type, typically sorted by an HS Code (Harmonized Schedule Code, for those paying attention at home), and the country you’re importing to. So, knowing the HS Code for electronics can help you understand which countries have a free trade agreement…and which (China, ahem) have serious tariffs.

Your importer number will be your Social Security Number (unless you are a corporation or non-US resident). But for anything beyond that, we strongly recommend getting a customs broker. This is seriously complicated stuff.

Still with us? Cool.

The bottom line is that international freight shipping is not particularly difficult, but since the regulatory environment is a little bit complex, and it’s easy to get fleeced, it’s best to use a freight forwarder. 

That being said, if you learn the basics, you can talk on equal footing with forwarders and get a better deal. 

And if you have more questions, you can always download Freightos’ free Importing From China Expert Guide to turn into a guru yourself.

Smooth shipping!

Eytan Buchman is obsessed with content marketing, data storytelling (it’s a thing!), and of course, freight. He also bakes really good cookies. He’s the Chief Marketing Officer at the Freightos Group, which operates WebCargo, as well as Freightos.com, the world’s largest online freight marketplace.

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