Order Form Filling Incoterm: Fill & Download for Free

Unlike most sourcing agents I didn’t have a clue about how sea freight worked by the time I set up my first business. Another thing that struck me was the fact that it was, and still is, very hard to find decent information on how sea freight and shipping from China is actually working. I know that this is a big concern for small businesses import from China and I receive questions about this topic on an almost daily basis.My hope is that this article is going to provide the reader with a well rounded introduction to shipping and sea freight. In this article I’ll introduce the reader to the shipping process and some of the things that you better keep an eye on when importing from China.IncotermsShipping Incoterms are international standard codes that decides when and where cargo shall be transferred between the supplier and the importer.FCL & LCL shippingSea freight is not exclusive to those importers who purchase large quantities from China.. If you want to import by the container then FCL (Full Container Load) shipping is the right choice, it’s also the cheapest mode of transportation if counted by cost per kilogram. However, for smaller buyers LCL (Less than Container Load) is available. In fact, you can basically ship cargo with very small volumes – even less than one cubic meter.“Who’s managing the sea freight?”Here you basically got two options, either the supplier or you. I’ll begin with explaining the latter. Letting the supplier manage the shipping is common among inexperienced importers and even we let the supplier manage the shipping from time to time. It’s very simple and all you need to do is to tell the supplier that you want them to ship the cargo as CIF “Port of destination” (you actually have to specify which port you want it to be delivered to) and they’ll do the rest. The downside is that you’ll probably end up paying a bit more than if you would have managed the shipping by yourself.As mentioned, you can also manage the shipping by yourself. This doesn’t mean that you have to swim all the way to China, pick up your cargo and then swim back home. It can be done from the comfort of your home and office by hiring a shipping and logistics agent. These companies are everywhere and they tend to offer discounts in return for a fairly small yearly service fee. The shipping agent can then manage your shipping all from the Chinese supplier to a nearby port or a specific location within your country (i.e your warehouse).“Do I need to pay any fees or taxes in China?”No, you don’t need to pay any “export tax” when importing from China. However, you will need to pay for transportation to the port of loading in China and the cost for export clearance papers. Both of these are included in every incoterm from FOB (Free on Board) and above so you don’t need to even bother with this unless you select EXW as your incoterm.“ What about insurance?”Insurance is included when you select CIF, that’s why it’s called “Cost Insurance Freight”. However, the definition of the insurance may vary between different shipping companies. When you let your supplier manage the shipping you are not in control of which shipping they select, which is probably the cheapest. I suggest that you contact a local shipping agent if you want to know what the insurance actually covers.Delivery timeThe transit time from China to most locations in Europe and the United States is roughly 29 – 35 days. However, keep in mind that it can take a few days – sometimes up to a whole week – before your cargo is loaded in the port of loading in China. The same thing is true in the Port of Destination, it usually takes 2 – 3 days before your cargo is cleared and ready for pick up.Sea freight is indeed quite slow and this means that importing from China certainly requires a lot more long-term planning compared to domestic product purchases. This has also been a major cause for the recent surge in reshoring in Europe and the US. In general I recommend businesses to place an order at a minimum 3 months before they need the products in their warehouse.“What happens when the cargo arrives at the Port of Destination?”When the container vessel arrives the containers are first unloaded. Some may be inspected by the local customs authorities, but most are not. Regardless of whether you or the supplier managed the freight, the port authorities will begin customs clearing which basically means that you are invoiced any duties, VAT, port fees and service fees (Yes, there are a lot of fees).“How do I get my stuff from the port?”You got two options; either you pick it up yourself or you ask your shipping agent to load it on a truck and deliver it to a specific location. It’s not harder than that. When the cargo arrives at the Port of Destination you will likely be notified by the port agent. In most cases you can book the transportation directly through the port agent.If you are ordering a full container load this is certain to recommend. Upon delivery you can expect to have somewhere between 30 minutes to an hour to unload the cargo. Be well prepared because you don’t want to waste your time.“What will happen if the cargo is damaged?”This actually happens a lot more often than most importers would believe. This is also the time when that insurance turns out to be a pretty good investment. If your cargo is damaged then I advise you to follow this process:1.) Take photos and videos of the damages2.) Estimate the total number of damaged cartons and products3.) Make a calculation of the total value loss. Keep in mind that this should be supported by the value stated on the invoice. (Insurance companies are not stupid and fraud was still a criminal offense last time I checked)4.) Send the material to your insurance companyThe last point is not always that easy if you let your supplier manage the sea freight and have no clue of which insurance company they selected. Therefore I suggest that you ask your supplier for a copy of the sea freight insurance policy before the cargo is shipped. Then you’ll know who to contact in case your cargo would be damaged during the transportation.If you have a valid claim it’s usually a rather quick and painless process to go through in order to get your money back. However, keep in mind that most sea freight insurance only covers the value of your products – not the shipping costs.ContainersIn case you decide to import full container loads you have three different options:1. FCL 20’’ (Volume: 33.2 cbm)2. FCL 40’’ (Volume: 67.7 cbm)3. FCL 40’’ HQ (Volume: 76.3 cbm)4. FCL 45’’ HQ (Volume: 85.9 cbm)The container volume may differ slightly between different shipping companies. The volumes above are valid for Maersk containers. However, the difference is so small (+/- 0.1 cbm) that you don’t need to bother. There is still one way to save quite a lot of money based on the sea freight cost that’s related to the container volume. That is to place orders based on the units that fit in a specific container size rather than a pre-determined quantity.This way you can avoid situations where you pay for empty space or have to order one FCL container and one LCL container. The latter situation can become rather costly since LCL comes with higher port fees than FCL shipping.Export packingThe best insurance is high quality export packing. It would be natural to assume that the Chinese suppliers would have this figured out. However, I’ve seen countless of times when Chinese suppliers use cheap and low quality export packing to wrap up cargo worth tens of thousands of dollars. NEVER make this assumption or you might end up bankrupt.Prior to your order you shall clearly specify to your supplier which export packing you require. At a minimum I recommend the following specifications:1. Outer cartons: 5 layer cartons2. Inner cartons: 3 layer cartons3. Pallets: Wooden freight pallets (dimensional standards vary between different countries)4. Protective plastic: Yes (wrapped around the outer export cartons)5. Plastic straps: Yes (shall fix the cartons to the pallet)Once upon a time I made the terrible mistake of only telling the supplier that the cargo should be stacked on pallets. They were indeed stacking the cargo (1000 pcs x 25 kg PVC tarpaulins) on pallets, but not on the kind of pallet that you use when you ship 25 tons of cargo from China to Europe. No, they used plastic pallets. The kind of pallet Chikita stacks their banana cartons on.The result was almost a complete disaster. The pallets were crushed and the plastic turned into sharp edges that penetrated the cartons. However, in the end we got lucky since the cargo was not damaged.Shipping documentsAs you would’ve probably expected shipping comes with a fair share of paperwork, below I explain the basic documents:Bill of LadingThe main freight document issued by the transportation company that specifies the shipping company, exporting company (seller), consignee (buyer), products, volume and incoterm. The Bill of Lading is mandatory when shipping from China and shall be delivered (along with C/I & P/L) to the buyer within 2 weeks (counting from date of balance payment)Mandatory for all types of products: YesCommercial InvoiceA document specifying the order value, types of products and consignee. This document is used by the Port Agent for customs clearance and calculation of VAT and custom fees. The Commercial Invoice is mandatory and shall be delivered (along with B/L & P/L) to the buyer within 2 weeks (counting from date of balance payment)Mandatory for all types of shipments: YesPacking listA document specifying the volume, different types of products and quantity per type of product. The Packing List is mandatory and should be delivered (along with B/L & C/I) to the buyer within 2 weeks (counting from date of balance payment)Mandatory for all types of shipments: YesCertificate of Origin / Form AA document specifying the origin of the raw material and / or the products. May be used to determine the custom rate but also for statistics and enforcement of embargoes. Different countries got different custom rates that are applied when importing products to the EU or USA. (I.e. the EU offers a reduced tariff for textile import from India. The importer is required to prove that the true origin in order to be granted the reduced tariff)Mandatory for all types of shipments: No (Required in certain countries and markets for food, chemicals, raw materials and if the buyer is requesting a reduced tariff)Licenses & certificationCertain products require additional documentation. In most countries this includes agricultural products, food and vehicles. There’s no global standard for this and it would take me the whole weekend to write about all the different licenses in Europe, USA and Australia. However, that doesn’t prevent more from writing about something really scary that happened a few months ago.I was just about to leave office when I received a phone call from an importer in my native Sweden. He had purchased two Jet skis from a Chinese suppliers. Everything went fine until the cargo arrived in Gothenburg, the Port of Destination. Upon arrival the local customs requested the customer to show them the proper certification for usage within the European Union. Like many importers before him that made this mistake, he didn’t have any documents apart from the ordinary shipping papers.The customs refused to let him clear the cargo and he called his supplier in China. I was not very surprised when he told me that his Chinese supplier had no clue about EU vehicle certification. In a situation like this there’s nothing you can do. The only way to at least prevent further expenses was to request the local customs to destroy the Jet Skis… a tough choice considering they cost more than USD 50,000 in total.Sea freight related costsShipping from China involves a multitude of different fees. The cost is closely related to the selected incoterm. As I said in the beginning of the article, we’ve already covered that topic and since Google doesn’t like duplicate content I won’t copy paste it. However, below I list a number of costs that you should keep in mind when shipping from China:· Transportation to Port of Loading (included in FOB)· Export clearance (Included in FOB)· Sea freight charge (included in CIF)· Insurance (Included in CIF)· Port fees (Included in DAT)· Customs clearance fees· Custom duties· VAT (not really a cost though)· Transportation from the Port of DestinationShipping fraudYou’ve probably heard stories about importers receiving containers filled with brick stones. While I think that the real risk lies in Payment fraud and suppliers cutting corners on the product quality, these things actually happen. The only way to be certain that your supplier is not shipping a container filled with cow dung instead of high end furniture is to hire an agent that performs a container loading inspection.A container loading inspection consists of two phases and begins with a stocktaking on cargo that’s about to be loaded. When that’s done the next step is to witness the cargo being loaded and the container being sealed.Sea freight process summary1. Transportation to the Port of Loading2. Export clearance3. Cargo loading on container vessel4.i) Shipping to the Port of Destination4.ii) The supplier (or the freight agent) sends the Bill of Lading, Packing List and Commercial Invoice to the importer4.iii.) The importer receives the shipping documents and forwards them to the agent in the Port of Destination (this company is specified in the Bill of Lading)5. Arrival in the Port of Destination & cargo unloading6. The port agent notifies the importer about the cargo arrival. The importer may now choose additional services such as customs clearing and transportation to a specific address in the importer’s country. In most cases it’s also possible to pay the customs and VAT directly to an agent instead of dealing directly with the government for the customs duty and VAT declaration.7. The cargo is ready for pick up at the Port of Destination or transported to a designated location within the country.Got more questions about Sea Freight and Shipping from China? Don’t hesitate to get in touch with us, we’re always happy to answer your questions

Unlike most sourcing agents I didn’t have a clue about how sea freight worked by the time I set up my first business. Another thing that struck me was the fact that it was, and still is, very hard to find decent information on how sea freight and shipping from China is actually working. I know that this is a big concern for small businesses import from China and I receive questions about this topic on an almost daily basis.My hope is that this article is going to provide the reader with a well rounded introduction to shipping and sea freight. In this article I’ll introduce the reader to the shipping process and some of the things that you better keep an eye on when importing from China.IncotermsShipping Incoterms are international standard codes that decides when and where cargo shall be transferred between the supplier and the importer.FCL & LCL shippingSea freight is not exclusive to those importers who purchase large quantities from China.. If you want to import by the container then FCL (Full Container Load) shipping is the right choice, it’s also the cheapest mode of transportation if counted by cost per kilogram. However, for smaller buyers LCL (Less than Container Load) is available. In fact, you can basically ship cargo with very small volumes – even less than one cubic meter.“Who’s managing the sea freight?”Here you basically got two options, either the supplier or you. I’ll begin with explaining the latter. Letting the supplier manage the shipping is common among inexperienced importers and even we let the supplier manage the shipping from time to time. It’s very simple and all you need to do is to tell the supplier that you want them to ship the cargo as CIF “Port of destination” (you actually have to specify which port you want it to be delivered to) and they’ll do the rest. The downside is that you’ll probably end up paying a bit more than if you would have managed the shipping by yourself.As mentioned, you can also manage the shipping by yourself. This doesn’t mean that you have to swim all the way to China, pick up your cargo and then swim back home. It can be done from the comfort of your home and office by hiring a shipping and logistics agent. These companies are everywhere and they tend to offer discounts in return for a fairly small yearly service fee. The shipping agent can then manage your shipping all from the Chinese supplier to a nearby port or a specific location within your country (i.e your warehouse).“Do I need to pay any fees or taxes in China?”No, you don’t need to pay any “export tax” when importing from China. However, you will need to pay for transportation to the port of loading in China and the cost for export clearance papers. Both of these are included in every incoterm from FOB (Free on Board) and above so you don’t need to even bother with this unless you select EXW as your incoterm.“ What about insurance?”Insurance is included when you select CIF, that’s why it’s called “Cost Insurance Freight”. However, the definition of the insurance may vary between different shipping companies. When you let your supplier manage the shipping you are not in control of which shipping they select, which is probably the cheapest. I suggest that you contact a local shipping agent if you want to know what the insurance actually covers.Delivery timeThe transit time from China to most locations in Europe and the United States is roughly 29 – 35 days. However, keep in mind that it can take a few days – sometimes up to a whole week – before your cargo is loaded in the port of loading in China. The same thing is true in the Port of Destination, it usually takes 2 – 3 days before your cargo is cleared and ready for pick up.Sea freight is indeed quite slow and this means that importing from China certainly requires a lot more long-term planning compared to domestic product purchases. This has also been a major cause for the recent surge in reshoring in Europe and the US. In general I recommend businesses to place an order at a minimum 3 months before they need the products in their warehouse.“What happens when the cargo arrives at the Port of Destination?”When the container vessel arrives the containers are first unloaded. Some may be inspected by the local customs authorities, but most are not. Regardless of whether you or the supplier managed the freight, the port authorities will begin customs clearing which basically means that you are invoiced any duties, VAT, port fees and service fees (Yes, there are a lot of fees).“How do I get my stuff from the port?”You got two options; either you pick it up yourself or you ask your shipping agent to load it on a truck and deliver it to a specific location. It’s not harder than that. When the cargo arrives at the Port of Destination you will likely be notified by the port agent. In most cases you can book the transportation directly through the port agent.If you are ordering a full container load this is certain to recommend. Upon delivery you can expect to have somewhere between 30 minutes to an hour to unload the cargo. Be well prepared because you don’t want to waste your time.“What will happen if the cargo is damaged?”This actually happens a lot more often than most importers would believe. This is also the time when that insurance turns out to be a pretty good investment. If your cargo is damaged then I advise you to follow this process:1.) Take photos and videos of the damages2.) Estimate the total number of damaged cartons and products3.) Make a calculation of the total value loss. Keep in mind that this should be supported by the value stated on the invoice. (Insurance companies are not stupid and fraud was still a criminal offense last time I checked)4.) Send the material to your insurance companyThe last point is not always that easy if you let your supplier manage the sea freight and have no clue of which insurance company they selected. Therefore I suggest that you ask your supplier for a copy of the sea freight insurance policy before the cargo is shipped. Then you’ll know who to contact in case your cargo would be damaged during the transportation.If you have a valid claim it’s usually a rather quick and painless process to go through in order to get your money back. However, keep in mind that most sea freight insurance only covers the value of your products – not the shipping costs.ContainersIn case you decide to import full container loads you have three different options:1. FCL 20’’ (Volume: 33.2 cbm)2. FCL 40’’ (Volume: 67.7 cbm)3. FCL 40’’ HQ (Volume: 76.3 cbm)4. FCL 45’’ HQ (Volume: 85.9 cbm)The container volume may differ slightly between different shipping companies. The volumes above are valid for Maersk containers. However, the difference is so small (+/- 0.1 cbm) that you don’t need to bother. There is still one way to save quite a lot of money based on the sea freight cost that’s related to the container volume. That is to place orders based on the units that fit in a specific container size rather than a pre-determined quantity.This way you can avoid situations where you pay for empty space or have to order one FCL container and one LCL container. The latter situation can become rather costly since LCL comes with higher port fees than FCL shipping.Export packingThe best insurance is high quality export packing. It would be natural to assume that the Chinese suppliers would have this figured out. However, I’ve seen countless of times when Chinese suppliers use cheap and low quality export packing to wrap up cargo worth tens of thousands of dollars. NEVER make this assumption or you might end up bankrupt.Prior to your order you shall clearly specify to your supplier which export packing you require. At a minimum I recommend the following specifications:1. Outer cartons: 5 layer cartons2. Inner cartons: 3 layer cartons3. Pallets: Wooden freight pallets (dimensional standards vary between different countries)4. Protective plastic: Yes (wrapped around the outer export cartons)5. Plastic straps: Yes (shall fix the cartons to the pallet)Once upon a time I made the terrible mistake of only telling the supplier that the cargo should be stacked on pallets. They were indeed stacking the cargo (1000 pcs x 25 kg PVC tarpaulins) on pallets, but not on the kind of pallet that you use when you ship 25 tons of cargo from China to Europe. No, they used plastic pallets. The kind of pallet Chikita stacks their banana cartons on.The result was almost a complete disaster. The pallets were crushed and the plastic turned into sharp edges that penetrated the cartons. However, in the end we got lucky since the cargo was not damaged.Shipping documentsAs you would’ve probably expected shipping comes with a fair share of paperwork, below I explain the basic documents:Bill of LadingThe main freight document issued by the transportation company that specifies the shipping company, exporting company (seller), consignee (buyer), products, volume and incoterm. The Bill of Lading is mandatory when shipping from China and shall be delivered (along with C/I & P/L) to the buyer within 2 weeks (counting from date of balance payment)Mandatory for all types of products: YesCommercial InvoiceA document specifying the order value, types of products and consignee. This document is used by the Port Agent for customs clearance and calculation of VAT and custom fees. The Commercial Invoice is mandatory and shall be delivered (along with B/L & P/L) to the buyer within 2 weeks (counting from date of balance payment)Mandatory for all types of shipments: YesPacking listA document specifying the volume, different types of products and quantity per type of product. The Packing List is mandatory and should be delivered (along with B/L & C/I) to the buyer within 2 weeks (counting from date of balance payment)Mandatory for all types of shipments: YesCertificate of Origin / Form AA document specifying the origin of the raw material and / or the products. May be used to determine the custom rate but also for statistics and enforcement of embargoes. Different countries got different custom rates that are applied when importing products to the EU or USA. (I.e. the EU offers a reduced tariff for textile import from India. The importer is required to prove that the true origin in order to be granted the reduced tariff)Mandatory for all types of shipments: No (Required in certain countries and markets for food, chemicals, raw materials and if the buyer is requesting a reduced tariff)Licenses & certificationCertain products require additional documentation. In most countries this includes agricultural products, food and vehicles. There’s no global standard for this and it would take me the whole weekend to write about all the different licenses in Europe, USA and Australia. However, that doesn’t prevent more from writing about something really scary that happened a few months ago.I was just about to leave office when I received a phone call from an importer in my native Sweden. He had purchased two Jet skis from a Chinese suppliers. Everything went fine until the cargo arrived in Gothenburg, the Port of Destination. Upon arrival the local customs requested the customer to show them the proper certification for usage within the European Union. Like many importers before him that made this mistake, he didn’t have any documents apart from the ordinary shipping papers.The customs refused to let him clear the cargo and he called his supplier in China. I was not very surprised when he told me that his Chinese supplier had no clue about EU vehicle certification. In a situation like this there’s nothing you can do. The only way to at least prevent further expenses was to request the local customs to destroy the Jet Skis… a tough choice considering they cost more than USD 50,000 in total.Sea freight related costsShipping from China involves a multitude of different fees. The cost is closely related to the selected incoterm. As I said in the beginning of the article, we’ve already covered that topic and since Google doesn’t like duplicate content I won’t copy paste it. However, below I list a number of costs that you should keep in mind when shipping from China:· Transportation to Port of Loading (included in FOB)· Export clearance (Included in FOB)· Sea freight charge (included in CIF)· Insurance (Included in CIF)· Port fees (Included in DAT)· Customs clearance fees· Custom duties· VAT (not really a cost though)· Transportation from the Port of DestinationShipping fraudYou’ve probably heard stories about importers receiving containers filled with brick stones. While I think that the real risk lies in Payment fraud and suppliers cutting corners on the product quality, these things actually happen. The only way to be certain that your supplier is not shipping a container filled with cow dung instead of high end furniture is to hire an agent that performs a container loading inspection.A container loading inspection consists of two phases and begins with a stocktaking on cargo that’s about to be loaded. When that’s done the next step is to witness the cargo being loaded and the container being sealed.Sea freight process summary1. Transportation to the Port of Loading2. Export clearance3. Cargo loading on container vessel4.i) Shipping to the Port of Destination4.ii) The supplier (or the freight agent) sends the Bill of Lading, Packing List and Commercial Invoice to the importer4.iii.) The importer receives the shipping documents and forwards them to the agent in the Port of Destination (this company is specified in the Bill of Lading)5. Arrival in the Port of Destination & cargo unloading6. The port agent notifies the importer about the cargo arrival. The importer may now choose additional services such as customs clearing and transportation to a specific address in the importer’s country. In most cases it’s also possible to pay the customs and VAT directly to an agent instead of dealing directly with the government for the customs duty and VAT declaration.7. The cargo is ready for pick up at the Port of Destination or transported to a designated location within the country.Got more questions about Sea Freight and Shipping from China? Don’t hesitate to get in touch with us, we’re always happy to answer your questions. e-CantonFair.com

FCA incoterms meaning is one of the most common question asked here on Quora and I will try to explain it in layman’s language for better understanding. FCA means free carrier and it is a trade term dictating that sellers of goods is responsible for the delivery of those goods to a destination specified by the buyer. So, when used in trade, the word free indicates that the seller has an obligation to deliver goods to a named place in order to transfer to a carrier.On the other hand, if you want to know about DAP incoterms meaning, it stands for delivery at place. This means that if a delivery is sent on a DAP basis, the seller is the one who is responsible for the delivery of the goods which also includes transport costs to the named destination. For a better understanding of any trade-related terms and import-export procedures, you may also fill out a simple form at Tazapay website https://www.tazapay.com/#knowledgeIt has helped me tremendously and would help you too.