Manufacturing products – that’s just the beginning. You also need to fulfill orders, and that’s a whole other challenge. And in between, you probably need to book freight.
But how do you do that?
Many business owners find freight shipping particularly scary because it’s so unfamiliar. But once you get past the headlines and complicated terms, booking freight is more straightforward than you would think.
Ultimately, booking freight for your eCommerce store or Kickstarter campaign comes down to four key decisions.
Here’s what you need to know.
1. Choose a freight broker or freight marketplace
There are two main ways to book freight: through a broker or a marketplace.
A freight brokerage firm will ask you a few questions and handle the rest, similar to how travel agents used to book vacations before online booking became common.
Similarly, freight marketplaces help you book shipments just like Expedia helps you book hotels. We recommend checking out Freightos.
No matter which marketplace you choose, the process is similar. You will need to provide details about your shipment, pickup and delivery locations, and customs information. Then, you’ll select a shipping option based on the quotes provided.
2. Determine the right shipping terms
When dealing with freight shipments, you’ll encounter incoterms. These are rules that define the responsibilities of the buyer and seller in freight shipping.
The four most common incoterms are EXW, FOB, DDU, and DDP. Here’s what they mean for you:
- EXW (Ex Works): The seller (your manufacturer) hands over responsibility for the goods once they’re manufactured. You need to arrange for someone to pick them up.
- FOB (Free On Board): The seller is responsible for getting goods onto a shipping vessel. You take over responsibility from there, including handling the import process and arranging local transportation once the goods leave the vessel.
- DDU (Delivery Duty Unpaid): The seller handles the entire freight process, except for customs, which you will pay.
- DDP (Delivery Duty Paid): The seller handles the entire process, so you have nothing to worry about.
If your manufacturer insists on EXW or FOB terms, it will affect when you need to book freight. Both brokers and marketplaces can handle any incoterms – just confirm with your manufacturer which ones apply to you.
3. Calculate customs costs
When importing goods from another country, you’ll likely need to pay customs fees, which fall into two main categories:
- Duties and tariffs.
- Safety exams.
For duties and tariffs, you’ll be charged a percentage based on the HS Code of the goods, the country of origin, and the destination country.
To estimate your costs, look up your HS Code using the GlobalPost HS Classification Tool. Then, use that code along with other relevant information to calculate your import duties and taxes.
Additionally, your goods might be randomly selected for customs inspection. This can involve X-rays, container openings, or direct inspections of the goods. If this happens, you’ll need to cover the exam costs, which vary based on the inspection method. (For example, I had a shipment of board games X-rayed in 2020, which cost around $600 USD.)
4. Choose transportation mode
Freight shipping can be done via four transportation modes: air, sea, rail, and road. Your shipment will likely use a combination of these, but the main leg will typically be by air or sea.
Sea shipping is much cheaper but significantly slower, often taking weeks or even months, especially from China to the US. Recent supply chain disruptions – such as those seen during the COVID-19 pandemic – have occasionally further extended these times.
Air shipping is much faster, with deliveries often made within a few days or weeks, but it is considerably more expensive.
If your items are perishable, air shipping is the only viable option. On the flip side, if environmental sustainability is your priority, sea shipping is likely the best choice.
Consult with your freight broker or compare multiple quotes on a freight marketplace to determine if the faster delivery is worth the extra cost.
Bearing all this in mind, freight booking is still very complex. Below, we’ve included some tips from a freight shipping expert to help you all the latest best practices.
5 Tips for Better International Freight Shipping
Please Note: The information in this section comes directly from Corinne Berzon at Freightos. Freightos is a freight marketplace, meaning it helps businesses book their own freight shipping.
What you read in this section was previously part of a guest post, which we’ve bundled into this post for your convenience.
Unpredictable freight rates, port congestion, and fluctuating demand have made freight rates less reliable.
This means that for any shipper, the flexibility to compare quotes and choose the right rate for each shipment can be a huge advantage. Here are 5 tips for getting better freight rates for your international shipments – even when the market is unpredictable:
1. Get multiple quotes
Getting rates from multiple freight forwarders lets you compare price, routing, and estimated transit time so that you can find the best quote for every shipment.
But make sure when you compare quotes that you are getting a detailed breakdown of what’s included in the price. Look out for these details when checking freight quotes from various freight forwarders to avoid surprises:
- Correct origin and destination details
- Main freight charges
- Custom clearance charges
- Warehouse and ground transportation charges
- Port charges and equipment fees
- Additional service fees
2. Try different shipping modes and lanes
Closures and congestion on the shipping lane you usually use can be costly and frustrating. One way to overcome volatility is to look at alternate routes and modes. Here are some examples of how flexibility can help you ship smoother:
- If you typically ship air, consider whether shipping a higher volume of goods by ocean might be more cost efficient.
- If you are shipping FCL but are struggling with long transit times, consider splitting shipments up. Switching to LCL or air cargo could help keep your inventory moving.
- If your regular shipping lane is bogged down by delays, consider shipping to alternate ports and use inland transport for delivery.
3. Double check your shipping details
International freight involves a lot of documentation and forms. Making sure these are accurate can prevent shipment delays and extra charges.
- Accurate measurements and labeling can make or break your profitability – about 20% of charges added after booking result from incorrect measurements.
- Proper licensing can prevent your shipments from being held up at customs, which costs both time and money in avoidable penalties.
- Communicate about requirements like special product handling, extra packaging, additional equipment support, or any non-standard service before shipping to avoid service disruptions, expensive accessorials, or extra charges.
4. Keep seasonality in mind
When you are getting freight quotes for your international shipments, keep in mind that freight costs fluctuate by season.
- Peak season for ocean shipping is usually August-October when businesses stock up on back-to-school and holiday inventory. During this time, prices can climb as capacity decreases.
- Lunar New Year in late January or early February shuts down most east Asian factories and manufacturers which can lead to a short period of congestion and elevated prices.
5. Use a freight marketplace
Getting multiple quotes from different forwarders can be time-consuming – and until fairly recently could only be done by reaching out to providers one by one. But freight is going digital, and now shippers can get quotes instantly from dozens of freight forwarders.
The power to compare multiple quotes can help save you time and money, plus by using an online freight marketplace, you also gain the flexibility to switch modes, lanes, or providers depending on specific shipping needs.
Marketplaces provide a number of additional benefits:
Market visibility
Marketplaces collect pricing and transit time data from lots of service providers so you can compare delivery times, prices, and service standards – and choose the best option for every shipment.
Transparency
By using a freight marketplace, you’ll get full transparency into what each quote includes. Since quotes are standardized, you won’t have to guess what services are included.
User reviews
Picking the right freight forwarder can be confusing, but hearing from other importers and exporters can make the decision easier. Marketplaces let you assess the performance of different logistics providers before committing.
Final Thoughts
Booking freight for your eCommerce store or Kickstarter campaign might seem overwhelming at first. But once you understand it, it’s a lot more manageable.
Remember, the goal is to ensure your products reach your customers efficiently and cost-effectively. Smart freight management is one more lever of power you have to make that happen.
