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Import From China to USA : Sourcing & Shipping Guide for beginners

Do you want to import goods from China to USA ?

 

It’s much easier to become a millionaire by import and resell than working for somebody else.

But it seems too complicated for newbies.

There are also many people who think their business is too small to get products directly from China.

But the fact is, no matter what kind of products you want to purchase, or how small your business is, even though you just want to buy something for your personal use, you can import directly all by yourself.

The guide contains in-depth information and is valuable reading for anyone seriously venturing into the importing business.

It will benefit both the new and experienced importers.

Who this guide is for:

  • Anyone interested in the import/export industry
  • Anyone who wants to import from China, especially American
  • FBA sellers, eBay sellers and independent sellers
  • Offline sellers (retailer/wholesaler)

This step-by-step guide aims to take away all your worries & fears, and make you a professional importer in a few days.

You get complete access to what we learned in our 20 years knowledge and experience.

With it, you can take your businesses to the next level.

Forgive us. A complete guide should also include ‘how to sell’.

We are not so familiar with that part, so rather stop at the stage of shipment arrival.

This guide is completely objective and neutral.

None our company name or weblink showed.

Let’s get started!

 

1/ Respect the US import regulation

 

When you import from China, you become the importer, legally the importer of record.

Importer of record is defined as the owner or purchaser of the goods, or when designated by the owner, purchaser, or consignee, a licensed customs broker.

The importer is ultimately responsible for the correctness of the entry documentation presented to customs and all applicable duties, taxes and fees;

While U.S. Customs and Border Protection (CBP) is the agency that reviews imports, collects duties and enforces all U.S. import and export laws and regulations.

  1. i) If you are American, CBP does NOT require an importer to have a license or permit, whether as an individual or business.

CBP entry forms do ask for your importer number: this is either your IRS business registration number, or if your business is not registered with the IRS or you do not have a business, your Social Security Number (SSN) will be sufficient.

  1. ii) If you are not American, you can be a foreign importer of record. You need to work with a U.S. customs broker, by completing a CBP Form 5106 to obtain a customs assigned number first.

 

2. Identify the products you want to import

 

If you ever think about it, It often feels like everything you could possibly sell is already being sold, not to mention the reality that there will be plenty of competition in the most popular product categories.

Fortunately, there are still golden opportunities out there, proof of this being new products successfully launch all the time.

When you’re purchasing, you’re basically looking at private labeling products.

This means you’re taking an existing product, putting your brand on it, and possibly making some light improvements.

Generally there are two kinds of products:

  • Commoditized products are essential, high demand, and popular goods. These are products that everybody needs.
  • Niche products are goods that serve a specific customer base and product category. The market niche defines the product features aimed at satisfying specific market needs, as well as the price range, production quality and the demographics that it is intended to target.

The reason for niche segments comes down to resonating with a highly-engaged, and highly-converting audience.

Serving a niche segment is a great business proposition because you provide a product that solves an issue for a very passionate audience segment.

Know your niche, and know it well.

Doing so will let you create effective marketing, test the product quality properly, price your product competitively and engage with your target market.

So the key issue in your initial product selection is finding a niche or an area of specialization.

The more you know about a product, the greater the chances that you’ll be successful.

The ideal niche products can satisfy both emotional value and practical value.

  1. i) Emotional Value: Anything that elicits an emotional response within consumers will automatically form a connection with them. When a product is able to provide that emotional release it is likely to go viral.
  2. ii) Practical Value: A product that is truly useful and helps solve a problem for consumers or helps them be more productive is more likely to be recommended by them. Practical value can beat the aesthetic or face value of some products and can help a product reach that viral stage.
  3. iii) Most people get stuck looking for the ‘perfect product’ and never get started at all. There’s no such thing as the perfect product. Every product has challenges to overcome, and profit for those who do. Your job is to find YOUR product and launch it, then grow from there.

2.1 What can someone import from China?

 

Choosing the right product or product category can be instrumental to your success.

The products you choose will shape your entire business, from marketing to shipping, to pricing, to further product development.

  • Optimized product selection — as long as your products stay within the niche, they’re likely to sell; so less guess-work in choosing what to offer.
  • Optimized pricing — because your range of customers is smaller, you can use previous sales analytics to estimate the perfect prices.
  • Simpler brand management — with a more targeted range of products, you have less listings and maybe even less channels, making your entire brand easier to manage.
  • More effective content — it’s easier to create valuable content when you cater it to the preferences of a single group, rather than trying to please everyone at once.
  • Sense of community — targeting specific niches makes you in-group, leading to greater customer loyalty and more personal relationships.
  • Precision online marketing — you can more precisely target specific group behavior rather than general group behavior.
  • Lower storage fees — product turnaround is faster when you can better predict best sellers, plus less chance of inventory backlog.
  • Less expensive campaigning — targeting less markets means less ads, less diverse content, and less market research.

You’ll need to brainstorm, research, and select a product(s) to import & sell. It might be a single product or a full product line that occupies a niche in a market.

But if you’re starting small, start small. It’s all right to have big dreams, but be realistic at the very beginning.

2.1.1 Go with a product you like and familiar

 

A wise person once said that creativity requires a degree of restriction.

For example, if you give someone a choice of 3 business ideas and ask them to choose the one they like best, then they will probably be able to tell you within a couple of minutes, perhaps immediately.

On the other hand, if you tell someone they can start a business in any area they wish, they will probably still be making their mind up two months later.

Think about your profession, experiences, and hobbies. Look for the niche neither too wide nor too narrow.

Ideally, you have a couple of ideas for a great niche to start selling into.

 

2.1.1.1 Based on your own interest and passion

 

Let’s not go far, what is it that you are passionate about?

What makes you want to get up early in the morning?

What is the thing that never fails to come to your mind everyday? Just follow your heart.

If you work in a particular industry or have passions in a particular hobby, that’s a great place to start.

You’ll know better than anyone what you’re looking for.

Also you’ll be better equipped to stay motivated and overcome the hurdles if you are deeply invested in what you are selling.

Make the decision easier on yourself by limiting your choices to products related to your interests.

Selling products you love is not only motivating; it is also a heck of a lot easier.

It’s likely that there are plenty of other people who also share your interest which gives you an instant audience for your product.

Write down your interests and then make a list of products that are related to these interests.

Being passionate about what you do will not only help carry you through hard times, but it will also aid in crafting a brand message that speaks to people in a way that is meaningful, authentic, and engaging.

By emotionally investing in your product, you can better deliver its value and mission into the market.

If you just choose the products only because of money, then sooner or later you will lose the passion and interest.

 

2.1.1.2 Based on your experience and expertise

 

Has working in a particular industry helped you learn the ins and outs?

Maybe you have a skill or a particular set of experiences that makes you more knowledgeable than the average person on a particular topic.

Turning your expertise into your own business is a smart way to enter the market with a leg up that isn’t easy for others to duplicate or copy.

You need to look back and recall what are the things that you have been doing that you know no one else can do better.

It makes you stand tall and proud because people remember this of you.

This part focuses on the things that you are not just good at but you’re definitely the cream of the crop.

You should choose the products that you know and like, and this is directly connected with your educational background and previous experiences and hobbies.

Don’t be afraid to look at smaller product categories and niches.

Even though a niche is a smaller subset of a broader category with fewer overall customers, it often makes up for this shortcoming by way of fewer competitors and a more targeted audience.

Competition is good because it validates existing demand for a product, but the right amount of competition is even better because you’ll have the opportunity to fill a unique need and cost-effectively reach your customers.

 

2.1.2 Go with a product valuable

 

Think carefully about picking a product that isn’t easy to replicate.

If you are able to offer a product that is truly unique, you’re immediately adding value to customers.

Differentiating your product selection enough means you won’t be in direct competition with much larger brands right away.

2.1.2.1 Solve a customer pain point

 

Your areas of improvements:

What are the things that you don’t have that you wish to acquire?

What could you improve on? And if you think that you could address these weaknesses, could they potentially be a breakthrough?

Some skills can be taught. And, some of the best products have originated from rigorous training before coming to fruition.

Your hates or dislikes:

Sometimes, what you hate doing is what you need to start building.

What you dislike could be a potential product that you can provide.

Instead of doing the things you hate, your business will do otherwise.

In that manner, you are earning by trying to augment what you are apathetic about.

When you’re brainstorming ideas for a product, it’s essential you reflect on problems in your own life.

Product opportunities can also exist in a few other areas:

  • Improved product features
  • A new market unrealized by your competitors
  • Unique product positioning and marketin

Solving a customer pain point will always be an effective way to develop a product people want.

Abstract customer pain points, meanwhile, are usually about addressing poor or frustrating experiences with the current selection of available products.

It’s worth paying close attention whenever you notice common frustrations with an existing line of products.

Being keenly aware of the pain points and small annoyances you come across in everyday life could be just what you need to come up with your next profitable product idea.

Listen for problems and pain, which are often signs of unmet needs.

After identifying an unmet need, try to find products that meet those needs and then work toward making those products easier to get.

By providing solutions to problems, you go beyond selling products and establish yourself as an expert in the field, which helps earn customer trust and loyalty – which means more sales.

Your product doesn’t necessarily need to be a huge, complicated endeavor. It can be quite simple, yet exceptionally effective.

 

2.1.2.2 Read customer reviews on existing products

 

If you already have an established store with a bit of traction, you can see what customers are saying about your existing products.

Are there any trends or interesting bits of feedback you can use as inspiration to develop your next product?

Pay special attention to shortcomings and complaints being shared.

If you don’t currently have a store, have a look at customer reviews for other brands and products in the industry you want to explore.

What “wishlist” feedback is being shared about potential improvements to already successful products?

What add-ons or additional products do customers consistently bring up?

There is a wealth of insight you can learn from customer reviews.

If you’re not sure of the industry or product category to explore, consider a specific demographic and focus on brands and products that those individuals gravitate toward.

 

2.1.2.3 Browse what’s trending on online marketplaces

 

If you prefer to sell products in your own store, you can still gather inspiration by checking out what’s popular and trending on other marketplaces.

Browse sites like Amazon, or eBay, and browse lists like ‘What’s hot,’ ‘Most wished for,’ and other categories that showcase current customer demand.

Here are a few links to get you started:

Also you can check out related items or products that customers frequently purchase together in that niche.

Amazon is a useful resource for this, as there are several locations where the site displays product affinity.

  • Products customers frequently buy together
  • Other products that customers frequently buy
  • Similar items that Amazon recommends
  • Related sponsored products

2.1.2.4 Always be on the lookout

 

Part of being an entrepreneur is always pushing your imagination.

  • Are there norms to be broken?
  • Is there an opportunity to improve life?
  • What products gain quick customer acquisition?
  • What industries are gaining traction?

Keeping up to date with what’s going on in the world will help you identify new online business opportunities.

In addition, sit down and evaluate your strengths and interests.

One of the most straightforward strategies you can implement today is to keep an open eye and an open mind.

Take a look at magazine topics, newspaper headlines, new product releases, street fashion, trade shows and even quirky inventions.

New ideas can pop up at the most unexpected moments, and it’s important not to dismiss any chance thoughts you may have.

Keep a list in your phone or with a pen and paper to refer back to later when it’s time to conduct market research for your product idea.

In order to make it more powerful and lasting, you need to add a secret ingredient, and that is ‘sustainability’.

Nowadays, replication is rampant. So, you need to make a product that cannot be duplicated in the long run.

 

2.1.3 Go with a product easy to ship – small, light, consumable

 

The bigger and heavier your product is, the more expensive shipping is.

And shipping is typically the 2nd biggest expense in this business.

It’s a long way from being manufactured in China till the end customers. Your items are put into a box then a big carton, then a pallet, then your container. One month later, it’s going to do that in reverse when it lands in the U.S.

You also want to avoid fragile products and products with lots of moving parts.

The more complex a product is, the higher your return rate, which again drives up shipping costs.

You’d better keep your product size limitation within Small Standard-Size (15-inches) and Large Standard-Size (18-inches).

  • Small standard size: Any packaged item that is 12 oz or less with its longest side 15 inches or less, its shortest side 0.75 inch or less, and its median side 12 inches or less.
  • Large standard size: Any packaged item that is 20 lb or less with its longest side 18 inches or less, its shortest side 8 inches or less, and its median side 14 inches or less.

Also, it better be consumable, not seasonal, and customers are more likely to purchase multiple times.

If you’ve already convinced someone to buy one and they enjoy it, it’s way easier to sell them more of the same.

2.2 Avoid products with AD/CVD

 

Dumping occurs when foreign manufacturers sell goods in the U.S. at less than fair value.

Countervailing cases are when a foreign government provides enough subsidies and tax benefits for their manufacturers to sell their goods more cheaply than U.S. manufacturers.

Antidumping (AD) and Countervailing (CV) duties are additional fees that are used to discourage demand for products deemed to be import sensitive.

The Department of Commerce sets AD/CVD rates and CBP enforces these decisions and collects the duties on imported goods.

Beyond the amounts that AD and CV duties can reach (between 7-230% depending on the product and country of origin), there are other issues importers face when dealing with AD and CV duties.

In short, the U.S. doesn’t want to import such items. You need to avoid products with AD/CVD.

You can review the scope of AD/CVD orders to determine whether the merchandise falls under the scope of an order.

Federal Register notices from Commerce, available at https://enforcement.trade.gov/frn/summary/prc/prc-fr.htm

E.g. if you search ‘glass’ on the page, you’ll find the items: Automotive Replacement Glass Windshields, and Certain Glass Containers. Then you can double check here, https://aceservices.cbp.dhs.gov/adcvdweb

Please note there’s no coding system in the scope of AD/CVD orders for convenience in assisting importers in determining whether a product may be subject to an AD/CVD order.

The written description of the scope of the order is dispositive.

2.3 Avoid products with prohibitions, restrictions and other special requirements

 

When considering a product for import, make sure that it avoids barriers such as failing to comply with US safety standards, high customs duties, or carrier restrictions.

The importation of certain classes of merchandise may be prohibited or restricted to protect the economy and security of the U.S., to safeguard consumer health and well-being, and to preserve domestic plant and animal life.

Some commodities are also subject to an import quota or a restraint under bilateral trade agreements and arrangements.

It is impractical to list each specific article; however, various classes of articles are listed below.

  • Cheese, Milk, and Dairy Products
  • Fruits, Vegetables, and Nuts
  • Insects
  • Livestock and Animals
  • Meat, Poultry and Egg Products
  • Plants and Plant Products
  • Seeds
  • Wood Packing Materials
  • Tobacco-Related Products
  • Fireworks
  • Flammable Fabrics
  • Multi-Purpose Lighters
  • Foods, Drugs, Cosmetics, And Medical Devices
  • Gold and Silver
  • Animal Fur
  • Trademarks and Trade Names
  • Alcoholic Beverages
  • Motor Vehicles And Boats
  • Branded products

You should also avoid importing any inherently dangerous products. The importer (re: you) is responsible for any personal or property damage your products may cause.

It might be better to avoid some electrical devices, baby products, etc.

Importing goods that are unsafe, that fail to meet health code requirements, or that violate restrictions could end up costing you quite a bit of money in fines and penalties. At the very least, such goods would be detained, and possibly destroyed.

Merchandise may be seized and forfeited by CBP if:

  • Its importation is restricted or prohibited because of a law relating to health, safety or conservation;
  • The merchandise is lacking a federal license required for the importation;
  • The merchandise or packaging is in violation of copyright, trademark, trade name, or trade dress protections;
  • The merchandise is intentionally or repetitively marked in violation of country of origin marking requirements; or
  • The imported merchandise is subject to quantitative restrictions requiring a visa or similar document from a foreign government, and the document presented with the entry is counterfeit.

Ensure that your product complies with US safety standards and labeling requirements early on. Agencies that oversee common imports include:

The FDA oversees the import of all food, medication, cosmetics, some housewares and food-related items, health devices, and more. The FDA requires prior notice be given for all imported food products.

Chemicals imported into the U.S. are often regulated by the EPA.

According to information from CBP, imports regulated by the DOT include cars and motor vehicles.

Toys and children’s products are among imports regulated by the CPSC.

The FTC oversees a variety of parts of the import process, including product labeling and more.

The USDA oversees the import of plants, plant-products, wood, animals and more. In many cases, the USDA requires permits and more.

The TTB issues permits for importers of alcohol and tobacco products. TTB permits include the Federal Basic Permit, Certification of Label Approval (COLA), Natural Wine Certificate, and Certification of Age and Origin. These permits are required when importing alcohol.

You can also find a list of Amazon restricted products and FBA product restrictions for your reference.

The easiest way to find information is by going to customs’ websites for your country and the countries you wish to sell your item too.

Check out those URLs on screen, and if you can’t find the information you want or are unclear about the specifications, contact directly by phone or email.

Making sure you can import your item legally and according to your country’s regulations is a necessary part of the import process. Thankfully, the number of customs and importing regulations is relatively few.

However, we do recommend using a customs broker the first time around. Even so, you’ll make things a lot easier for yourself now if you get a good grasp of what is required.

2.4 Self-analysis

 

To make a product successful, you must be personally and emotionally committed to its success.

Once you’ve got a product in mind, you need to begin with a self-analysis:

  • What kinds of products do you like, enjoy, consume and benefit from?
  • Do you like the product you’re planning to sell?
  • Can you see yourself getting excited about this product?
  • Would you buy it and use it yourself?
  • Would you sell it to your mother, your best friend, your neighbor?
  • Can you see yourself selling this product for the next 2 or 3 years?
  • Is this a product that you intensely desire to bring to the marketplace?

Then analyze the product from the customer’s point of view:

  • What does the product achieve, avoid or preserve for the customer?
  • How does the product improve your customer’s life or work?
  • What kind of customers will you be selling the product to?
  • Do you personally like the customers who’ll be buying this product?

There are a series of additional questions you need to ask before you make a final decision on a new product offering.

  • Is there a real need for the product in today’s market?
  • Is your new product better than anything else currently available?
  • Why is your product superior to your competition?
  • Is it lower priced or of better quality than anything else available?
  • What are the startup costs associated with this business?
  • How long after starting before I can become profitable?

2.5 How to find a profitable niche ?

 

2.5.1 Google Trends (free)

 

Google Trends is an invaluable tool for marketers who need information about the products, events, and services that matter most to their audiences.

It’s not just about how, when, and where people search. It’s about the deeper insights that only related searches can reveal.

When does interest in a relevant term spike? What about interest in a competitor’s brand name? Google Trends uses real-time data to gauge consumer search behaviors over time.

  • Quickly find popular terms
  • Explore your own topics
  • Be geographically relevant
  • Refine your insights
  • Automate your search

Google Keyword Planner is another free tool.

By looking at the exact keywords that people are typing in, you can get a good idea of what products are in demand and how much revenue you can generate.

 

2.5.2 Ecomhunt (free and paid)

 

Ecomhunt allows you to easily find products that are already proven to sell.

They post a list of winning products on a daily basis that contains information such as Facebook ad reports, AliExpress reviews & suppliers, descriptions, etc.

Basically the things you would need to start selling a product without having to do the research yourself.

It is one of the best ways of having access to the latest products that are trending, without making much effort on your own.

It is easy to use and navigate, where the data is quick and easy to get for you to start testing.

There is a considerable amount of functionality since there are a lot of data points and hundreds of products for you to choose from. It also helps you to find the products which are appropriate for your store.

It’s free to check 2 products per day.

2.5.3 FindNiche (free)

 

FindNiche is a free niche analytics tool.

You can easily find niche products from your competitors, get latest insights of trending and best-winning products on top Shopify and AliExpress stores.

It has the largest Ecom intelligence database, including 1000K products, 11000 niches and 700K stores. It updates daily and can research with tens of filtering, sorting, and searching methods.

2.5.4 eBay

 

EBay is a great place to do research because you have access to sales data in real time.

Simply type in a product on it’s search bar. Then look for the ‘Sold Items’ in the sidebar and click on the check box.

It will now display a listing of products that have sold in the product category of your choice along with the final selling price.

With this information, you should be able to get a good idea of the demand and selling price of a wide variety of products.

 

2.5.5 Pinterest

 

Pinterest is a social media platform with hundreds of millions of active users and it’s a place where people go to find new ideas and products to improve their life.

Pinterest’s audience may not be as vast as Facebook’s, or as teen-targeted as the Snapchat and TikTok crowd.

More than anything, Pinterest is preferred by women, especially moms.

Shopping is a top activity for many Pinterest users.

Pinterest gives you a guided search bar to help you refine your search ideas.

With the guided search bar, you’ll find articles and products ideas directly from your Pinterest feed.

The pins with the most repins will tend to contain popular products that you can sell.

2.5.6 Alibaba vs. Amazon vs. Aliexpress

 

You can compare prices on Alibaba vs. Amazon vs. Aliexpress to have an idea about the price difference.

Whatever price you buy a product for, you’re aiming to sell it for at least 3x your cost.

 

2.5.6.1 How much does it cost?

The easiest way to check the approximate prices is to go to Alibaba and type the product name and check what you can see.

You can get a general idea there.

With Alibaba, you’re normally buying from the factory or at least a very specialized trading company and they have relatively high minimum order quantities.

With Aliexpress (Chinese Ebay) you are normally buying from a reseller and you can buy one or two items at a time but at a much higher price.

 

2.5.6.2 How much does it sell?

Take a look at pricing on Amazon or eBay or other marketplaces to see what your product sells for and work backwards to determine your breakeven point for sourcing costs.

It’s important to get a good idea of the average resale price for your item before you get started.

For a number of popular items, the profit margins tend to be very low.

Oversaturated markets just mean a hell of a lot of work for very little in return.

Throw big, established sellers into the mix and it’s almost impossible to compete.

You won’t know which markets are oversaturated until you research them.

So visit auction sites and read classified ads and any material you can get your hands on until you know exactly what you’re getting into.

Just keep looking through the market data on those sites and comparing it against what you can get from Alibaba.

It may take some time, but eventually you will naturally learn what works and you will start finding great product opportunities left and right.

Eventually you’ll find some opportunities that you want to move forward with.

 

2.6 For example: Yoga clothes

 

Let’s presume you are passionate about Yoga. You want to find some product ideas in this catalogue.

Search Yoga on Amazon. You may need to search the broad term to have a full view of relative products.

In the left column, you got something like the below.

You’ll learn:

  1. i) The main products fall into the Sports & Fitness Department. Some clothing can be fashion.
  2. ii) Yoga Mats, Yoga Towels, Yoga Mat Bags, Yoga Straps, Yoga Leggings, Yoga Blocks, etc. are a list of products that may be sold together.

Then click Yoga Mats, and you get this.

Unique selling proposition:

#1, Thick, with strap

#2, Classic, eco friendly, non slip, with strap

#3, Non slip, with strap

#4, Thick, print reversible

You’ll learn:

  1. i) The mat length does not matter much. The mat thickness is from 1/4 inch, 2/5 inch, 1/2 inch to 1 inch.
  2. ii) The mat should be equipped with a strap for easy move.

iii) Yoga mat is not only for Yoga, but also for Pilates & Floor Workouts.

  1. iv) The surface can be plain like #1,2,3, or with print like #4. You can think more about the print design. Below is an example. It seems more meaningful with numbered circles.

The 3rd one is the best seller, and the lowest. Click to move on.

From the description, you’ll learn the mat should be long-use and easy to clean. The material should be eco friendly.

You can also learn the pain points from the reviews.

Browse around, you will finally get all the details of the product, then try to improve it based on your experience and expertise.

2.7 Private Label Products

 

Private labeling is one of the most effective ways to make your products stand out from the millions of others listed for sale online.

Creating a private label product can give you more control over production, pricing, branding, and profitability.

2.7.1 Benefits of private labeling

 

  • Profit margins

Private label products will generally have higher profit margins than their generic counterparts.

While it will cost more to get a manufacturer to add your branding to a product, you will be able to sell the product at a higher price.

There is inherent value in a branded product even if the brand is unknown.

  • Exclusivity

A major advantage of private label products is that they stand out from generic resale products on websites like eBay and Amazon.

You are essentially setting yourself apart from your competitors and, hopefully, giving buyers more reasons to choose your product.

It also removes the temptation of competitive pricing as your product is different to everything else out there.

  • Branding

Creating a private label means that you have your own brand. It’s something you own and an asset you can build upon.

Having a brand gives your online business an identity.

If your buyers like your product they will purposefully seek out your brand in future, rather than opting for whatever generic product is cheapest.

Ultimately, branding is about recognition, trust, and customer loyalty, all things that are more difficult to foster when selling generic resale goods.

  • Marketing

Having a private label product can help take your marketing to new heights.

You are limited with what you can do to market a generic product.

With your own brand, you have many more options.

You can create a story around your brand, take creative product photos, build a social media presence, and target your product at specific demographics. Having a more purposeful marketing strategy can increase brand equity, customer loyalty, and sales.

2.7.2 Risks of private labeling

 

  • Quality

Product quality is a risk that all sellers take. However, there is possibly more at stake for private label sellers.

You’re taking the risk of putting your brand on a product that may not be up to scratch.

And if a poor quality product makes it into the hands of your customers, your business and brand are going to suffer.

  • Reliability

You’re also taking a risk on the reliability of your manufacturer and supplier.

What happens if they take too long, muck you around, or suddenly go out of business, especially when you’ve worked with them to create your private label product?

Finding a reliable manufacturer helps to mitigate this risk, but you can’t eliminate it entirely.

  • Liability

As a private label seller, you are likely to be liable for the product you’re selling.

This can be a risk, especially with goods like baby products, or anything that is inherently fragile or dangerous (think electronics, safety equipment, sports and outdoor gear, food and dietary supplements etc).

This can be particularly risky in the U.S. where civil lawsuits are common. There is also the option of liability insurance for your business.

  • Legality

Selling a private label product with your brand on it leaves you open to potential legal issues. You need to be aware of trading regulations, possible trademark/patent risks, as well as the safety risks mentioned above.

You also need to be wary of any words you use or claims you make on your packaging to prevent potential legal challenges.

And if you’re going into competition with a big-name brand and they see you as a genuine threat, you can expect them to take legal action to either slow you down, or shut you down.

2.8 A quick summary

 

You need something that is going to stand up if you are going to put your name behind it, so find something to be proud about selling. Your products define your business.

Your products are your business!

The products you sell are fundamental to everything you do.

They’ll affect your marketing, your profit margins and the design you use. Logistics and legal restrictions come into play, too.

Open your mind and follow your heart, start from small.

Look for niche markets that have low competition and high demand, and be prepared to continually adjust your market as the demand changes.

Unfortunately you can’t simply create an idea and then just sit back and watch the profits roll in.

Things change so rapidly on the Internet that to be successful requires making constant tweaks and adjustments to your idea to fit changing demand.

Make sure you’ve done the research and you know there’s a market or niche for the products you plan to import. In addition, you should know roughly how much your product should cost in order to make an adequate profit selling.

 

3/ Classify your product and calculate landed cost

Now you should have a list of product ideas and you know roughly how much it cost.

It’s time to classify your goods – HTS Code and calculate the landed cost.

When goods are imported into the customs territory of the U.S., they are subject to certain formalities involving the CBP.

In almost all cases, the goods are required to be “entered,” that is, declared to the CBP, and are subject to detention and examination by CBP officers to insure compliance with all laws and regulations enforced and administered by the CBP.

In most cases involving commercial goods, and some involving non-commercial importations, the importer or the agent must “enter” the goods by filing an electronic or paper “entry” to obtain release of the goods followed by an electronic or paper “entry summary.”

As part of the entry process, goods must be “classified” in HTSUS and their customs value must be determined.

  • HS: Harmonized System (Corresponds to HS Code)
  • HTSUS: Harmonized Tariff Schedule of the U.S. (Corresponds to HTS Code)

CBP uses this system and its rules to classify imported goods.

All goods imported into the U.S. are subject to the provisions of the HTS, as well as to regulations of CBP and laws that customs enforces.

Classifying goods is important not only for duty purposes, but also to determine whether the goods are subject to quotas, restraints, embargoes or other restrictions.

The act of classifying goods requires an importer to be familiar with the HTSUS.

The CBP is responsible for fixing the final classification and valuation of the goods.

It is the responsibility of the importer of record to use “reasonable care” to “enter,”  “classify” and “value” the goods and provide any other information necessary to enable the CBP to assess the correct duties, collect accurate statistics, and determine whether all other applicable legal requirements are met.

3.1 HTSUS

 

Goods in trade generally appear in the Harmonized System in categories or product headings beginning with crude and natural products and continuing in further degrees of complexity through advanced manufactured goods.

The United States, in implementing its obligations under the Harmonized System Convention, adopted and incorporated into its national customs tariff system the “core” Harmonized System. As indicated above, the U.S. customs tariff system is known as the HTSUS.

It’s widely used in:

  • Customs tariffs
  • Collection of international trade statistics
  • Rules of origin
  • Collection of internal taxes
  • Trade negotiations
  • Transport tariffs and statistics
  • Monitoring of controlled goods
  • Areas of Customs controls and procedures, including risk assessment, information technology and compliance.

3.1.1 HTSUS structure

 

The HTS is a U.S. nomenclature system used to classify traded goods based on their material composition, product name, and/or intended function.

The HTS is designed so that each article falls into only one category. It is divided into chapters, each of which has a 2-digit number.

The HTS comprises a hierarchical structure for describing all goods in trade for duty, quota, and statistical purposes.

This structure is based upon the international Harmonized Commodity Description and Coding System.

The 4- and 6-digit HS product categories are subdivided into 8-digit unique U.S. rate lines and 10-digit non-legal statistical reporting categories.

01-99 total 99 headings as 99 chapters, https://hts.usitc.gov/current

Chapter 77 is reserved for future use.

Two final chapters, 98 and 99, are reserved for national use by individual countries (e.g., special tariff programs and temporary duty suspensions or increases).

According to the U.S. Trade Representative, the top import categories (2-digit HS) in 2018 were: electrical machinery ($152 billion), machinery ($117 billion), furniture and bedding ($35 billion), toys and sports equipment ($27 billion), and plastics ($19 billion).

These product headings are designed at the broadest coverage levels with 4-digit numerical codes (or headings) and, where deemed appropriate, are further subdivided into narrower categories assigned two additional digits (which comprise 6-digit numerical codes or subheadings).

The first two digits of a 4-digit heading indicate the chapter in which the heading is found.

 

3.1.2 Determine the code

 

HTS provides duty rates for virtually every item that exists. It is a reference manual that is the size of an unabridged dictionary.

Classification of goods in this system must be done in accordance with the General and Additional U.S. Rules of Interpretation, starting at the 4-digit heading level to find the most specific provision and then moving to the subordinate categories.

When classifying merchandise, one must be aware that due to the hierarchical structure:

  1. i)  Merchandise must first be classified in the 4-digit heading whose terms most specifically describe the merchandise
  1. ii) Only 4-digit headings are comparable (i.e., no consideration should be given to the terms of any subheading within any 4-digit heading when considering the proper classification of merchandise at the 4-digit heading level).

iii) Then you can determine the rest code based on the composition of the merchandise and the intended use of the item.

HTS is a hierarchical system of product description, it is not possible to classify all goods in trade by doing an electronic search, and HTS provisions must be reviewed to locate the one that most specifically describes each shipment.

Thus, the potentially applicable headings should first be compared; once a heading is chosen, its subordinate provisions at the same indentation level in the nomenclature structure should be compared.

Classification, and, when ad valorem rates of duty are applicable, appraisement, are the two most important factors affecting dutiable status.

Classification and valuation, whether or not they are pertinent because an ad valorem rate of duty applies, must be provided by commercial importers when an entry is filed.

In addition, classifications under the statistical suffixes of the tariff schedules must also be furnished even though this information is not pertinent to dutiable status.

Accordingly, classification is initially the responsibility of an importer, customs broker or other person preparing the entry papers.

You can start to search https://hts.usitc.gov/ based on product name and description.

 

3.1.2.1 Querying

 

HTS Search supports the following functionality:

  • Contains Any: Enter one or more words separated by a single space.
  • Contains All: Enter one or more words, each within double quotes and separated by a single space i.e. “yoga” “mats”
  • Contains Phrase: Enter one or more words separated by a single space in double quotes i.e. “yoga mats”.

3.1.2.2 Matching

 

Any word or phrase in quotes is matched exactly.

For example – searching for mats will return any tariff articles containing the word mats or it’s close derivatives i.e. mat whereas searching for “mats” will return any tariff containing that exact word.

If no results are found, you must modify the search criteria in order to find the correct data in HTS.

When you have been communicating with your supplier later, the code they provided will be a good basis for your final decision.

Please note CBP makes the final determination of what the correct rate of duty is, not the importer. So you’d better double check here, https://rulings.cbp.gov/

You can also work with a customs broker. Most brokers have imported into the U.S. hundreds and thousands times.

They know the process inside and out, and you can count on them to answer your questions about tariff classification and customs entry in general. They rely on information provided and updated by the CBP.

3.2.2.3 For Example

 

Yoga mat, it can be used for other floor exercise. It’s kind of an exercise mat. Search ‘exercise mat’ on https://hts.usitc.gov/.

Look at the left column. Since you need to determine the first 4 or 6 digit code first.

9506

Articles and equipment for general physical exercise, gymnastics, athletics, other sports (including table-tennis) or outdoor games, not specified or included elsewhere in this chapter; swimming pools and wading pools; parts and accessories thereof:

9506.91.00

Articles and equipment for general physical exercise, gymnastics or athletics; parts and accessories thereof

10 Exercise cycles

20 Exercise rowing machines

30 Other

Clearly, the HTS code for yoga mat is 9506.91.00.30. Now double check here, https://rulings.cbp.gov/

3.1.3 Find the tariff rate based on HTSUS

 

As indicated above, you can find the tariff rate here https://hts.usitc.gov/

3.1.3.1 Column – Heading/Subheading

This column contains the 4-digit, 6-digit and 8-digit numbers assigned to the class of goods described in the third column (i.e., article descriptions).

The 4-digit number is defined as a “heading,” and the 6-digit and 8-digit numbers are defined as “subheadings.”

The 4-digit and 6-digit numbers are part of the International HS whereas the 8-digit number is part of the national HTSUS. The legal text of the HTSUS extends only up to the 8-digit level. Tariff-rate lines are found only at the 8-digit level or line.

3.1.3.2 Column – Stat. Suffix

The second column is entitled “Stat. Suffix” for “Statistical Suffix.”  Some tariff-rate lines are annotated to permit the collection of trade data on narrower classes of merchandise.

This is done by the addition of two or more digits to the 8-digit legal numerical code.

The result is a 10-digit “statistical-reporting number.” If no two-digit annotations exist for a tariff-rate line, then two additional zeroes are added onto the 8-digit legal numerical code.

All merchandise falling within the 10-digit statistical-reporting numbers of a particular 8-digit legal provision receives the same rate of duty as provided for in that 8-digit provision.

The 10-digit statistical-reporting numbers are for the collection of statistical data only and are not part of the legal text of the HTSUS (and thus cannot be cited as authority for the classification of merchandise).

 

3.1.3.3 Column – Article Description

The third column is entitled “Article Description.”

Within this column are detailed descriptions of goods falling under each heading, subheading, and statistical-reporting number.

Goods are classified under a particular heading or subheading by application of the GRIs, and in some instances, by application of the Additional U.S. Rules of Interpretation.

3.1.3.4 Column – Unit of Quantity

The fourth column is entitled “Unit of Quantity.”

Under this column is the unit of measure in which goods are to be reported for statistical purposes. These same units may also be used to assess rates of duty for particular goods.

Also, in some instances, two or three different figures in different units must be reported.

The second unit of quantity in such instances is frequently used to administer a measure regulating imports (e.g., quotas).  If the letter “X” appears in this column, only the value of the shipment must be reported.

3.1.3.5 Column – Rates of Duty

The final three columns appear together under a superior heading entitled “Rates of Duty.” The column designated number 1 is divided into two subcolumns: “General” and “Special.”

Under the General subcolumn are rates of duty for countries qualifying for most-favored-nation, or normal trade relations (“NTR”) status.  Most goods imported into the U.S. receive the general rate of duty, including China.

Under the Special subcolumn are found the rates of duty for certain preferential tariff programs.

Rates of duty in column 2 apply to products of Cuba and North Korea.

 

3.2 How much for duties and taxes ?

 

If the value of a shipment of merchandise imported by one person on one day is $800 or less, there will be free duties and taxes. It’s De Minimis Value.

There are three types of rates of duty that may be assessed on goods imported into the U.S.: ad valorem, specific, or compound (or mixed).

  • An ad valorem rate of duty is a percentage of the dutiable or customs value of the merchandise.  (This is the rate of duty most often applied)
  • A specific rate of duty is a specified amount per unit of weight or other measure of quantity (e.g., 10 cents per pound or 5 cents per dozen).
  • A compound (or mixed) rate of duty is a combination of both an ad valorem rate of duty and a specific rate of duty (e.g., 5 percent ad valorem plus 10 cents per pound).

CBP has the right to require a formal entry on any shipment where additional information, bonding or protection is required. In the case of low value shipments, it is important to note that this treatment can be denied if used for the purpose of avoiding compliance with any pertinent law or regulation.

 

3.2.1 Main Tariff

 

There are columns in the HTS to denote the general, special and maximum duty rates for each line item.

  • Imports from most countries are dutiable at the normal trade relations rates under the General header in Column 1.
  • Goods from countries that do not have normal trade relations are dutiable at the full rates in Column 2.
  • Goods from some countries enjoy duty-free status. They are shown under the Special header in Column 1 of the tariff schedule.

The first column (General) is referred to as the “Most Favored Nation”, and China is considered a “Most Favored Nation” here.

The “general” rates of duty subcolumn contains U.S. normal trade relations duty rates; products of some NTR countries may be eligible for preferential tariff programs, as reflected in the “special” subcolumn. Column 2 (the so-called “statutory rates”) applies to countries listed in general note 3(b); the general notes set forth the rules for applying the HTS.

Embargoes, anti-dumping duties, countervailing duties, and other very specific matters administered by the Executive Branch are not contained in the HTS.

In the yoga mat example, the tariff rate is 4.6%.

 

3.2.2 Other taxes or fees

 

CBP also collects federal taxes and fees on behalf of other federal agencies. It is based on the value of the merchandise being imported, not including duty, freight, and insurance charges.

  • Harbor Maintenance Fee (HMF): 0.125% of the value (if by sea)
  • Merchandise Processing Fee (MPF): 0.3464% of the value, min $25, max $485

3.2.3 Total customs fees

 

  • Product value * (tariff rate+0.00125+0.003464) (if by sea)
  • Product value * (tariff rate+0.003464) (if by air)

 

3.3 The exact Landed Cost

 

For companies involved in importing, the cost of freight and duty on items purchased overseas can be quite significant.

Freight costs and duty are such expenditures that must be rolled into the core item cost, so values such as cost of sales are reflected accordingly.

All buyers should calculate a landed cost of the product they are purchasing before actually importing it.

Do not go through the trouble of importing and then finding out you spent more than you can sell it for.

 

3.3.1 What is Landed Cost?

 

Landed cost – also referred to as landed price, net landed cost, total landed cost or total delivered cost – is the total price of a product up until it reaches the buyer’s doorstep.

It determines how much it costs to source a single item up to the moment it is received by your customer.

It includes all specific prices associated with the shipping of every item, such as the original price of the product, shipment or transportation costs, customs, duties, taxes, insurance, crating, handling and payment fees, even currency conversion.

All of this together will then allow you to define the correct sales price and establish a profit margin for each product.

 

3.3.2 Why is landed cost important?

 

3.3.2.1 Gives you more accurate information

There are obvious costs associated with shipments, such as the cost of the goods, but there may also be expenses that are less apparent, such as duties, insurance costs and quality control costs.

Calculating the landed cost gives you a complete picture and helps you avoid unexpected expenses, making your reporting and budgeting more accurate.

 

3.3.2.2 Helps you price products optimally

If you set your prices too high, you may see a decrease in sales.

If you set them too low, your profits may not be as high as you’d like and you may even lose money. Without an accurate idea of how much it costs to ship each product, it’s much harder to price your products at the optimal level.

Understanding landed cost is crucial for knowing how to price imported products. It also gives your sales team an idea of how much they can discount a product while still bringing in a profit.

 

3.3.2.3 Helps reduce expenses

When it comes to international shipping, the lowest-priced products are not always the best deal because several other factors go into the shipping process. Calculating landed costs requires you to look at all of your expenses related to shipping products.

This may reveal opportunities for reducing your costs. Consider whether all of your current costs are worthwhile, whether more cost-effective shipping methods might exist or whether other shippers offer better prices.

Analyzing your landed costs can also give you the information you need to negotiate better rates.

 

3.3.2.4 Supports global expansion

Most businesses believe international expansion is necessary for long-term growth.

Working with foreign suppliers and selling your products to customers in other countries provides your business with more opportunities for growth.

You can introduce your brand to new markets and potentially lower your costs.

However, to take advantage of these possibilities, you need to know how much it will cost to expand your operations and partnerships to other countries. Landed cost analysis gives you the information you need to be confident that you can grow your business by expanding internationally.

 

3.3.3 How to calculate landed cost?

 

The basic equation that allows calculation is the following:

Product + Shipping + Customs + Risk + Overhead = Landed Cost

 

3.3.3.1 Product

This is probably the most straightforward point to consider. It refers to the net price you pay your supplier for a single item and includes materials and components.

 

3.3.3.2 Shipping

If you have some experience in shipping, you will know well that every single aspect of the process has an associated cost. Aside from the price for freight itself, you also have to factor in fees related to handling or packing.

 

3.3.3.3 Customs

Customs requirements and fees are country-specific: CBP has its own authority to monitor the goods that cross its borders. Therefore, CBP is in charge of collecting duties, tariffs, applicable taxes and other fees.

 

3.3.3.4 Risk

This includes all costs associated with protecting your business, employees and customers. That is, whatever you’re paying for insurance, compliance and quality assurance.

 

3.3.3.5 Overhead

The final price of an import is related to operations: staff, due diligence cost and exchange rates, to name a few. All of these operation costs are included in overhead.

 

3.3.3.6 For Example

Below is a brief example of how you might calculate landed cost.

A seller quoted 500 units with $20 each.

  • Product: 500 units * $20 = $10,000
  • Freight: $1,500
  • Customs: $10,000 * 5% = $500
  • Insurance: $100

Total landed cost: $10,000+$1,500+$500+$100=$12,100

Actual cost per unit: $12,100/500=$24.2

Understanding landed costs is essential for importers looking to understand their gross margin and to ensure accurate profit analysis. Understanding the gross margin means that you can work out at what point you break even, and then how much profit you’ll earn after you’ve reached your break even point.

In this case, in order to break even you need to sell for $24.2 each and increase this figure if you are to make a profit.

It’s critical to get landed cost earlier; no one wants to lose customers (due to estimating costs too high) or earnings (estimating costs too low).

If it’s higher than you had anticipated, you can try to look for ways to mitigate the cost elements. If it’s in line with your budget, you can go ahead and begin the process.

 

3.3.4 You may need to estimate

 

You may not know the exact costs of something until after your shipment arrives.

In these cases, you need to estimate your costs as accurately as possible.

Get estimates from the companies you work with and look at costs from previous shipments to get an idea of how much you’ll have to pay.

Unexpected fees that may come up during shipping will sometimes result in

fluctuations in your total landed cost, which is totally normal.

While you should determine as many of your costs in advance as possible, an informed estimate can go a long way. Then, once you get your actual, final costs, reconcile them against the estimates you used.

 

3.4 A quick summary

 

Though almost every item you bought from China can make money for you, you still need to have a clear view at the beginning about how much your cost will be.

Try to get as much information as possible, and calculate the most exact unit price, especially when you are going to place the order.

 

4/ Search Alibaba suppliers and get quotes

Cheaper wages, plenty of resources, expert designers, trade infrastructure, friendly trade laws and all makes China a perfect trade hub.

It is just perfectly structured for importing.

Trends have emerged that affect how people do business in China, for example, solid economic expansion of rural areas in China, rapid market changes and government reforms have transformed China from being a country for low-cost manufacturing to an attractive destination to carry out business transactions.

  • Low-cost manufacturing
  • High number of suppliers to choose from
  • High quality products can be produced with reasonable price
  • One-stop services like Alibaba for easy purchase
  • Full supply chain including modern infrastructure for easy ship

You can find suppliers online or in trade shows. We recommend searching on Alibaba.com at the beginning.

It’s free-use and effective. Also there are many alternatives that can be found with a simple Google search.

Alibaba Group has so many products like Taobao, Aliexpress, Tmall, Alipay, 1688, and etc. And Alibaba.com is their first product since 1999. Alibaba.com is the largest search engine for finding manufacturers and suppliers not only from China but also from all the world.

Your ultimate goal when looking for suppliers should be to find 3-5 potential suppliers, contact them, get price quotes and other important info.

Buying on Alibaba and using the directory is fairly straightforward and similar to other marketplaces. If you haven’t used it or don’t know how to use it correctly or safely, keep reading.

 

4.1 Create an Alibaba account

 

Go to https://www.alibaba.com/ and sign in if you already have an account. If you don’t have an account, go to the signup page and follow the instructions to create one.

Registration is completely free and you can post unlimited buying requests directly to suppliers.

If you do not have a business, you can fill the “Company name” field with your name.

 

4.2 Begin your search

 

Alibaba.com is like an online trade show.

You can find suppliers for all kinds of products, learn products via photos or descriptions, and evaluate suppliers’ background by company information.

Browse the product categories or do a search for the particular product you’re looking for.

There are mainly two methods to find products on Alibaba.com:

You need to know exactly what you’re looking for.

If you are only searching for broad search terms or vague descriptions of products, you will have a long list of results that will take a long time to sort through.

You can search for the product on Amazon first and look at the reviews and descriptions of top rated products, to give you a clear product description.

You can’t include all search words at once as you are limited to 50 characters, and you may also need to search multiple times with variations of words.

However, by providing more specific search terms you’ll be getting much better results than more generic broad search terms.

 

4.2.1 Search by supplier

Instead of searching by product, you can select the “Suppliers” tab next to the search bar. This will return suppliers who specialize in the product you’re trying to purchase.

 

4.2.2 Post a request for quotation (RFQ)

RFQ is short for the Request For Quotation, which is the buying request submitted by a buyer, and open to suppliers for bidding.

You only need to give the product information to Alibaba, they will help you send your inquiry to suppliers, who have a higher possibility to match your requirements. Then the suppliers will give you their quotations.

Compared with you go to Alibaba search suppliers directly, and send inquiries to suppliers one by one, using Alibaba RFQ is much more efficient, because you can get in touch with around 10 suppliers in just 2-3 hours.

If you’re not satisfied with the results, you can post RFQ again and again, to get more suppliers to reach out to you.

Click on the “Submit RFQ” option and create your post in the space provided. You can also attach product links or images to describe your requirements better. Learn more, https://rfq.alibaba.com/

The very important thing you need to know is to describe your sourcing requirements as detailed as possible because every Alibaba supplier can only reply to less than 30 RFQs per month.

If your RFQ is too simple, they will think that you are not a serious buyer, and they don’t want to waste this opportunity to reply to your RFQ. Good suppliers will only choose those most serious buyers, choose those RFQs that match their business well.

 

4.3 Trading Companies vs. Factories

 

There are two basic types of suppliers on Alibaba: factories and trading companies.

Factories manufacture products. A real factory owns their own facility and physically creates every item that they sell.

Factories typically have very narrow specialties and you’ll rarely find a factory that makes a large variety of goods.

In fact, if a company claims to be a factory but sells hundreds of disparate items, they probably aren’t a real factory.

Trading companies do not manufacture products but source different products from different factories, then sell to you.

As a result, they will add a markup to the overall cost of your products.

They are often more experienced in exporting and they can provide additional services. For example, they might offer better packaging options or offer a first level of quality control.

Chinese companies’ names usually consist of four elements: Location + Name + Business Scope + Company Type.

Trading companies usually use words like trading, import&export, international, etc.

While factories usually use industrial, products, or certain product names like stainless, plastic, etc.

You can also check their product categories if it’s focused on certain areas.

Neither trading companies nor factories are inherently bad or good. Trading companies (normally) have lower MOQs and better quality controls. Factories (normally) have lower prices and are more professional on particular items.

It’s always better to focus on how to balance between the price, quality and the service, instead of verifying if it’s a real manufacturer and you only buy from them.

 

4.4 Filter your search results

 

Searching by product and category can return thousands of items, so it could take lots of time to sort through products.

You can use the options on the left side of the search results page to narrow your search and return fewer, more specific results.

 

4.4.1 Gold Supplier

Gold Supplier is a paid membership for suppliers on Alibaba.com who have serious interest in doing business with buyers worldwide. Rough $4,500 per year.

A Gold Supplier does not mean good quality products but it does give some indication this supplier is a legitimate and invested seller. Scammers usually don’t pay for Gold Supplier status because they need to change accounts very frequently and this extra cost is simply too much for them.

Gold supplier status is still the number one thing to look for when searching for reliable suppliers and to avoid scams.

To see if a supplier has Gold status or not, you simply go to the product page or supplier profile and look for the number, which also tells you how many years the supplier has had that Gold status.

More important than gold supplier status itself is the number of years a supplier has held this status.

The best suppliers typically have held gold status for multiple years.

You’d better try to stick with Gold Suppliers who have at least a three-year track record on the site. The longer a company has held gold supplier status, the more reliable they are likely to be.

 

4.4.2 Verified Supplier

Verified Supplier is kinda like a higher level than the gold, rough $10,000 per year to Alibaba.

It means a third-party inspection company (such as SGS, Bureau Veritas, TUV SUD or others) have carried out an independent inspection of the company. They check and verify things like:

  • Company profile certification
  • Business scope certification
  • Enterprise qualification certification
  • Product R&D capability
  • Quality assurance capability
  • Aftersales service capability
  • Associated factory
  • Cooperative factory
  • Etc.

If the supplier has been verified, you will see the special verified logo on their Alibaba profile, as well as a list of things that have been verified. Then, you can click on the individual items to get more information or access visual materials on the aspects that have been verified.

Selecting an assessed supplier will definitely provide high quality suppliers, however, it can significantly reduce the number of results.

It is definitely a good sign of a trustworthy supplier, but you shouldn’t automatically eliminate everyone else.

Basically, you have to look at it from the perspective of how many suppliers there are for the product you are searching for.

If you get TONS of results, then it can be a good idea to only contact verified suppliers.

 

4.4.3 Trade Assurance

 

Trade Assurance is a free service for buyers. It secures your payment, as your payment is made to a bank account designated by Alibaba.com.

Trade Assurance protects online orders when payment is made through Alibaba.com. It covers you if:

  • Your products are not shipped on time as per the contract with your supplier.
  • Your products do not meet the quality standards as per the contract with your supplier.

Trade Assurance doesn’t cover all orders on Alibaba – as it’s only eligible for suppliers who have signed up to the service and promise to abide by the Trade Assurance rules.

The supplier prepares the goods for shipment and you deposit your payment in a special account designated by Alibaba.

As soon as the order is confirmed, the goods and the money changes hands.

With Trade Assurance, the supplier knows the money is there, and that they don’t have to just trust that it’s coming.

At the same time, the buyer knows that the money isn’t going to be turned over to the supplier until they receive the goods and can inspect them for quality. It’s a protection for both buyers and sellers.

You can easily see which suppliers/products are covered by Trade Assurance by looking out for the Trade Assurance logo when searching for products and suppliers on Alibaba.

When you hover over the Trade Assurance logo, you’ll be able to see another very important piece of information – the coverage amount for that supplier.

This is also known as the supplier’s Trade Assurance limit and this amount is set by Alibaba. It’s based on the supplier’s qualification status and also their historical sales volume, so the higher this amount the better really.

You need to be as specific and detailed as possible in your contract.

Also include images. A contract that details all of the order expectations between you and your supplier will result in higher product quality and significantly less issues.

Even if you have Trade Assurance, you should always try and resolve any issues directly with your supplier. If it’s a genuine mistake, most suppliers will be more than happy to alter/fix/replace it for you.

 

4.4.4 Transaction History Level

The level is based on an accumulated score awarded for total online transaction volume and amount.

The greater the transaction volume and amount, the higher the score awarded.

Basically, it indicates how much in sales a supplier has done on Alibaba and, obviously, the bigger these numbers are, the better. It is a good indicator that it is a legit company with regular orders.

 

4.4.5 Ratings & Reviews

Reviews are a clear telltale sign of the status of a supplier’s performance. we can finally see what other buyers think about the supplier and their products.

It’s great that they also list which product the feedback/review was left for and the buyer’s country.

Anyway, you shouldn’t base any decisions on looking at the reviews alone, unless they’re very bad.

If they clearly indicate that the product quality is low, the supplier made mistakes with the order, etc., that’s a good reason to remove that supplier from your shortlist. As time goes by and the number of reviews increase, this will become a much more useful tool for buyers.

 

4.4.6 Mixing filters with search terms

The more specific your search terms are, the less results you are likely to get and likewise, the more filters you have applied the less results you will get.

Running very specific searches with lots of filters applied will often return few or no suppliers. If you are finding that you are getting few or no results for your searches, try the below:

  • Searching with specific search terms and less filters applied
  • Searching for broad search terms with filters applied

Gold supplier and trade assurance should be the minimum filters applied, however, filtering by location, past export countries and assessed supplier are optional if little or no search results are returned.

 

4.4.7 Pay attention to product photos

Try to look for signs that the photographs are authentic, such as:

  • Signs the photo was taken in China
  • Company watermark on the photo
  • Good photos but not too good

 

4.5 Further filtering suppliers

 

After searching for keywords and applying filters, you can quickly filter the results further using some other factors.

On the right side of each result, you’ll see:

  • The gold supplier status with the number of years they’ve held it
  • The transaction level and amounts over the last 6 months
  • The response rate

* The response rate is not particularly important as the supplier may respond to messages via email and not the Alibaba messaging system. As long as it’s over 70%, it’s acceptable.

The important factors to look at are the years they have held the gold status and their transaction levels.

Also you can find which year the company is established. If more than 10 years, it’s a good sign.

There are many other functions, such as filtering by country or region.

Say you plan to purchase from Shenzhen. You can narrow down the province in filters (in this case Guangzhou province), so you only see suppliers from that region.

Ask the supplier whether they attend trade shows.

If yes, it’s usually a good indication that they are legitimate and trustworthy. Trade shows require a monetary investment – making it unlikely that bogus operations will be present!

However, keep in mind that if they say that they don’t attend trade shows, it doesn’t necessarily mean they are a fraud.

 

4.6 Searching on the “Suppliers Tab”

 

Searching on the products tab will show you all products that a supplier has created in the past.

It is a good way to find the exact product you are looking for and get ideas for features you could add to your product.

However, in the products tab you will find thousands of products with suppliers showing up multiple times.

Suppliers could have hundreds of products that match the search terms, so you’ll find after a few pages into the products tab, you are clicking on the same suppliers again as all of their products are showing up in results.

There is another option to search under the “suppliers” tab where the results will show the suppliers that have products that match your search terms.

The disadvantage of this is that you can’t always see the exact product you are searching for in the results, however, it reduces the number of supplier results you need to search through.

There’s no right tab to use but the products tab is a good place to start. After you have shortlisted suppliers from the first few product pages, switching to the suppliers tab could save you time.

 

4.7 Contact methods

 

In general, the prices listed on the Alibaba website tend to be higher than what you can actually get when you start negotiating with your supplier.

You should reach out to as many suppliers as you can and get as many quotes to get an idea of the range of prices for your product. When first starting out, contact at least 20 suppliers.

You want to contact as many as possible because you’ll be narrowing down your list based on the number of responses you receive. Once you start getting replies, choose 3-5 to work with.

You need to realize that most good suppliers receive hundreds of inquiries per day.

As a result, you’d better project confidence and know exactly what you want to buy. Also your message should be concise, professional and to the point.

Except direct call the factory on the phone, there are four ways to contact every supplier on Alibaba. You can click:

  • Get Latest Price
  • Contact Supplier
  • Start Order
  • Chat Now

Choosing “Get Latest Price” is a quick and easy option, but suppliers are less likely to pay personal attention to these requests. Choosing “Start Order” only makes sense if I already know I’m ready to order from this supplier, which might not be true if this is my first time working with them. “Chat Now” is a good way to contact the supplier directly, but time differences can make it difficult to coordinate.

For these reasons, you need to use the “Contact Supplier” option to reach out directly with a representative.

It’s similar to sending an email, but through the Alibaba site, and you’ll receive an email notification for every response the supplier sends you.

A request for quotation, often called RFQ, is a typical business procedure which serves as an invitation to suppliers to bid on particular products.

Responsive suppliers will usually reply within 24 hours or sooner, depending on holidays, weekend, their workload, and interest in you and your company.

Expect at least a third of them not to reply. They may simply not be interested in your proposal (too small order, wrong market, etc.).

When contact suppliers, you can act bigger than you really are. Use the word “we” instead of “I” and “our” instead of “my”. Not only does this make your company seem larger than it is but it also displays a sense of teamwork and unity.

Also you prefer not mention that this is your first time.

It will probably give you a disadvantage in negotiating at a later point.

Taking a few extra minutes to plan your message can make a significant difference in the number and quality of replies you receive.

Then see who messages you back and how serious it seems they are taking your business.

Their customer service at this point is a good indicator of where it will be in the future.

After you’ve established initial contact, ask for their WeChat account.

WeChat is a messaging app widely used in China for everyone.

Once you are connected on WeChat, communication becomes infinitely easier and faster.

hThe suppliers will receive your messages instantly and they are more likely to respond in a timely fashion.

In addition, WeChat allows you to communicate via video as well if you want a tour of their facilities.

While email is a good for first level communication, WeChat is much more intimate and effective.

 

4.8 For Example

 

Let’s move forward to the ‘yoga mats’ example in Alibaba.

When you enter ‘yoga mats’, it shows suggested items as below.

We have learned earlier that the mat should be non slip and eco friendly.

These are the basic features, but you need to think more. Custom print is a unique selling point.

Click ‘yoga mats custom print eco friendly’. Now you’ve got thousands of results.

The green squares we marked mean these companies have paid to Alibaba to list ahead. Let’s ignore it for now, and take a look one by one.

This company is a 7-year gold supplier, and has large transactions.

Such companies may not be so positive about new small customers.

Their response rate 71.4% also approved that.

The product is yoga towel. Ignore it. It seems the first several products with advertisements aren’t the perfect fit.

Let’s move to the first none-AD one.

It’s 5-year gold supplier, 95.5% response rate, 250,000 transactions. Also the review is good. Click to find more about the product details.

You’ll learn:

  1. i) It’s made of TPE. We can add ‘TPE’ for the product search.
  1. ii) UV printing to make color more vivid.

iii) The mat can be widely used in recreation picnic, baby crawling, home carpet, yoga studio, gymnasium, etc.

  1. iv) Company Profile – Trade Shows, showed they attend physical shows, which is a good sign.

Now we can say it’s a professional mat manufacturer. But we need to click the company name for a double check.

This name Fuqing Shengde Plastic & Rubber Products Co., Ltd. showed:

  • Fuqing is a city, where the factory located
  • Shengde is their brand
  • Plastic & Rubber is their expertise

They also put yoga in their url, https://shengdeyoga.en.alibaba.com/

They list their products, which is yoga related. When you browse, you can open your mind to learn a lot about yoga products.

You can finally put this company into your potential contacts.

 

4.9 A quick summary

 

An early mover into China’s large and fast growing Internet economy, Alibaba has been enjoying a number of competitive advantages that propelled its growth.

By familiarizing yourself with Alibaba in the early stage, you can work efficiently. Also you can browse other similar platforms such as Global Sources or attend China Import and Export Fair based on your own situation.

 

5/ Gathering info and list potential suppliers

 

Now that you understand how to better protect yourself when doing a transaction on the other side of the globe, it’s time to contact some suppliers.

When contacting suppliers overseas, email will likely be your main method of communication.

You do not need any Chinese language knowledge.

Almost all Chinese suppliers who export have English language websites and sales catalogs and at least a couple of staff members with reasonable English.

Make sure you have the exact requirements of your product before contacting them as it’s important to appear professional from the start and know what you are talking about.

You are suggested to follow below three tips when send inquiry or post RFQ to get a quick and accurate quotation:

  1. i) Demonstrate that you are a serious buyer with a legitimate business.
  1. ii) Describe the product you are trying to source with as much detail as possible to ensure your requirements are met.

iii) Ask questions to determine whether the supplier is a good fit for your business.

To make sure communication is as clear as possible, keep your emails short, concise, well formatted and spelling error free. This will not only help the manufacturer but it will ultimately provide you with better replies in the end.

Also remember it’s not only about getting the lowest price.

If you come across a quote that is significantly cheaper than the others, raise a red flag.

Lowest price always accompanies high risk, maybe quality, quantity or reputation.

Be aware of suspicious payments, or communication that doesn’t seem right.

It’s never too late to simply cease communication and look for another supplier.

Whenever you try to drive down the price, there might be repercussions on quality. Don’t push hard, especially at the first time, 5% will be a pretty significant discount.

The company you ultimately choose will be a part of your business supply chain; you will rely on them to manufacture and ship your product.

It’s important to build a mutually beneficial relationship with your supplier for a much smoother experience all round.

Don’t forget: these are real people!

Alibaba suppliers will often simply ignore many buyer requests.

They are selective in who they respond to and even more selective in who they give their best prices to.

The goal of the first message is to get a response. Avoid mentioning quantity (too small or too big) which may scare off a supplier.

It’s easy for a supplier to ignore an initial email. But once a supplier has actually responded to you, it’s difficult to ignore future emails.

Chinese business people respect cultural differences and will not expect foreigners to fully blend in with their culture.

One factor that is important in running a successful import business is developing mutual trust.

You need to treat whoever you are dealing with respectfully.

International trade is based on mutual trust.

If you don’t trust your supplier, nobody will look after your production in the factory, and nobody will sincerely help you when trouble happens.

Just like you, suppliers are real people, working their real jobs. Treat them like human beings. Ask them how their days are going. It never hurts to be friendly.

So, keep these tips in mind when communicating and negotiating with suppliers on Alibaba. You’ll need answers for the following subjects.

 

5.1 Minimum Order quantity

 

The Minimum Order Quantity (MOQ) requirement sets the lowest quantity of a certain product (e.g. 500 pcs) that a supplier is willing to sell.

If the importer cannot reach the MOQ requirement, then the supplier is not willing or able to enter production.

It can be set per order, per product, per material or per color.

The MOQ is often specified on the suppliers Alibaba page, or website. You can also contact them directly to ask for their MOQ.

Even if a listing has their MOQ listed, you should double check with them to make sure it’s accurate.

If the MOQ is much higher, you’ll want to ask them if they are willing to negotiate the minimums.

Make sure to give them an idea of what you can afford. Keep in mind, minimum order quantity is almost always negotiable.

In addition, there are also different MOQs to keep track of, not just one.

Let’s take the textiles industry for example. Apparel manufacturers MOQ often looks like this:

  • Per unit: 1000 pcs
  • Per standard material: 500 pcs
  • Per custom material: 1000 pcs
  • Per standard color: 250 pcs
  • Per custom color: 500 pcs
  • Per size: 250 pcs

You can negotiate a lower quantity requirement from your supplier.

Most suppliers tend to be more willing to reduce the MOQ in order to accommodate smaller buyers. They may consider offering a lower MOQ, in return for a higher price.

 

5.2 Product Price

 

One of the most important questions is how much cost per unit.

Many times on Alibaba they will give you a range (Example: $8-$10 per unit), but you’ll want to know exactly how much each unit will cost you based on specific quantity.

The chances are good that you will receive very comparable prices, i.e. ranging from $18-$24.

Chinese suppliers are very good at knowing how much their competitors are charging and therefore will price themselves competitively, especially if they want to do business with you.

 

5.3 Production time (Lead time)

Knowing how long it will take to produce your order is an important consideration and depending your exact business, time can be critical.

 

5.4 Payment terms

The standard payment term is a deposit payment of 30% upfront before manufacturing, and 70% balance payment upon completion – but before shipping (or at least before arrival). The longer you work with a supplier, the easier it will be to deal with payments. Never accept an order requiring a 100% deposit unless the order is small (less than $1000).

 

5.5 Sample cost

Samples are important to inspect for quality. You’re going to want to ask what their pricing is for samples right away. Some suppliers that receive a lot of sample requests and may change the full retail pricing, others will offer you samples at a discounted rate, and some may even provide you samples for free if they feel you’re a serious buyer.

 

5.6 Incoterms (Trade Terms, Freight Terms, Ship Terms)

 

Incoterms (International Commercial Terms), are the global standard terminology and definitions used in international trade to determine which parties are responsible for the shipment at varying times during transit.

The Incoterms rules are a series of predefined commercial terms that are widely used in international commercial transactions or procurement processes.

Since the whole transportation can be divided into several parts, it’s necessary for the seller and buyer to be aware of who pays for internal delivery, who prepares documents, who manages customs, or so. It’s all about freight cost and responsibility (or risk).

 

5.6.1 Incoterms goal

Incoterms exist to reduce confusion between buyers and suppliers, not cause it.

An incoterm provides one universal definition for a series of tasks, responsibilities, and decisions; when you and your supplier both understand the terms, your shipping discussions will be more efficient.

By familiarizing yourself with the details of each incoterm, you can choose the one that makes the most sense for your next order.

All incoterms define:

  • Cost: who pays for each part of the delivery?
  • Responsibility: who handles the operations for each part of the delivery?
  • Risk: when does risk of cargo loss or damage transfer from the supplier to the buyer?
  • Instructions: what information do forwarders, brokers, or other parties involved in the shipment need to know?

They are aimed to reduce or remove altogether uncertainties arising from different interpretations of the rules in different countries.

As such they are regularly incorporated into sales contracts worldwide.

The rules are accepted by governments, legal authorities, and practitioners worldwide for the interpretation of most commonly used terms in international trade.

 

5.6.2 Most common incoterms

Basically how much of the shipping you pay the supplier to handle.

Based on the incoterm you select, you can let the supplier handle the goods transportation to

  • no further place but the factory/manufacturer, which is EXW
  • a nearby port in China, which is FOB
  • a nearby port in your country, which is CIF (including maritime insurance)
  • all the way to your facility, which is DAP/DDU (not including tariff and taxes)

In brief, it can be divided into 2 categories.

  • EXW and FOB means you – the buyer can use your own freight agent and pay for their services directly.
  • Other terms mean the seller uses their freight agent and you still pay for that.

 

5.6.2.1 Ex Works (EXW)

Summary: supplier has minimal obligation; buyer assumes all costs, responsibility, and risk upon picking up goods from the supplier until final delivery.

Pros: buyer has maximum control and visibility into costs and operations; product price is often lower than FOB product price.

Cons: nearly all responsibility is on the buyer – the supplier is not even obligated to load the goods onto the truck.

Also, navigating customs clearance in a foreign country can be difficult and expensive; the additional hassle and risk may not be worth the money saved on the product price.

Recommended for: experienced buyers who have solid relationships with their suppliers.

 

5.6.2.2 Free on Board (FOB)

Summary: supplier assumes all costs, responsibilities, and risks from the time the goods leave the factory until loaded on the ship at the origin port. Buyer assumes all costs, responsibilities, and risks after that point.

Pros: this is the best option for new buyers because the supplier handles much of the responsibility at origin, but the buyer still has much control over total shipping costs.

Cons: FOB product price is usually higher than EXW product price because suppliers add markup to recoup their internal shipping expenses.

Recommended for: new buyers or any buyer working with a particular supplier for the first time.

 

5.6.2.3 Cost, Insurance, and Freight (CIF)

Summary: supplier assumes the costs and responsibilities to get the goods to the destination port, including insurance; however, the risk is transferred to the buyer when the goods are loaded on the ship at the origin port.

Pros: requires minimal commitment from the buyer – the buyer doesn’t need to coordinate with a freight forwarder, negotiate freight rates, arrange freight, etc.

Cons: buyers give up control over things they have a vested interest in controlling, such as insurance coverage and Importer Security Filing (ISF). Buyers will also likely pay inflated destination handling charges, as they’re working with suppliers’ freight forwarders instead of their own.

Recommended for: Doesn’t recommend CIF because of buyers’ low amount of control and high risk of hidden costs.

 

5.6.2.4 Delivered Duty Paid (DDP)

Summary: supplier assumes all cost, responsibility, and risk until goods are delivered to the buyer. This is the only incoterm in which the supplier is responsible for import clearance and taxes and duties; the buyer only pays for the cost of the goods themselves.

Pros: similar to CIF – it requires minimal buyer involvement.

Cons: similar to CIF – it gives too much control to suppliers and buyers will likely pay inflated costs.

Recommended for: for similar reasons to CIF, we don’t recommend DDP for ocean shipping. However, it is more common and makes more sense for air express or parcel shipping.

 

5.6.3 Incoterms examples

Basically an incoterm consists of two components: a three letter code and a city name. Without an incoterm, you have no idea how far the supplier will ship your cargo.

When it comes to importing from China, you can find a price quoted by a supplier in China is always based on an incoterm and a city. Let’s take two basic incoterms in practical use as examples.

 

5.6.3.1 FOB Shenzhen Port

  • You book shipping space loading at Shenzhen Port
  • Your supplier handles the inland delivery to Shenzhen Port
  • Your supplier handles customs export declaration
  • Your supplier pays all cost at the Shenzhen Port until departure
  • You pay the shipping cost
  • You pay all cost after the cargo leaves
  • You pay sea freight charges, destination port charges, customs tariff and duties, inland transportation to your door or warehouse

5.6.3.2 CIF New York Port

  • Your supplier book shipping space from a nearer loading port
  • Your supplier handles the inland delivery to the port
  • Your supplier handles customs export declaration
  • Your supplier pays all cost until the cargo arrives at New York Port
  • You pay all cost after the cargo arrives at New York Port
  • You pay destination port charges, customs tariff and duties, inland transportation to your door or warehouse

Commonly, you can find the term states clearly with the product price when receiving quotes, i.e. FOB Shenzhen $10/pc or CIF New York $12/pc. If not, advise the seller to add it to avoid any further confusion or even dispute.

 

5.6.4 Incoterms best practice

 

The biggest factor is experience level. More experienced buyers generally want more control over the shipping process and associated costs, and they’re comfortable taking on more risk and responsibility to get it.

Less experienced buyers generally benefit from offloading some responsibility to their suppliers, even if it means giving up some control and price visibility.

The best practice:

  • If the shipment is just samples or small (under 150kgs and 1cbm), select EXW.
  • Other cases, request the seller quote based on FOB and list the FOB fees separately.

Most suppliers will quote EXW or FOB price at the beginning, and are flexible in providing different prices based on different terms upon your request.

When you compare prices from several suppliers, make sure they are based on the same term. For example, A-seller quoted EXW $5/unit while B-seller quoted FOB $5.5/unit, it doesn’t mean the price from B-seller is not more competitive than A-seller.

 

5.7 How to Find the best supplier in China ?

 

The first thing you must do is to get multiple quotes, ideally from three or more suppliers. This will tell you what the normal cost of your desired products is.

  • Some quotes will come back impossibly low.
  • Some quotes will come back really high.
  • Most quotes will fall within the same range.

Quality is directly related to price. Abnormally low priced items normally mean low quality. Another reason for a low price can be:

  • The quality is significantly lower than others
  • Different shipping terms (i.e. FOB instead of CIF)
  • Significantly higher minimum order quantity (MOQ)

When evaluating Alibaba sellers:

  1. i) Don’t pick the lowest price.

If the price is too good to be true, it probably is. Watch out for steep discounts and suspiciously low prices, as they are more likely to be counterfeit.

If a supplier is offering discounts or lower prices for orders paid in full, be careful. Anyone searching to be fully paid upfront (before the products are received) should be met with a healthy dose of suspicion.

  1. ii) Make sure the supplier clearly understands what you are looking for.

Make sure that you have properly conveyed your requirements to the supplier. Lack of clarity can cause manufacturers to use their own creativity while developing your product, which might not be a good thing.Also, ensure that the supplier has verified every single specification of your product.

 

5.8 A quick summary

 

Once you’ve narrowed it down to a select few suppliers, you’ll want to weigh all your options.

You’ll want to consider more than just price, MOQ and payment terms. Make sure you factor in how well and how quickly each supplier replied to you.

Your communication with your supplier can be a critical element of your business going forward so you’ll want to make sure you start off on the right foot. You need to list suppliers that match your business and you.

You can also perform a free search here, to check if the supplier has U.S. shipment records.

 

6/ Get Sample before order

Now it’s time to get 3-5 samples from potential suppliers.

Samples are an investment. You have to know what you’re selling before you can sell it and you’ll learn a lot in the process.

Be judicious depending on your budget, but don’t hold back for fear of failure.

 

6.1 Why order samples?

 

6.1.1 You can test the quality

Above everything else, you’d like to see, smell and feel the actual product before spending money on it, and on a larger scale at that. Requesting for a sample is not only practical, it’s also a smart way of experiencing the product first-hand.

As awesome as many products look in pictures, there’s the fact that some images can be a little misleading.

Most of us are highly visual and can be easily swayed by good presentation, but you don’t want to place orders for a product that is visually appealing but later turns out to be of poor quality in reality.

Design, functionality and overall quality must be ‘verified’ before you enter mass production.

 

6.1.2 You can test the supplier

Ordering samples also helps you verify a supplier’s competence.

You can get a good idea of how they will be to work with in terms of the manner in which they communicate, how fast they process and ship out orders, and how well they package their products among other things.

A supplier’s ability to produce good samples should never be taken for granted. Securing samples is a good way of putting suppliers to task. Think of it as a test that will help you narrow down your choices.

This will save you a lot of money in the long term and provide you the peace of mind you need to go forward.

 

6.1.3 It shows you’re serious

Lastly, ordering samples is important because it helps establish your relationship with suppliers. You have to keep in mind that many suppliers deal with dozens of requests on a daily basis and not all of these requests lead to actual orders.

When you pay for a sample, they take you more seriously and reply to you faster.

Ordering samples gives suppliers the impression that you are serious about building a long-term relationship and that you are seriously interested in dealing with them. It’s valuable when it comes down to negotiating price and MOQ.

In general:

  • You know how the supplier communicates
  • You understand about the shipment process and the time taken
  • You understand how customs work in different scenarios
  • Finally, you know how the product is

 

6.2 Types of samples

 

6.2.1 Factory samples (ready made)

These are the type of samples that are already made instead of being manufactured according to a buyer’s design and specification.

While it does show a manufacturer’s production capability, it doesn’t necessarily demonstrate their ability to produce customized products.

If you are after a product that does not require customization, this is the kind of sample you’ll receive.

Make sure to also ask if and how the sample product will differ from the sample in mass production. This is important because there are times when the same materials are not available in small quantities to produce a sample.

 

6.2.2 Pre-production samples (customs made)

These are the kind of samples you’ll get if your product requires customization.

This is also a good way to test a supplier’s capability to produce products out of customer specifications and is obviously part of the learning process for both the manufacturer and the buyer as well.

From a supplier’s point of view, developing product samples to a buyer’s specifications is no easy task.

Not only will it take time, the possibility of failure is also high because not all manufacturers are capable.

This is the reason why having additional suppliers as a backup is essential just in case the first few ones fail to live up to expectations.

It is critical to provide the supplier with clear product specifications, but there are limitations to what manufacturers can achieve when it comes to pre-production samples.

For example, creating a material in a certain Pantone color requires a certain order volume, and cannot be done on a small material sample.

This also applies to materials, as the factory may only be able to use stock material that is, to a varying extent, similar to your product. They cannot custom-make materials for a single product sample.

Similar, technical and economic, limitations also exist when it comes to materials, components, and design.

 

6.3 Sample quantity

 

You’d better order samples from more than one supplier.

Inciting competition is a brilliant strategy especially when the fail rate is high for a specific product.

Ordering and paying for samples from multiple suppliers makes a lot of sense.

You’ll be wasting a ton of time and money on a single supplier who keeps coming up short on expectations.

When you have more options to choose from, you can easily filter out those that are not performing as expected so you can focus on those that do.

The only downside to this strategy is that it gets more costly as you add more suppliers to your list.

 

6.4 How much do samples cost?

 

This will vary from supplier to supplier as well as the cost of the product you’re importing.

Cheap products (worth a few dollars) are usually free.

Often though, this free is relative as you’ll have to pay for shipping costs, and sometimes a supplier will simply over-charge you slightly on the shipping cost in order to cover the sample.

If it’s a more expensive product, there are two general options:

  1. i) The supplier charges you the same per unit price that you’d pay in your actual, large quantity order.
  1. ii) The supplier charges you a higher, usually retail price for the sample. Since they are manufacturers/bulk suppliers and they don’t want to waste time with retail customers trying to get a good deal on a single quantity order.

Anyway, you should still ask them to credit this overcharge back to you when you place your first real order. This is something that any decent supplier will happily agree to (in fact most do it by default). That way if you do decide to deal with them, you’ll get the extra money you paid back.

Also specify that the sample be labeled “sample: of no commercial value.” This will save you from being charged duty for the package imported.

 

6.5 Who should organise shipping – you or the supplier?

 

Theoretically you can organise the courier yourself, But in reality there’s no point in that at all as it will be much more expensive and also more time consuming.

Keep things simple and let your supplier arrange the courier and just invoice you.

So simply give the supplier your full address for delivery and ask them to find the cheapest courier quote they can get.

It really doesn’t matter which courier company they use (DHL, UPS, FedEx etc.) some will be faster than others but in general they’re all equally good so just go with the cheapest price.

 

6.6 How to pay for samples?

 

There will be some rare situations when you don’t have to pay anything.

Usually, you’ll have to pay for either the samples + shipping or shipping alone (if the samples themselves are free).

Most suppliers don’t accept Paypal due to the difficulties encountered in withdrawing money, high tax rates and potential charge backs from dubious buyers.

If Paypal has been accepted by suppliers, keep them as your precious.

It’s increasingly common that suppliers create digital invoices via the Alibaba payment gateway. You can request to pay via Alibaba.com, as that guarantees the payment sent to the right company safely.

Also, you can use a supplier’s AliExpress store (if have) to order samples.

 

6.7 Sample test

 

If your sample was shipped by air courier, it should arrive within 1 week. Once you get your samples, here are what you need to do:

  • Quality

Is the quality what you expect? Use the item for a while and see if it holds up and how it holds up.

  • Packaging

Check to see if the packaging is sufficient to ship to your customer. If your items are lumped into one box, inform your supplier to box them on future orders.

  • Instructions

If your goods do not come with instructions and if your supplier does not have instructions, then you need to create or borrow some instructions and include them with your goods.

  • Labelling

Is “Made in China” marked? If not, ensure this is done on future orders.

When the sample quality is good, ask your supplier what exact materials were used for various components to prevent them from substituting for inferior materials later.

 

6.8 A quick summary

 

Make sure to make your samples perfect even if it takes weeks of back and forward.

Not only the sample itself, but also consider ask yourself several questions:

  • Which supplier did you enjoy working with the most?
  • Which supplier was the most flexible and accommodating?
  • Which supplier wrote and/or spoke the best English?
  • Which supplier shipped the samples in a timely fashion?
  • Which supplier shipped samples that were packaged nicely?
  • Which supplier was the most accurate and professional?

Finally, building up personal relationships with suppliers is absolutely essential for getting the best-priced goods.

It’s important to make a phone call, start up an email exchange, or have regular chats on Skype/WeChat and get to know them.

The time you spend building a relationship will put you in a stronger position to get better prices. Also, because you know your supplier, you will feel more confident that things will go smoothly when you finally do place your order.

 

7/ Trial order

 

Everyone makes mistakes when they start out and it’s best to get some practice before you start investing in inventory and selling seriously.

Once you’ve validated your product, you can feel safe bulking up your order quantity and/or making changes to differentiate your products. It will be your first trial order.

Placing your first order is an exciting time.

If you are up to this stage of the game, it means you have found a great niche and a reputable supplier, and you’re about 90% ready to place an order.

You need to be as specific as possible and ask your supplier to confirm product specifications before both production and shipping.

When you have selected your supplier, request the Proforma Invoice for your prospective purchase.

When placing your first ever order or trying out a new supplier, it’s vital that you play it safe in order to avoid being scammed. This means before you go investing in a large order, start out small by just ordering a few items.

Along with protecting your large sum of money, it will also give you a chance to get used to selling the product, testing out selling techniques and different selling platforms before you are landed with a huge shipment.

 

7.1 Proforma Invoice

 

7.1.1 What is a pro forma invoice?

A pro forma invoice (P/I) is a preliminary bill of sale sent to buyers in advance of a shipment or delivery of goods. It notes the kind and quantity of goods, their value, and other important information such as packaging and shipping.

It is a binding agreement to satisfy their internal purchasing-approval process. P/I streamline the sales process by eliminating additional back-and-forth after a sale goes through, as all terms have been agreed to upfront.

P/I provides the buyer with a precise sale price, and it should be presented as precise an estimate as possible.

Although it may be subject to change, it represents a good faith estimate to avoid exposing the buyer to any unexpected and significant charges once the transaction is final.

The purpose of this document is to ensure the seller and buyer are on the same page about the agreement, including the price of the goods and services. It gives prospective clients an overview of the cost of products and services and why.

 

7.1.2 Proforma Invoice vs. Commercial Invoice

If the parties have already completed a sale, a commercial invoice records it. If the transaction has not yet occurred, the seller may use a pro forma invoice.

A proforma invoice is essentially a draft invoice, and there are a lot of similarities between invoices and proforma invoices.

The key difference between proforma invoices and invoices: whereas invoices are legal documents, proforma invoices are not. This has several implications:

  • Issuing a proforma invoice does not mean that a customer is required to make any payments on the products listed.
  • A proforma invoice should not be recorded as an account receivable by the seller. Because it is not a true invoice, it should not be registered as such.
  • A proforma invoice should not be recorded account payable by the customer since payment is not expected, meaning it is not marked as such.

 

7.1.3 Proforma Invoice vs. Quotation

In many ways, a proforma invoice is similar to a sales quotation.

Both proforma invoices and quotations let a customer know how much an order might cost, and both are sent at a similar point in the sales process – i.e. before a sale is entirely finalised. Usually, neither proforma invoices or quotes are legally binding.

However, whereas a proforma invoice represents a customer’s commitment to purchasing particular goods, a quotation does not. Instead, a quotation simply recognises a customer’s interest.

 

7.1.4 Proforma Invoice vs. Purchase Order

At face value, a proforma invoice sounds the same as a purchase order. Both types of documents contain descriptions, quantities, prices, discounts, payment terms and other terms of the sale.

However, the difference is the origin: the seller prepares and sends a proforma invoice to the buyer.

When it comes to a purchase order, it’s the buyer (and its accounts payable department) who issues and sends it to the seller and uses the document for invoice matching when disbursing payment.

A purchase order is considered a commercial document, meaning an official confirmation of a sale, while a proforma invoice is a quote from a sale, not a confirmation.

That’s why the terms in a proforma invoice are still subjected to change while a purchase order is a legally binding agreement.

 

7.1.5 What information is required in a proforma invoice?

The invoice shall be prepared in the manner customary in the trade, contain the information required as below:

  • The name of seller and buyer
  • The detailed description of the merchandise, including the name by which each item is known, the grade or quality, and the marks, numbers, and symbols
  • The quantities in weights and measures
  • The purchase price of each item and total
  • The kind of currency
  • The country of origin
  • The incoterm (shipping term or trade term)
  • The payment term
  • The packing details
  • The lead time (ready date)
  • And/or all charges upon the merchandise, itemized by name and amount including freight, insurance, commission, cases, containers, coverings, and cost of packing; and, if not included above, all charges, costs, and expenses incurred

Also, it must contain a statement on the cost of production by the seller.

 

7.2 Packaging goods

 

Cargo packaging (freight packaging) is the last step before loading into any carriage, and it is a very important factor to consider when shipping goods.

Previously, the only function of packaging was to protect the shipment. In modern transport, other considerations must also be taken into account, for instance, automated storage and mechanical handling.

Different types of shipment packaging will affect the size, weight and fragility of your goods.

Prior to your order you shall clearly specify to your supplier which export packing you require.

We suggest you should take some time to reach an agreement with your supplier for how to pack your cargo properly.

Because proper packaging of your freight is the best way to ensure that your goods arrive safely at their destination.

It would be natural to assume that suppliers would have this figured out. NEVER make this assumption or you might end up bankrupt.

The proper packaging of goods for transportation requires a good understanding of the product and distribution environment. It also requires knowledge of packaging materials, experience and patience.

 

7.2.1 Hazards of transportation

 

Below are the most common hazards present in transportation.

Punctures and Abrasion: Occurs when the package shifts or comes in contact with other packages or material handling equipment during sorting and other shipping operations.

They can also be the result of improper or insufficient internal packaging that does not prevent the contents from

shifting, resulting in the product being damaged or the package failing to contain the product.

Compression: Occurs when external forces are applied to the sides, faces or corners of a package.

Stacking, shock, vibration, material handling equipment and tie-down straps all generate compression forces that may result in package or product damage. Proper packaging offers the necessary level of protection against these forces.

Environmental Exposures: High and low atmospheric pressures are not restricted to air transit and can have a dramatic effect on some products or packages.

High and low humidity can result in condensation or corrosion, and it can greatly reduce the stiffness and compression resistance of paper-based products. Temperature extremes globally can range from -80º F to +160º F and can dramatically affect the performance characteristics of packaging material.

Other common environmental exposures include, but are not limited to, dirt, dust, odors and precipitation. If a product or package would be considered damaged if exposed to these hazards, then the shipper must take extra measures to ensure the package can protect the shipment from these known hazards.

Shipment Handling: Proper cushioning can reduce damage caused by the shock incurred during shipment handling. It is important to note that your shipment will most likely be handled with a forklift at some point during distribution. Proper packaging must be able to protect the contents from the drops and impacts commonly associated with handling operations.

Shock: Occurs during handling and transportation as a result of impacts with forklifts, racks, containers, floors and other shipments. Proper cushioning can reduce damage caused by shock. Most products will require some level of shock protection to prevent damage during normal

Vibration: Occurs in transport vehicles like trucks, planes or ships and on virtually anything else that moves, such as forklifts or conveyor belts. Proper cushioning can absorb and reduce the negative effects vibration can have on your product.

 

7.2.2 Packaging Types

 

Packing requirements vary, depending on the commodity, transport type, weather conditions and regulations of the country of origin or destination. Besides, cost is one of the top things to consider.

Here are 4 types widely used in freight packaging.

 

7.2.2.1 Carton

Paper and cardboard packaging is limited by the weight that it can withhold, as well as the ease of transporting it due to its incompatibility with common lifting equipment such as forklift trucks. There are also issues with its performance in extreme weather conditions, as it is likely to suffer damage in humid, wet or very cold conditions. It is however very cheap and easily recyclable.

  1. i) Corrugated Carton

This is the method that is used for shipping clothes, books, plastic and other things that are not breakable.

  1. ii) Double-Walled Corrugated Carton

This packaging method is often a reasonable alternative to crating and used quite often in the shipping industry. If moving furniture or other larger items, to ensure the protection of the finishes and delicate parts, use quality styrofoam and bubble wrap around these areas, box items securely so there is no movement inside, palletize and use strapping to hold in place, metal or nylon strapping bands are preferred.

iii) Double Cartons

This packaging method is used more often for fragile items such as: glassware, china, and smaller items that need extra care. These items should be separately hand wrapped in a commercial bubble wrap individually. Then these items are placed inside an inner shipping box, which will then go inside an actual shipping box with approximately 2-3 inches or more.

 

7.2.2.2 Crate

Crating is usually used for larger and heavier items, or as the best guarantee against breakage as well as high valued items that could be damaged easily. Whether wooden crate or plastic crate, they can well play a bracing role.

There is usually a higher cost for this method of packaging, but the advantage is well protected.

 

7.2.2.3 Pallet

Most ports, warehouses and other distribution terminals are designed with pallets in mind.

Palletizing is used for consolidating smaller items together, after they are boxed, and is necessary for large items and heavy shipments. This means the items are placed on a heavy wood foundation, shrink wrapped, strapped in place.

When using this method, a lift gate or dock is needed and a forklift is used to move these items. There is generally an extra charge added for the liftgate service.

Standard pallets are 40″ x 48″ with the goods not to extend over the pallet being used or exceed the height of 8 feet. Special pallets must be made for goods larger than 40″ x 48″. Loads wider than 7 feet will require a forklift to off-load the freight. If your freight is under 150 lbs, and your business does not have a dock, the load may be broken down from the pallet and then off-loaded by hand.

Attention: Wood packaging needs to be treated with chemicals or heat before being allowed into the U.S. If original wood, it is very likely that they will not be allowed into the port of import. It is then possible that you will have to either arrange for the return of the shipment, the destruction of non-compliant packaging or the treatment of non-compliant packaging. This can be very costly, time consuming and greatly affect your supply chain.

 

7.2.2.4 Bag

Freight packing with flexible packaging bags is commonly used for bulk products. For example, a 25kg woven polypropylene bag is strong and tough, ideal for feeds, etc. While an intermediate bulk bag can bear 1~2 ton, easy loading and unloading by handling equipment at the port facility.

 

7.2.3 Packaging considerations

 

There are a number of materials available for shipment packaging. Some of them with new technologies and more advanced materials are suited to bearing greater weights, surviving extreme weather conditions or minimizing excess weight and space.

  • Type of carrier – What are the various types of carriers to be used before the goods arrive at their destination? Usually, truck and ship are used in sea transport.
  • Types of hazard – For each type of carrier, what hazards are the shipments likely to encounter? For ocean shipping, this would include the type of storage, loading and unloading facilities, route, time of year (summer, winter, etc.) port reputation, etc.
  • Cost factors – As well as ensuring maximum protection for the goods being shipped, the exporter should minimize transportation costs by using lightweight, least bulky materials etc.

For some items, import duties are based on the gross weight of the item, including the interior and exterior containers and packing material. An allowance for tariff purposes is given for “tare” (the difference between the gross and net weights) and so both weights should be shown on the commercial invoice.

 

7.2.4 Packaging summary

 

If your shipment is more than 1 cbm, you’d better always palletize your goods to minimize the possibility of damage. You will benefit from the extra steps taken to properly package your freight.

Also, it should be a plywood pallet, not solid/original wood.

After the agreement between the buyer and the shipper, it is the shipper’s responsibility for packaging the goods correctly. Shrink wrap, cartons, corrugated boxes, crates, pallets, strapping or banding is acceptable packaging for the freight industry.

 

7.3 Marking

 

Every article of foreign origin entering the U.S. must be legibly marked with the english name of the country of origin (Made in China), to inform the ultimate purchaser which country the imported article was made. The ultimate purchaser is generally the last person who will receive the article.

The marking must be legible. This means it must be of an adequate size, and clear enough, to be read easily by a person of normal vision.

The marking should be located in a conspicuous place. It need not be in the most conspicuous place, but it must be where it can be seen with a casual handling of the article. Markings must be in a position where they will not be covered or concealed by subsequent attachments or additions. The marking must be visible without disassembling the item or removing or changing the position of any parts.

While a ‘Made in China’ mark is normally sufficient, some products have more specific labelling requirements.

  • Children’s Products: Warning Label, CPSIA Tracking Label
  • Electronics: FCC Mark
  • Apparel: Fiber Composition, Care Instructions, Flammability Warning
  • Packaging: Warning Label

Articles that are not marked at the time of their importation shall be subject to additional duties unless properly marked, exported, or destroyed under CBP supervision prior to liquidation of the entry.

 

7.4 Insurance

 

Cargo insurance covers loss or physical damage of goods, while in transit by land, sea or air. Many importers believe that this insurance should be handled by their carriers.

However, if you are not in control of the cargo insurance, it is difficult to guarantee that the correct type and amount of insurance has been placed on your shipment.

Shipments being transported anywhere in the world are exposed to a wide range of risks. Some of which include loss or damage due to:

  • theft, pilferage or hijack;
  • mistakes in transportation such as dropping, rough or inappropriate handling;
  • accident to the carrying conveyance such as a vessel sinking, aircraft crashing or vehicle fire, road traffic accident or overturning;
  • exposure to rain or salt water;
  • variations in temperature.

Most of these risks are difficult for the owner of the goods to manage directly.

This is because the goods will be given into the care, custody and control of third parties who will limit their liability for loss or damage to those goods.

There’s no reason not to have your consignment insured with a little additional money.

It will cover the transportation damage, but clearly it doesn’t cover any quantity or quality issue.

 

7.5 Build relationships

 

Your approach to suppliers needs to be part of your strategic plan since almost every company is dependent on suppliers.

Many buyers seem to get this supplier issue backwards. They think that because they place the order, they’re in the dominant position and can exploit it with unreasonable demands.

Let’s get this right: you need good and reliable suppliers.

When you find them, treat them like gold. Work as hard on building a good supplier relationship as you do building a relationship with your customers. And be loyal to your good suppliers.

They are essential to your business’s good health and growth. They are a nuanced bootstrapping strategy.

Let’s briefly look at all the ways suppliers can impact your company.

  • Quality: Supplier components can positively or negatively affect the quality of your product. Higher quality increases customer satisfaction and decreases returns.
  • Timeliness: Their timely deliveries are crucial to how customers view your reliability. A quick turnaround can become the key to minimizing your inventory.
  • Competitiveness: They can give you the one-up on your competition based on their pricing, quality, reliability, technological breakthroughs and knowledge of industry trends.
  • Innovation: Suppliers can make major contributions to your new product development. The good ones will understand your company, its industry and needs, and can help you tweak your new idea.
  • Finance: If you’ve proven to be a considerate, loyal and paying customer, you may be able to tap into your suppliers for additional financing. That financing may take the form of postponed debts, extended terms on new purchases, flexible payments, etc.

It’s totally all right to be a demanding customer to your supplier. You can also be a valued customer. Here are a few things you should do:

  • Always pay on time. You can negotiate for favorable payment terms before you place an order, but once the order is placed, don’t renege or attempt to change the rules. Don’t play games with suppliers’ cash. You’ll be absolutely amazed at the goodwill and benefits you will earn by observing this simple rule.
  • Provide adequate lead times. Try to give suppliers as much lead time as possible on your orders. Unless there’s a good competitive reason not to, share with them an honest projection of your needs, and keep them abreast of any significant changes in that estimation.
  • Share information. Keep the good supplier aware of what’s going on in your company. Tell them about changes in key personnel, new products, special promotions and so on. Many times, you’ll find that good suppliers can help you in some way.

Most suppliers will highly value your business, even if it only comes in small, and they appreciate that eventually, you should become a larger and more steady customer for them.

For this reason, many suppliers will do their bit to get to know you to make sure you will be loyal to them in the future.

Take advantage of any gestures they offer and use any time they give you as an opportunity by telling them all about yourself, your family, your vision for your business and goals for the near future.

Getting to know each other on a personal level is truly the most important thing you can do to help secure a better relationship for the future.

Developing good relationships with suppliers is not a complicated process. Be communicative, tell them of your needs and standards, treat them fairly, be demanding, be loyal, and pay them on time.

 

7.6 A quick summary

 

Go with the one that is the easiest to work with, taking into account pricing and quality.

We normally suggest making your first order size as low as possible (the supplier’s minimum order quantity).

You want to gradually build up the order size with your supplier over the course of two or three orders.

Some basic precautions to follow:

  • Buy from Alibaba Gold Suppliers only
  • Making payment through Alibaba Trade Assurance
  • Order small at first and gradually increase it

Also mention that this will be the first trial order and that if it is successful, large orders will follow. After production finished, request the high resolution product photos and videos before you pay the balance.

You can always ask the supplier to send you 1 or 2 pieces from the bulk order to check quality.

If you are moving into large-scale importing, invest time and money on a few trips to China to see the suppliers/manufacturers/agents that you feel you want to work with.

 

8/ Shipping from China to USA

Before shipping, if you have the budget, which is around $300, you can hire an inspection company check for you before your balance payment.

You can also:

  • Request photos, and maybe a live video (easy with Wechat).
  • Request send you a few samples taken from production.

As indicated above, you choose EXW or FOB with your supplier. You are responsible for the shipping, and you’d better plan as early as possible.

  • Leave yourself enough time to plan and comply
  • Use air delivery only if necessary
  • Find suitable shipping method based on cargo volume & weight
  • Find a local freight forwarder
  • Well packaging
  • Insure your cargo

Your first priority is to make sure everything runs smoothly and that every participant in the process is reliable.

Your second is to ensure that every stage of the process is as cost-efficient as possible because this is where your costs can really add up. It’s vital to research the best freight company, transportation and storage options.

You might not get it right the first time, but when you do, you’ll be able to enhance your profit margins significantly.

 

8.1 Parties Involved

 

8.1.1 Freight Forwarder

 

You should start arranging your freight as early as possible, no later than one weeks before the order is ready for moving. Your first step is to find a freight forwarder.

A freight forwarder, forwarder, or forwarding agent, also known as a non-vessel operating common carrier, is a person or company that organizes shipments for individuals or corporations to get goods from the manufacturer or producer to a market, customer or final point of distribution.

  • investigating and planning the most appropriate route for a shipment, taking account of the perishable or hazardous nature of the goods, cost, transit time and security;
  • arranging appropriate packing, taking account of climate, terrain, weight, nature of goods and cost, and the delivery and warehousing of goods at their final destination;
  • negotiating contracts, transportation and handling costs;
  • obtaining, checking and preparing documentation to meet customs and insurance requirements, packing specifications, and compliance with overseas countries’ regulations and fiscal regimes;
  • offering consolidation services by air, sea and road, ensuring cost-effective and secure solutions to small shippers who have insufficient cargo to require their own dedicated units;
  • liaising with third parties to move goods (by road, rail, air or sea) in accordance with customer requirements;
  • arranging insurance and assisting the client in the event of a claim;
  • offering tailored IT solutions and electronic data interchange (EDI) connections;
  • arranging payment and other charges or collection of payment on behalf of the client;
  • utilizing e-commerce, internet technology and satellite systems to enable real-time tracking of goods;
  • arranging air transport for urgent and high-value cargo and managing the risk door to door;
  • arranging charters for large volume, out-of-gauge or project movements by air and sea;
  • acting as broker in customs negotiations worldwide to guide the freight efficiently through complex procedures;
  • dealing with special arrangements for transporting delicate cargoes, such as livestock, food and medical supplies;
  • arranging courier and specialist hand-carry services;
  • working closely with customers, colleagues and third parties to ensure smooth operations to deadlines;
  • maintaining communication and control through all phases of the journey, including the production of management reports and statistical and unit cost analysis;
  • acting as a consultant in customs matters;
  • maintaining current knowledge of relevant legislation, political situations and other factors that could affect the movement of shipments.

In short, freight forwarders arrange the best means of transport, taking into account the type of goods and the customers’ delivery requirements.

They use the services of shipping lines, airlines and road and rail freight operators.

Simply search on Google then reach out to get freight quotes.

 

8.1.2 Customs Broker

 

Those importing merchandise for their own use often hire a customs broker, particularly if they find the importing procedures complicated.

Importers wishing to consult the professional services of a customs broker may do so.

Customs brokers are licensed by CBP, but are not CBP employees.

Remember, even when using a broker, you (the importer of record) are ultimately responsible for the accuracy of the entry documentation presented to CBP and all applicable duties, taxes, and fees.

Here’s a list of customs brokers by CBP, https://www.cbp.gov/contact/find-broker-by-port .

Please note these lists may not be all-inclusive, are subject to change, and those brokers appearing on the list are not endorsed by CBP.

A broker is a must for a first time import. Categorizing your product to ensure it gets the appropriate tariff/duty is a complex task and a broker will help to ensure you don’t end up paying more than necessary.

Also, if a portion of your documentation is incorrect, the delay that will inevitably occur can be cripplingly expensive.

As you won’t be able to move the product while the documentation is being amended you may end up paying demurrage – a hefty fee for storing your item in docks/yards for more than the couple days they are allotted.

 

8.1.3 Ports Of Entry

 

Ports of entry conduct the daily, port-specific operations like clearing cargo, collecting duties and other monies associated with imports. Ports of entry are the level at which CBP enforces import and export laws and regulations.

Find a Port of Entry in your state here, https://www.cbp.gov/contact/ports

 

8.2 Top 2 things to consider when shipping from China

 

When it comes to shipping, you want your cargo delivery safe, on time, with competitive freight cost.

Choosing the best delivery option is completely dependent on your unique circumstance, but we suggest considering the below two issues and get the answers before any movement in international trade.

The answers will help you make your supply chain management more smooth and efficient.

  • Which shipping method can you choose?
  • Which party will manage your shipping?

 

8.2.1 Shipping Method: by Post, Courier, Air or Sea

 

As with most businesses, cost can’t be the only consideration but it is usually a primary and determining factor.

Different logistics methods can make a vast difference both in transit time and freight charges.

Therefore you always need to determine which method will be the most cost effective one.

 

8.2.1.1 Regular Post

This means normal, regular China Post (or Hong Kong Post) which can take up to 2~5 weeks to arrive. If you can wait, this is the cheapest option for small shipments, like samples and parcels. You may track and trace online, but the information can not be updated in time.

We don’t recommend this way at most times.

Plus: Pretty economical.

Pitfalls: Unsafe. Lost packages are hard to find.

 

8.2.1.2 Express courier

Transportation with a courier company (FedEx, UPS, DHL, etc.) will be the most suitable method for most people starting out.

$6/kg (per kilogram) for reference only. With courier service, you get fast delivery times and an online tracking facility. Most courier shipments take just 2~5 business days to arrive.

Pluses: Get seamless delivery. In most cases delivery is quick and reliable. When there’s a problem, there is a tracking number that can help resolve the matter.

Pitfall: The price is much higher than postal service.

 

8.2.1.3 Air freight

If the weight of sourced products is too large for couriers, example 300kg, air shipment might be the best bet. With air freight, costs will be significantly lower than with courier companies.

This way is for not so heavy cargo, and there are tight deadlines or a tighter control on the security. Transit time varies based on the schedule of airlines, but in general range between 2~10 days which is not bad.

While extra work is involved when the goods arrive at the destination airport. You have to handle documentation and customs clearance on your own (unlike with courier companies), which for many newbies may seem impractical. Of course, you can always outsource these tasks to a customs broker or a trucking company at an additional cost.

We suggest if the chargeable weight is over 250kg, you can try to choose air freight. If under 250kg, stick to international couriers.

 

8.2.1.4 Sea freight

Transport by ocean can take a very long time but can carry a massive amount of goods, which drives down the costs.

The diversity of cargo that can be shipped is also a major benefit to this mode.

That’s why it’s a popular and widely used mode in logistics.

Despite the lengthy delivery time, if you plan ahead, and have enough time to wait, sea freight will be your top choice. Depending on where you’re located, it will be in the vicinity of 15~40 days.

Just like with air freight, you’ll have to take care of the documentation, customs clearance and delivery of goods from the port to your warehouse or facility.

But if you choose freight agent’s to-door service, all you have to do is pay the freight charges and wait for your cargo to be sent to your specified address.

Shipping by sea can be economical, particularly, if you’re prepared to handle the logistics of clearing the goods through customs yourself. Also, the best way to handle large bulky purchases.

 

8.2.1.5 A quick summary

Each comes with unique benefits and it’s often a combination of these shipping methods to get the Chinese sourced goods to your business.

There should be some deliberation over the time frame you need your products, the security of your shipment, and usually the biggest factor, the cost.

Shipping rates will make up a substantial percentage of your total product landed cost, so it’s important to keep them as low as possible at all times. But sometimes, time is more crucial than money.

It’s all about balance. Choose the right way after considering all the actual situations.

You’ll have to decide which factors are the most important for you and your business to declare a winner.

Of course, whether ocean or air shipping is right for you could very easily change from shipment to shipment.

 

8.2.2 Shipping Management: by yourself or by an agent?

Letting the supplier manage the shipping is common among inexperienced importers.

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” or DAP “Your facility address” and they’ll do the rest.

The downside is that you’ll probably end up paying a bit more than really needed. You may want to gain more control over your shipment based on EXW or FOB.

In fact, there are better options for saving money & time.

 

8.2.2.1 Do it all internally, for full control

We have only seen big groups follow this strategy. They book space directly with shipping lines, airlines, trucking companies and they handle customs.

If you choose this option, you need to make your own order follow up, you need to check with the carriers yourself to receive the proper info that is crucial for you. If a problem occurs, you need to deal with it in order to avoid paying extra charges.

Your time is the most valuable. When you work directly with a carrier, you cannot save that time, unless there’s a specialized department with professional crews in your company.

We don’t think this is a viable option for small and medium enterprises.

 

8.2.2.2 Work with a freight forwarder in the U.S., for convenience

This is what some importers do, and it is the most convenient option.

So what happens is this: small and medium companies try to work with a freight forwarder of the right size, who cares about their business. But most of the forwarders don’t always have their own office in China. They usually work with local agents, and add their margin on top of that agent’s fee.

This is not a cheap option, and not so efficient.

 

8.2.2.3 Work with a freight forwarder based in China, for speed

More and more importers have chosen this option.

The advantage is speed. The forwarder can keep close touch with your supplier, and keep you informed about everything. When trouble happens, your local partner will solve that asap.

Not only speed, but also better rates.

 

8.2.2.4 Work with a forwarder on each side, for speed and savings

A fourth option is to be in direct contact with each party. For example, a LA importer will be in touch with a forwarder in LA, and one in China.

This is probably the right choice for SMEs transport from China. For some buyers, every dollar saved is worth fighting for. And it allows for a higher degree of control, too.

 

8.2.2.5 A quick summary

Whether your supplier and you manage the transportation, you should always need to source the logistics solution from a third party.

No matter your forwarding agent is located in your country or in China, when you find the right partner, just stick to it.

As a decision maker, you may already be at the point where these options mixed with your goals become more automatic. The more information and experience you gain, the easier these decisions become.

 

8.3 Sea Freight

 

8.3.1 FCL

FCL, full container load, which means your goods are loaded into a full container. You buy large quantities, and the freight cost per unit will be less. It’s from CY (container yard) to CY.

These three types below are the most common ones used for container shipping.

  • 20’GP = 20’DV = 20FT = 20′ = 20 feet general purpose
  • 40’GP = 40’DV = 40FT = 40′ = 40 feet general purpose
  • 40’HC = 40’HQ = 40 feet high cube

* General purpose commonly means Dry Container (DC). Sometimes if fluid goods are packed by a flexible container bag, it can also be delivered by standard DC.

20ft Container40ft Container40ft High Cube
Inside Length5.89m12.01m12.01m
Inside Width2.33m2.33m2.33m
Inside Height2.38m2.38m2.69m
Door Width2.33m2.33m2.33m
Door Height2.28m2.28m2.56m
Capacity33.18cbm

(28 cbm in practical)

67.67cbm(58 cbm in practical)76.28cbm(68 cbm in practical)
Tare Weight2229kg3701kg3968kg
Maximum Load28000kg28000kg28000kg

You may have to learn to be comfortable with CBM measurements (cubic metres = Length*Width*Height in meter). Also please note the difference between the volume in theory and in practical. Most Chinese suppliers could advise the exact quantity loading in a full freight container.

20’GP is designed to carry more weight than voluminous cargo.

Example – minerals, metals, machinery, etc. all of which are heavy goods.

40’GP is designed to carry voluminous cargo rather than heavy cargo.

Example – furniture, tyres, toys, etc. all of which are voluminous goods.

Though the volume of 40ft is twice than the 20ft, the max load of both is the same, most cases under 20 ton.

While you can load more than double the 20ft cargo volume into a 40ft, you cannot load double the 20ft cargo weight into a 40ft.

The ocean rates from China for a 40′ container is less than double of a 20′ container – you may take it as rough 1.5 times for easy reference. And the 40’HQ cost the same as the 40’GP, sometimes higher US$100~200.

In addition to the above three common containers, there are special types if your cargo is not so regular, such as Reefer Container, Open Top Container, Flat-Rack Container, Tank Container, etc.

No matter which type of the container is, you can find many useful data printed on the door, such as CNTR NO., MAX. GROSS, TARE, NET, CU.CAP, etc.

 

8.3.2 LCL

LCL, less than container load, which means your goods and other importers’ goods consolidating together from the same loading port to the same destination port. You buy the just right quantity suitable for your specific target market.

It’s from CFS (container freight station) to CFS.

Unlike FCL, which usually has a flat rate per container, LCL is charged based on the volume, set in cubic meters.

LCL shipping is a cost-effective solution for smaller shipments as you only need to pay for the volume space used. At the same time it is almost always cheaper than air freight.

LCL shipments in FCL like this:

 

8.3.2.1 LCL packaging

Your cargo must be sufficiently protected, from the factory to a loading port warehouse, and stacked in a container for up to a month. Then to a discharge port warehouse, and finally on a truck to you.

A lot can happen in this time, and you need to be sure that your export packaging is up for the task, especially for LCL shipment.

  • Inner cartons: 5 layers
  • Outer cartons: 5 layers
  • Plastic wrapping: Yes (on outer carton)
  • Pallets: Yes (IPPC ISPM 15 Standard, 40*48inches)
  • Freight remark: Yes (Printed on outer carton)

You’d better provide the shipper with explicit and clear export packaging specifications. Do not leave anything to their interpretation, and provide graphical examples whenever possible.

 

8.3.2.2 LCL vs. Courier

A quick question. If your shipment is less than 1cbm, for example, 0.4cbm with 50kg, still LCL?

Please note the minimum billable weight/volume for LCL is 1 cbm or 1 ton.

You may think delivery via sea is always cheap. But in fact, courier such as DHL/UPS/FedEx is more competitive for this kind of small package.

Generally speaking, it’s better to choose express courier than LCL for the billable weight of a shipment under 100kg, sometimes even 200kg.

 

8.3.2.3 LCL rate = total ocean cost?

You may get the quote – ocean rate $40/cbm to your port. Please be cautious and try to have a clear thought first. Don’t take it for granted that that’s your freight cost. Actually, it’s just a small percentage of the total cost. Much more will be charged at the destination.

As you can imagine, loading a few LCL shipments into FCL before departure and unloading them after arrival takes quite a lot of time and effort. Not only the physical in-out, but also complicated shipping documents. The unit LCL freight price should be higher than unit FCL.

Most times, using LCL logistics, the freight agents often charge 2~3 times as much per cubic meter, compared to FCL logistics.

Let’s do easy math. 1x40HQ from Shanghai to New York is around $3,500. HQ can load 68cbm. $3,500/68=$52. So if you pay $40 for LCL to New York, you are going to pay more when landed.

Sometimes the prepaid rate is cheap, but there are various destination fees to be collected, which are listed below for reference only.

  • PSC fee (Port Service Charge)
  • SCA fee (Service Charge due Agent)
  • D/O fee (Deliver Order)
  • THC fee (Terminal Handling Charge)
  • TSF fee (Terminal Security Fee)
  • IPF fee (Import Processing Fee)
  • Etc.

If your freight agent handles LCL shipment for you, you need to get the to door quote to have a clear view, not just to port.

 

8.3.2.4 LCL vs. FCL

  1. i) FCL shipment will be loaded and sealed at origin by your supplier or the manufacturer, then shipped by a combination of ocean, road or/and rail to your final destination. The LCL shipment will be exposed for consolidating once at the loading port, and for sorting out again at the destination port.
  1. ii) The bill of lading of FCL shipment will be issued directly by the official shipping line. The bill of lading of LCL shipment will be issued by the freight forwarder.

iii) LCL service charges more than FCL when it comes to shipping cost per unit.

  1. iv) Shipping mark, which is a written symbol or symbols that are printed on the outer package, is mandatory for LCL shipment. The purpose of the marks is to identify your goods from those of other shippers. They should be made boldly, with waterproof ink, so that they can always be easily read. They should be in black, with red or orange for dangerous cargo. The package should be easily identified with the corresponding shipping documents and easily located for customs clearance and delivery.

 

8.3.2.5 Quantity suggestion

Buy MOQ at the very beginning. By doing this can lower your financial risk, and keep you out of large inventory trouble. Therefore your supply chain suffers fewer bottlenecks, allowing your operations to run smoothly.

You can buy just the quantity of products you need, and forget about how much space it takes. But sometimes it may cost additional $1,000 for the extra from the full container. This is not necessary in most cases.

You’d better request the quote based on the quantity you want, and let the seller also advise the weight/volume data.

  • If it’s less than 15 cbm, that’s fine, go ahead with LCL.
  • If it’s more than 15 cbm, you may consider buying more to load into a full container.

8.3.3 Freight Cost – Ocean Rates

 

The general ocean rate includes the base rate and surcharges, but NONE customs clearance and port charges at both sides, duty & taxes may occur, and other miscellaneous charges.

All international shipments are subject to destination charges:

  • Destination country customs related fee (i.e. Duty/Tax)
  • Destination port/terminal handling fee (i.e. THC)
  • Destination agent service fee (i.e. D/O)

8.3.3.1 FCL Rates

By the loading port, the destination port, the container type/weight/quantity.

For example: How much does it cost to ship a 20′ container to Los Angeles CA?

It cost roughly US$1,500 for shipping 1×20’GP from Shanghai port to Los Angeles port.

It’s almost impossible to negotiate a better price if you are a small or medium company. Simply choose the earliest available vessel after production ready, that should be all right.

8.3.3.2 LCL rates

By the loading port, the destination port, the volume, the weight, the volume/weight ratio.

For example: How much does it cost to ship 10 cartons to Los Angeles CA?

It cost roughly US$45 per cbm for shipping 5cbm light goods from Shanghai port to Los Angeles port.

8.3.3.3 To door rates

By HS Code/volume/weight/quantity/packaging/value/…

Also please note some related costs during an import process,

  • Transportation to Port of Loading
  • Export customs declaration
  • Loading port fees
  • Ocean freight charge
  • Insurance
  • Destination port fees
  • Import customs clearance
  • Customs duty/tax
  • Transportation from the Port of Destination

To-door means the destination charges and fees are prepaid.

All these fees make up the landed cost. Never assuming the basic shipping charges plus the products cost as your total cost.

For example, a port-to-port quote, EXCLUDE all destination charges, which may include: terminal fees, handling charges, customs clearance/inspection, duty and Tax (if applicable), delivery to your address, storage, insurance, etc.

Even to-door service, unlike parcel delivery companies (Fedex, UPS, etc.), common FTL/LTL carriers typically only provide dock-to-dock service or curbside delivery where the driver does not touch the freight.

This is known as “Dock to Dock” or “Shipper Loads / Receiver Unloads”. So commercial dock or curbside delivery only. Residential or inside delivery means extra fees.

 

8.3.3.4 Change Frequency

The international shipping industry, and the freight rates within it, are always volatile.

There are plenty of variables that factor into it, including but not limited to capacity, demand, oil bunkers, market perceptions, seasonal behaviors, labor issues at ports, congestion, disruptions, and strength of economies.

Unless you have a rather large consistent quantity (10 plus containers per week) then you’ll not likely to get a quote for longer than two weeks.

It may vary every week. Sometimes, if your supplier could catch up the earlier route by finishing the production one or two days earlier, you can save quite a bit. The price for 1x40ft container may increase $1,200 in the next week’s schedule.

US$1200+? Yes, it happened.

So knowing the rough date your shipment ready is essential for requesting the exact quotation.

Generally, ocean FCL rates are generally valid for up to two weeks at a time (expiring on the 15th and 30th of each month). LCL rates may last a bit longer, usually expiring at the end of each month.

 

8.3.3.5 Season Impact

Seasons with rain, storm or snow may impact the in-and-out for trucks and vessels, but busy seasons for shipping don’t necessarily coordinate with any other typical seasons of the year.

Peak season for China exports is typically the month before Chinese New Year (January), and the 3rd quarter of each year (From July to September) when many made-in-China products ship for Back to School, Halloween and Christmas.

The freight cost will be relatively high at these times, because too much shipments are waiting for delivery. You’d better plan accordingly as there is a finite number of containers and vessels available.

 

8.3.4 Transit Time

 

Estimated Transit Time (ETT) is the time between the Estimated Time of Departure from origin (ETD) and the Estimated Time of Arrival at the destination (ETA).

  • Sea to Los Angeles CA, 12-16 days
  • Sea to New York NY, 25-35 days

ETDs and ETAs are never guaranteed by the sea carrier and are subject to change at any time. Also keep in mind that it can take upto 7 days before the cargo is loaded at the loading port. The same thing is true at the destination port, 1 week or more for discharge and dispatch.

Always consider that delays might happen during the process, such as goods might not be produced on time, the vessel might not sail as scheduled, goods might be held by the customs. Be prepared and plan accordingly.

Transportation by ocean is quite slow, which means you need to do some significant planning, and have generous margins for the possible delays.

Besides, most manufacturers in China don’t stock any products, and only make-to-order. So place your order as early as possible.

We suggest 3 months in advance. For example, If you need your goods ready for the Christmas season, you’d better place your order in August or even earlier.

A sea carrier called Matson has reliable express sea service to Long Beach CA.

Importers who are seeking to improve their supply chain, whether through fast transits, dependable vessel schedules, responsive customer service, or online shipment management capabilities, will benefit from Matson’s singular focus on service.

You can also split up your shipment into 2 parts: small percentage by air, rest by sea.

 

8.4 Air freight

 

Air freight is a safe and efficient way for immediate transportation. Air cargo always has high value-to-weight or has a severe timeline.

 

8.4.1 Air Freight Advantages

The best thing with air shipment is speed.

In general, the transit time is no longer than 10 working days. Only 3~5 days in most cases.

This is a vast reduction compared to ocean freight. Nowadays, the fast delivery time alone can make a huge impact on a business niche.

Please note that air freight is just to-airport delivery.

You or the freight agent needs to handle the customs clearance and inland transportation to your warehouse, while courier services such as DHL/FedEx/UPS can be the one stop to-door delivery provider.

  • Air freight = airport-to-airport
  • Air courier = door-to-door
Air FreightAir Courier
Weight>100kg0.5-150kg
Volume>1cbm<1cbm
Transit Time2-7 days2-5 days
Upon ArrivalNoneTo door delivery

8.4.2 Air Cargo Types

By cargo properties, they can be divided into

  • General cargo
  • Special cargo

8.4.2.1 General cargo

Such as electronics, Jewelry, pharmaceuticals, wristwatches are high value. The electronics industry accounts for around 40% of the value of the entire international air cargo industry.

They need to be transported in a very good condition. The air shipping costs more than sea shipping, but means nothing compared to the value of products.

 

8.4.2.2 Special cargo

Including living animals, goods that are dangerous or need temperature control. For example, some chemicals are dangerous goods, and seafood that requires refrigeration and freezing during the whole-course cold chain transportation.

Perishable or hazardous goods are subject to different regulations, compared to general cargo. They have to pass through various inspections and need to meet numerous requirements, and not every airline can accept these items.

Make sure that you advise in detail about special goods you want to ship. Because leaving out any detail might lead to penalties/extra fees and denial of shipment.

Most of the special cargo can be classified as general after being tested by the authority. And there should be a report – Identification and Classification Report for Air Transport of Goods shown to the carrier before loading.

  • Powder
  • Chemical
  • With oil or liquid
  • With battery
  • With magnet (needs magnet test)
  • Audio accessory and equipment
  • With motor inside

Other restrictions will apply due to national laws and regulations of specific airlines.

 

8.4.3 Air Freight vs. Sea Freight

FactorAir FreightSea Freight
DistanceAir is most preferred for a direct city to city transport and on the most direct routes between countries.Sea is preferred for shipments that need to travel great distances spanning the vast oceans.
Type of CargoUnless special aircraft chartered, there are limited dimensions and weight for loading.Apart from the traditional parcel or box freight, sea is also used to transport heavy equipment, cranes, project cargoes, etc.
Time SensitivityThis mode is chosen mostly due to its quick transit time and their usually reliable scheduled arrival and departure times. Benefits may be lower inventory carrying costs and the opportunity to capture market share.A transit time of a month from point to point is quite normal for a sea freight shipment.
CostAir cost higher mainly due to the capacity available on a plane, the higher fuel consumption and operational costs of a plane.A cargo ship can carry much more at once.
Safety of CargoAirport regulations are controlled quite strictly and these regulations include the storage, handling and securing of your cargo.If the cargo inside the container is not packed properly, or LCL, there is a risk of cargo getting damaged.
AccessibilityAs handled quicker, there may not be congestion at the airports as compared to the long queues at the sea ports. Even had, it could be solved in days.Periods of severe congestion in sea ports could happen, which brings with it its own problems of additional costs like demurrage and detention.

A shipment may have various requirements regarding the mode of transport to be used, but essentially, it comes down to the nature of the freight, the time frame and how much budget.

You’d better seek a good balance between the service quality offered, cost component, the reliability of the service provider and time frame.

Also, it’s important to always keep an eye on both the air and ocean markets as both are extremely volatile. In many cases, depending on how market rates are moving and other market dynamics, one mode of transport can be chosen over the other.

 

8.4.4 Chargeable weight

 

Freight charges under air freight (including air shipment & international express courier shipment) and LCL sea freight are calculated on the basis of Gross Weight vs. DIM/Dimensional Weight, which one is heavier.

The heavier one will be taken as the chargeable weight, and this is the weighing you need to pay (also known as Billable Weight).

 

8.4.4.1 Definition

If we need to define chargeable weight, define two kinds of weight first.

  1. i) Gross weight is the total actual weighing of a product and its packaging. It can be measured by kinds of scales.
  1. ii) Dimensional weight, DIM weight for short, also known as volumetric weight, is calculated as Volume / (Dimensional Factor). E.g. a common carton, then (Length x Width x Height) / (Dimensional Factor).

Dimensional Factor, or shipping factor is a number defined by the carriers. And it can be varied from country to country.

For U.S., Dimensional Factor is:

  • 5000 cm³/kg = 200 kg/m³ (for courier shipment, including UPS/FedEx/DHL)
  • 6000 cm³/kg = 166.667 kg/m³ (for air shipment, including all airlines)

After you calculated dimensional weight, then compared with the actual weight of your cargo. Which is heavier, which is the billable weight.

Different cargo types have different volume/weight ratios. Some may weigh less but have a larger volume. Some may weigh heavier but have a smaller volume. It’s all about balance for air carriers.

Take for instance 1 ton of steel as compared to 1 ton of cotton. The latter will occupy more space than the former. Here, the volume of cotton is much higher than that of steel, even though it weighs the same and will require more space on the carrier.

If you consider this factor you will understand the significance of this shipping term and why it becomes important to consider actual weighing and volume of cargo.

 

8.4.4.2 Chargeable weight calculator for air freight

In order to calculate how much weight you are going to pay, you need to have a measurement of the package. You can just pick up the data from the sheet your vendor provided, and do the calculation yourself.

Step by step:

Packaging Data → Volume → DIM Weight → DIM Weight VS Gross Weight → Billable Weight

For airlines:

  • If the measurements are taken in centimeters, then the formula for calculation will be total volume (cm³) divided by 6,000.
  • If the measurements are in meters then the formula that is applied for calculation will be total volume (cbm/m³) divided by 0.006.

For UPS/FedEx/DHL:

  • If the measurements are taken in centimeters, then the formula for calculation will be total volume (cm³) divided by 5,000.
  • If the measurements are in meters then the formula that is applied for calculation will be total volume (cbm/m³) divided by 0.005.

For example, your supplier in China will send you a box with the length 100cm, width 80cm, height 60cm, and gross weighing 50kg.

Gross WeightDIM WeightChargeable Weight
By airlines50100x80x60/6000=8080
By couriers50100x80x60/5000=9696

8.4.4.3 Chargeable weight calculator for LCL sea freight

In practical work, not only just the air shipment but also LCL shipment needs to calculate the dimensional weight for the chargeable unit.

The rule is when calculating ocean cargo for LCL 1 Cubic Meter (CBM) is equal to 1 metric ton (1,000kgs). This means that any cargo with volumetric weight of 1 CBM would be considered as weighing 1 metric ton, and the transport charges would be levied accordingly.

Conversely, if the volumetric weighing is more than 1CBM, then the rates for LCL is calculated based on the higher of the two values of the gross weighing and CBM.

Dimensional weight for normal LCL sea freight is 1000kg/cbm, but it’s special in the U.S., which is 363kg/cbm.

  1. i) If the goods density is bigger than 363kg/m³, choose weight number as the chargeable weight;
  2. ii) If the goods density is smaller than 363kg/m³, choose volume number as the chargeable weight.

Example.

Note: Known LCL ocean rate is $80 per cbm from Shanghai to New York, calculate the dimensional weight rate is $0.22 per kg (80/363).

ItemWeightVolumeDensityCompare With Standard DensityLCL Cost
11000kg1cbm1000kg/cbm>363kg/cbm220=1000*0.22(by weight)
21000kg2cbm500kg/cbm>363kg/cbm220=1000*0.22(by weight)
31000kg3cbm333kg/cbm<363kg/cbm240=3*80(by volume)
41000kg4cbm250kg/cbm<363kg/cbm320=3*80(by volume)

8.5 Bill of Lading

Bill of Lading, B/L for short, is the most important shipping document in international trade.

 

8.5.1 B/L Definition

A Bill of Lading is a document issued by a carrier to a shipper of goods. It is a negotiable instrument, and it serves three purposes:

(i) it is a receipt for the goods shipped;

(ii) it evidences the contract of carriage;

(iii) it serves as a document of title (i.e. ownership).

(i) Explanation: A B/L is issued by the carrier or their agent to the shipper or their agent in exchange for the receipt of the cargo. It’s the proof that the carrier has received the goods from the shipper or their agent in apparent good order and condition.

(ii) Explanation: The contract between a shipper and the carrier is established when the shipper or their agent made a booking with the carrier (ocean shipping line and air shipping line) to carry the cargo from A to B. And the B/L is the evidence.

(iii) Explanation: Technically, it means that whoever is the holder of the B/L has the title to the cargo or the rights to claim the cargo.

The legal basis for Bills of Lading is known as the Hague-Visby Rules. It defines the obligations of the carriers (carefully load, handle, stow, carry, keep, care for, and discharge the goods carried” and to “exercise due diligence to … make the ship seaworthy) and the shippers (pay freight, pack the goods sufficiently well).

It’s complicated from a legal perspective. You can just define it as ‘a ticket for your goods’, and this ticket is necessary & important, that’s enough.

In general:

  • It is evidence of the goods being shipped
  • It is evidence of the goods being in apparent good condition when shipped
  • It is evidence of the contract of carriage, and a promise by the carrier to deliver the goods
  • It is a negotiable document which can be used to transfer the ownership of the goods named on it to somebody else
  • In international trade where payment by Letter of Credit is arranged, a clean B/L is required by the banks before any payments will be made

 

8.5.2 A B/L Sample

Please note that each shipping line or airline has their own B/L format, but the parts that need to be filled up are almost the same. Learning from this template form will be enough for you to complete or understand a B/L for your freight shipping work.

It’s the shipper’s responsibility to make sure the information listed on the B/L is the exact accurate and same as the buyer’s request. Let’s look into this form further one by one.

Shipper

Shipper is the name and address of who is shipping the cargo.

This may or may not be the actual owner or manufacturer of the cargo, but could also be a trader, an exporter or a freight forwarder. Someone who books space from the shipping line and pays the freight charges has the right to edit the shipper information.

Consignee

Consignee is the name and address of whom is receiving the cargo.

This may or may not be the actual owner or recipient of the cargo as it could be a trader, an importer or a freight forwarder. Being named as the consignee on the B/L also comes with the risk and responsibility of being held accountable for many issues at the destination, such as non-clearance of cargo, late clearance, claims, or so.

I.e. if the destination is an Amazon warehouse, then

  • the Importer of Record as the name of the importer
  • the Consignee as the Amazon warehouse

Notify Party

Notify Party is the name and address of the party who generally should be notified of the arrival of the cargo. Depending on the B/L, it can be different from the consignee.

Pre-Carriage by

Assume that there is an inland point which is connected to the mainland port by means of a vessel, the name of that vessel is shown here. Most times, it’s blank.

Place of Receipt

This is the place where the cargo is handed over by the shipper or the shipper’s freight forwarder to the carrier/shipping line. If this area is filled, it is assumed that the carrier has done the movement from here to the Port of Loading and if there are any incidents or damages to the container or cargo between the Place of Receipt and Port of Loading, the liability will be that of the carrier.

Port of Loading

This is the place from which the container or cargo is loaded by the carrier onto the nominated ocean vessel.

Ocean Vessel/Voyage

This is the name of the vessel and the voyage number that carries the container or cargo from Port of Loading

Port of Discharge

This is the place at which the container or cargo is discharged by the carrier from the nominated ocean vessel.

Place of Delivery

This is the final destination of the container or cargo. If this area is filled , it means that the carrier has undertaken to move the container or cargo from the Port of Discharge to the Place of Delivery. And accordingly, the carrier is responsible for the cargo condition.

Please note if there is a Place of Delivery shown in the B/L, the carrier will not allow the consignee to take delivery of the container or cargo at the Port of Discharge and move it to the Place of Delivery.

Marks & Numbers

The shipper marks his packages with some information identifying the shipment so that the consignee can know what the shipment is.

Please note that Marks & Numbers play a much more important role in LCL freight than FCL freight. It’s necessary information for LCL, since the shipments combined in one container and belonged to different consignee.

Besides, the container / seal No. also shown here by the carrier.

Number and Kind of Packages

Here the number of packages that are packed in FCL or LCL. Example: 20 pallets, or 10 cartons.

Description of Packages & Goods

This area is used to describe exactly what cargo is being loaded in the container or LCL.

Generally other information like number of packages, freight conditions, HS code etc. are also mentioned.

Gross Weight

This is the weight of the cargo that is loaded in the container or loaded on board. It does not include the tare weight of the container, just the cargo with packaging.

Please note that in most cases, your supplier estimates the weight on the B/L. If they greatly underestimate the weight, the customs could judge the goods and perhaps reweigh the goods when the shipment reaches the port.

Measurement

This is the volumetric calculation of the cargo that is loaded in the container. The total volume of the cargo in the container is shown here. Example: 28.000CBM.

Booking No. and Bill of Lading No.

It’s usually shown on the upper right corner. With the information, you can easily track and trace your shipments from the official website of the carrier.

These numbers have the format XXXX123456789…Generally, the first 4 letters are the carrier’s SCAC Code (such as COSU – COSCO, MSCU – MSC), then followed by several numbers, which could be 8 digital or 10 digital.

Others

The shipping carrier also lists some other information, including but not limited to:

  • Total Number of Containers and/or Packages
  • Freight & Charges (B/L of container shipping from China to Brazil do needs to be shown above)
  • Date on Board
  • Date of Issue
  • Place of Issue
  • Number of Originals
  • Carriers Agent

8.5.3 Air Waybill (AWB)

AWB is almost the same structure as Ocean Bill of Lading (OBL).

An Air Waybill is a documentary proof of the contract of carriage between the shipper and the carrier.

It also serves as:

  • a delivery receipt
  • a receipt of goods for shipment
  • a document required for customs clearance
  • a form of invoice for the carriage of the goods
  • an insurance certificate (if the insurance cover was arranged through the airline)
  • a dispatch note, bearing a list of all accompanying documents, and any special instructions given by the shipper

 

8.5.3.1 Difference between AWB and OBL

AWB doesn’t serve as a document of title. This is the most significant difference.

The words non-negotiable are printed at the top of the Air Waybill, and must not be changed or removed.

The AWB will be delivered with the air cargo. So as soon as the plane departs from the loading airport, the cargo rights will be transferred to the consignee. The consignee can only show their identification to claim the shipments. The AWB cannot be transferred.

 

8.5.3.2 “Rate Charge”

There’s a column called “Rate Charge” in the middle of an AWB. This rate will be automatically generated by the airlines according to IATA, and can NOT be modified. The charge shown is higher than you really paid.

This is the all-in billable weight rate, calculated by:

  • GCR (General Cargo Rate)
  • SCR (Specific Commodity Rate)
  • CCR (Commodity Classification Rate or Class Rate)
  • BUC (Bulk Unitization Charge)

 

8.5.3.3 AWB Number

Each AWB has its unique number. You can find this number on the head section. By submitting the number on the tracking page of the airline’s official website, all updated tracking information will be available.

The bill format is 2 airline code + 3 numbers as prefix + several numbers. Example, Air China Cargo, CA as the airline code, 999 as prefix.

 

8.5.4 Telex release B/L

Telex Release, aka Express Release, means a message that is sent by the shipping line or their agent at loading port to their office or agent at destination port advising that, the shipper or exporter has surrendered one or all of the original bills of lading that have been issued to them, and that the cargo can be released to the consignee shown on the B/L without presentation of any original bills of lading.

 

8.5.4.1 Telex release procedure.

  1. i) Shipper applies for electric B/L from the freight forwarder, and issues the electric guarantee paper, indicating that all the consequences and responsibilities of the electric B/L are undertaken by the shipper.
  1. ii) Then the freight forwarder asks the shipping company for electrical B/L issuing, and provides the guarantee paper.

iii) The shipping company receives the B/L application and guarantee paper therefore informs the destination port, to allow this shipment to be used electric B/L instead of the original B/L.

  1. iv) The shipping company issues the electric B/L or to the freight forwarder, or an email receipt forwarded. It depends on different carriers.

The evidence can be the email receipt or an electronic version of B/L showing surrendered or telex released. Then the consignee can show this evidence to the carrier’s branch or port agent at the destination, instead of the original paper B/L.

 

8.5.4.2 Original vs. Telex Release?

We suggest express release every shipment if possible.

  1. i) Release at the loading port is faster. There’s not much sufficient time for a courier delivery in some cases.
  1. ii) Release at the loading port is safer. It’s very annoying when the original has been lost during the transit. A new set of originals can be obtained from the carrier, but the process is so complicated. It cost both time and money.

 

8.5.4.3 Who verifies the B/L and keeps the information same as the actual shipments?

 

Nobody else except the shipper themselves.

The shipper provides all the data needed on a B/L. When a container is loaded and locked by the shipper, it will be kept closed, unless there’s an inspection by the customs. We know the inspection ratio is very very low. So at most times, all the information is just the same as the shipper said, because no one has the chance to open a container and see what’s actually in there.

The B/L clause also shows SHIPPER’S STOW LOAD, COUNT, WEIGHT AND SEAL. It’s a safe method for cargo shipping. On the other side, few shippers will scam the buyer this way.

 

8.6 ISF

 

U.S.-bound ocean cargo (including goods entering into a foreign trade zone and in-transit bond shipments) requires the electronic submission of 10+2 data elements.

It’s called Importer Security Filing, ISF for short.

ISF is required prior to vessels being loaded, mandatory for all ocean imports to the U.S.

Importers can file the ISF on their own or through a service provider (e.g., licensed customs broker) with a valid power of attorney.

Always keep that in mind that ultimate responsibility for ISF and correctness of the data rests with the importer. Therefore always make sure it’s filed timely and properly.

Failure to file ISF may result in a $5,000 liquidated damages penalty per violation.

CBP uses the vessel departure date minus 24 hours to measure timeliness. Late ISF, inaccurate ISF, or amendments can result in penalty too.

Not complying with the rule has not just cost thousands of dollars in penalties, but also increased inspections and cargo delays.

Before you import into the U.S., know what you are importing and identify the proper HTS numbers earlier in the process. Also decide who will transmit the ISF and send necessary documents to related parties in order authorize them timely.

 

8.6.1 10 required data elements

 

8.6.1.1 Seller Info

The name and address of the last known entity that sold the products or that agreed to sell the products.

 

8.6.1.2 Manufacturer/Supplier

The name and address of the entity that last manufactured, assembled, produced, or grew the commodity, or, the name and address of the supplier of the finished goods in the country from which the goods are leaving.

 

8.6.1.3 Consolidator Info

The name and address of the party who stuffed the container or arranged for the stuffing of the container. If the manufacturer is the party that stuffed the container or arranged for stuffing, then the manufacturer is considered to be the consolidator (stuffer).

 

8.6.1.4 Stuffing Location

The name and address(es) of the physical location(s) where the products were stuffed into the container. For bulk shipments, the name and address(es) of the physical location(s) where the goods were made “ship ready” must be provided.

 

8.6.1.5 Country of origin

The country where the products were manufactured, produced or grown. This element is the same as the “country of origin” element on the CBP form 3461.

 

8.6.1.6 Importer of Record

The Internal Revenue Service number, Employer Identification number, Social Security number or CBP-assigned number for the entity is responsible for the goods entering the limits of a U.S. port. The importer may or may not be the importer of record for the Customs entry, and may also be the owner, purchaser, consignee or agent.

 

8.6.1.7 Consignee

The Internal Revenue Service number, Employer Identification number, Social Security number or CBP-assigned number of the individual(s) or firm(s) in the U.S. on whose account the merchandise is being shipped. This element is the same as the “consignee number” element on the CBP form 3461.

 

8.6.1.8 Buyer Info

The name and address of the last known entity to buy the products or who agreed to buy the products.

 

8.6.1.9 “Ship to” Party Info

The name and address of the first “deliver-to” party scheduled to physically receive the goods after they have been released from Customs custody. The party physically receiving the goods must be provided and not an entity that merely owns the facility.

 

8.6.1.10 Harmonized tariff schedule at minimum

6-digit level – The duty/statistical reporting number under which the article is classified in the Harmonized Tariff Schedule of the United States (HTSUS). The HTSUS number is required to be provided to the 6 digit level, however, it may be provided up to the 10 digit level.

 

8.6.2 ISF best practice

  • Know what you are importing before you import it
  • Identify the proper HTS numbers earlier in the process
  • Consider a pre-classification system
  • Decide who will transmit the ISF and how
  • Consider using the Unified Entry Option
  • Know your supply chain partners
  • Require that the data be collected and provided earlier in the process
  • Add data to existing forms (e.g., purchase orders, shipping notices, commercial invoices, etc.)

8.7 Shipping to Amazon FBA warehouse

 

If you are an Amazon seller, and confident about the product’s quality (usually after several orders with your supplier), you can choose to ship to Amazon from China directly.

You can check our dedicated Guide: How to Ship from China to Amazon FBA warehouse ?

With Fulfillment by Amazon (FBA), you store your products in Amazon’s fulfillment centers. Once a customer orders a product, Amazon ships the goods for you.

All products that are sold and shipped in this way are enrolled into Amazon Prime and go as a free delivery to all Prime customers.

As an FBA seller, you don’t have to physically carry any inventory.

Meanwhile, Amazon handles all of your product fulfillment and most of your customer support. The best part is that you can sell remotely on Amazon FBA from anywhere in the world.

Here’s how it works:

  1. i) You send your products to specific Amazon FBA warehouses.
  1. ii) When a customer places an order on Amazon, Amazon will fulfill the order for you and the entire process is seamless.

iii) After your product is delivered, Amazon then follows up with the customer to make sure that everything was delivered on time. If the customer wishes to make a return, Amazon handles that as well.

Since Amazon can not be used as the consignee, importer of record or final address when shipping from overseas. They do nothing during the whole process except as the receiving place. You need to comply with their strict principles and rules.

  • Must be labeled
  • Must be DDP

You need to create the shipping plan to get the Shipment ID, Reference ID and carton labels, which is required by the freight forwarder.

  1. i) In Seller Central, go to the menu bar and click on “Inventory”.
  1. ii) From the drop-down menu select “Send/Replenish Inventory”. Make sure “Create a Shipping Plan” is selected on the screen that follows.

iii) Enter the address where the shipment will come from. This is usually your supplier’s address.

  1. iv) For the Packing type, select “Case Packed”. On the “Set Quantity” tab, fill out the “Units per case” and “Number of cases” fields.
  1. v) Click on “Work on Shipment.”
  1. vi) Select “Small Parcel Delivery” under “Shipping Method”, select “less than truckload” if by sea. Select “Other carrier”.

vii) For “Shipment Packing,” fill out the fields for “Number of Boxes”, “Box weight (lb.)”, and “Box dimensions (in.)”

viii) For “Shipping Charges,” if you see the “Shipping charges” field, you can click on calculate so you will have an idea of the cost it will incur. Click “Accept Changes” when you’re done.

  1. ix) For “Shipping Labels,” simply click on “Print Box Labels” so you can save the PDF and send it over to your supplier.
  1. x) Click on “Complete Shipment” when you’re done.

Click INVENTORY → Manage FBA Shipments, then click the created shipment, you’ll find the Shipment ID and Reference ID. Now your job is done, leave the shipping to the pros.

$300/cbm (per cubic meters) for reference only.

8.8 A quick summary

 

Shipping is complicated and you need to find a good freight agent. Your freight agent should be:

  • Reliable and you can count on.
  • Trustworthy and act in your best interest.
  • Informed on your individual requirements and needs.
  • Fair and honest pricing.
  • Comprehensive suite of services and one-stop partner.

9/ Customs clearance in USA for Chinese goods

Normally the consignee will be notified via an arrival notice within 5 days or less of port arrival, by the delivery agent listed on the B/L.

When a shipment reaches the U.S., the importer of record (i.e., the owner, purchaser, or licensed customs broker designated by the owner, purchaser, or consignee) will file entry documents for the goods with the port director at the goods’ port of entry.

Imported goods are not legally entered until after the shipment has arrived within the port of entry, delivery of the merchandise has been authorized by CBP, and estimated duties have been paid. It is the importer of record’s responsibility to arrange for examination and release of the goods.

 

9.1 Entry documents

Within 15 calendar days of the date that a shipment arrives at a U.S. port of entry, entry documents must be filed at a location specified by the port director. These documents are:

  • A bill of lading listing the items to be imported.
  • An official invoice that lists the country of origin, purchase price, and tariff classification of the goods imported.
  • A packing list that details the imported goods.
  • An arrival notice provided by the freight agent.

If the goods are to be released from CBP custody at the time of entry, an entry summary for consumption must be filed and estimated duties deposited at the port of entry within 10 working days of the goods’ entry

 

9.2 Customs broker

Customs brokers are the only persons who are authorized by the tariff laws of the U.S. to act as agents for importers in the transaction of their customs business.

Customs brokers are private individuals or firms licensed by CBP to prepare and file the necessary customs entries, arrange for the payment of duties found due, take steps to effect the release of the goods in CBP custody, and otherwise represent their principals in customs matters.

The fees charged for these services may vary according to the customs broker and the extent of services performed.

Your licensed customs broker can provide a variety of services:

  • Arrange customs clearance for imported goods at the port of entry.
  • Prepare for the release of goods imported from China.
  • Make sure that products and goods imported enter the country efficiently.
  • Work with CBP to ensure that all government duties, taxes and fees are paid as needed.
  • Determine which permits are required to import your goods and help you with obtaining the needed permits.
  • Advise you through the import process, including determining entry options for your goods, navigating free-trade agreements, and tax or duty deferment.

 

9.2.1 POA – Power Of Attorney

 

Every entry must be supported by one of the forms of evidence of the right to make entry outlined in this chapter. When a customs broker makes entry, a CBP power of attorney is made in the name of the customs broker.

This power of attorney is given by the person or firm for whom the customs broker is acting as agent. Ordinarily, the authority of an employee to make entry for his or her employer is established most satisfactorily by a CBP power of attorney.

A nonresident individual, partnership, or foreign corporation may issue a power of attorney to a regular employee, customs broker, partner, or corporation officer to act in the U.S. for the nonresident employer.

Any person named in a power of attorney must be a resident of the U.S. who has been authorized to accept service of process on behalf of the person or organization issuing the power of attorney.

The power of attorney to accept service of process becomes irrevocable with respect to customs transactions duly undertaken.

A power of attorney issued by a partnership must be limited to a period not to exceed two years from the date of execution and shall state the names of all members of the partnership.

One member of a partnership may execute a power of attorney for the transaction of customs business of the partnership.

When a new firm is formed by a change of membership, the prior firm’s power of attorney is no longer effective for any customs purpose. The new firm will be required to issue a new power of attorney for the transaction of its customs business.

All other powers of attorney may be granted for an unlimited period.

 

9.2.2 Customs bond

 

In many cases, a customs bond is mandatory when importing. CBP mandates that you use a customs bond when your imports are valued at more than $2,500 or the imports are subject to another federal agency’s oversight.

Those requirements cover almost every type of import.

A customs bond is basically an insurance policy covering the payment of duties and taxes to the U.S. government when you are importing goods.

A customs bond will ensure that duties and taxes are paid, even in extraordinary circumstances. Imports arriving by both air and sea will need a customs bond.

It’s important to know there are 2 kinds of customs bonds: single entry bonds and continuous bonds. The bond type you choose will likely depend on how often you plan to import.

The difference between the bond types is simple. Basically,  a continuous bond will cover all the shipments you import during a one year period. A single entry customs bond will only cover a single shipment.

  1. i) Continuous bonds are considered simpler than single entry bonds. It is often more economical to purchase a continuous bond if you plan to import multiple shipments during a calendar year. A continuous bond also covers the ISF requirements you might be subject to, so no additional bond is required. Prices for continuous bonds can vary.
  1. ii) Single entry customs bonds can be a bit more complicated than buying a continuous bond. The minimum amount of the single entry bond you purchase is required to be worth at least the value of the goods, plus the taxes, duties and fees you will owe on them. Additionally, you are required to have supplementary bond coverage to meet ISF mandates if you are shipping your imports from China by sea.

The entry must be accompanied by evidence that a bond has been posted with CBP to cover any potential duties, taxes, and charges that may accrue.

Following presentation of the entry, the shipment may be examined, or examination may be waived. The shipment is then released if no legal or regulatory violations have occurred. Entry summary documentation – CBP Form 7501 is filed and estimated duties are deposited within 10 working days of the entry of the merchandise at a designated customhouse.

 

9.3 Customs release

Here’s how a customs official will process your shipment:

  1. i) Inspect the paperwork.
  2. ii) Determine if duties apply.

iii) Request duty payment.

  1. iv) Following confirmation of payment, release the shipment for pickup.

Unless there’s a problem, ocean freight is generally cleared within 1 or 2 days of the ship landing in port.

You will speed up the clearance of your goods through CBP if you:

  • Invoice your goods in a systematic manner,
  • Show the exact quantity of each item of goods in each box, bale, case, or other package,
  • Put marks and numbers on each package,
  • Show those marks or numbers on your invoice opposite the itemization of goods contained in the package that bears those marks and numbers.

9.4 Customs exam

You might just get caught up in a random inspection/exam.

Non-intrusive inspections are fairly quick, but an intensive exam could take more than a week.

Non-intrusive inspections cost around $275 at major ports, but an intensive examination costs around $800, not including third-party transport and storage costs.

Examination of goods and documents is necessary to determine, among other things.

  • The value of the goods for customs purposes and their dutiable status,
  • Whether the goods must be marked with their country of origin or require special marking or labeling. If so, whether they are marked in the manner required,
  • Whether the shipment contains prohibited articles,
  • Whether the goods are correctly invoiced,
  • Whether the goods are in excess of the invoiced quantities or a shortage exists,
  • Whether the shipment contains illegal narcotics.

Prior to the goods’ release, the port director will designate representative quantities for examination by CBP officers under conditions that will safeguard the goods. Some kinds of goods must be examined to determine whether they meet special requirements of the law.

For example, food and beverages unfit for human consumption would not meet the requirements of the Food and Drug Administration.

CBP officers will ascertain the quantity of goods imported, making allowances for shortages under specified conditions and assessing duty on any excess.

The invoice may state the quantities in the weights and measures of the country from which the goods are shipped or in the weights and measures of the U.S., but the entry must state the quantities in metric terms.

When packages contain goods of one kind only, or when the goods are imported in packages the contents and values of which are uniform, the designation of packages for examination and the examination for CBP purposes are greatly facilitated.

If the contents and values differ from package to package, the possibility of delay and confusion is increased. Sometimes, because of the kinds of goods or because of the unsystematic manner in which they are packed, the entire shipment must be examined.

Pack and invoice your goods in a manner which makes a speedy examination possible.

Always bear in mind that it may not be possible to ascertain the contents of your packages without full examination unless your invoice clearly shows the marks and numbers on each package (whether box, case, or bale) and specifies the exact quantity of each item of adequately described goods in each marked and numbered package.

A critical aspect in facilitating inspections is how the cargo is loaded. “Palletizing” cargo—loading it onto pallets or other consolidated units—is an effective way to expedite such examinations. Palletization allows for quick cargo removal in minutes using a forklift compared to the hours it would take manually.

It is particularly important that all statements relating to merchandise description, price or value, and amounts of discounts, charges, and commissions be truthfully and accurately set forth.

It is also important that the invoices set forth the true name of the actual seller and purchaser of the goods, in the case of purchased goods, or the true name of the actual consignor and consignee when the goods are shipped otherwise than in pursuance of a purchase. It is important, too, that the invoice otherwise reflect the real nature of the transaction pursuant to which the goods were shipped to the U.S.

Exam Bill

You may receive a bill if your shipment is examined by CBP. The importer shall bear any expense involved in preparing the merchandise for CBP examination and in the closing of packages. Household effects are not exempt. No distinction is made between commercial and personal shipments.

In the course of normal operations, CBP does not charge for cargo examinations.

However, there may still be costs involved for the importer. For example, if your shipment is selected for examination, it will generally be moved to a Centralized Examination Station (CES) for the CBP exam to take place.

A CES is a privately operated facility where merchandise is made available to CBP officers for physical examination. The CES facility will unload (devan) your shipment from its shipping container and will reload it after the exam. The CES will bill you for their services.

There are also costs associated with moving the cargo to and from the exam site and with storage. Rates will vary across the country and a complete devanning may cost several hundred dollars. The CES facility fulfills the needs of both CBP and the importer by providing an efficient means to conduct exams in a timely manner.

 

9.5 Review your shipment

After the goods have cleared clearance and have been released by CBP, your imports might be shipped on a train from the port of entry to a location closer to you.

From there, you can pick it up using your own truck or arrange a trucking company handle the delivery for you.

Once you have received your goods and have ascertained the quality, packaging, instructions and labels, send an email to your supplier and inform them that you have received your goods but have not reviewed them.

Tell them you will contact them once you review the items and hopefully, make another order.

 

9.6 A quick summary

When your shipment departed from China, you’d better prepare the shipping documents as early as possible. The B/L, Commercial Invoice and Packing List will be provided by the seller.

After getting them, check it first to make sure the information is complete and accurate. Then you can forward them to your customs broker, and get ready to pay any customs fees.

  1. i) Include all information required on your customs invoices.
  1. ii) Prepare your invoices carefully. Type them clearly. Allow sufficient space between lines. Keep the data within each column.

iii) Make sure that your invoices contain the information that would be shown on a well-prepared packing list.

  1. iv) Mark and number each package so it can be identified with the corresponding marks and numbers appearing on your invoice.
  1. v) Show a detailed description on your invoice of each item of merchandise contained in each individual package.
  1. vi) Mark your goods legibly and conspicuously with the country of origin.

Clearance involves preparation and submission of papers required to the authority. It’s so complicated and you’d prefer to find a customs broker for assistance. Smooth clearance can avoid further unnecessary detention and demurrage fees.

 

10. Take Action

Finally, let’s get to the most important part – take action!

Learning is NOT a productive task, and NOTHING is being produced.

Too much learning and too much information leads to confusion and a lack of confidence.

Those who implement the most will be the most successful. And those who learn the most will be most upset about it.

Implementing what you are learning is the only way to succeed in business.

We hope you can stop learning on this subject. This ultimate step by step guide will go a long way in turning a newbie into a professional importer if the points are strictly adhered to and implemented.

Step forward takes a lot of hard work.

When you’re first starting out, it’s easy to completely overwhelm yourself by planning the entire future of your empire.

Most get stuck on tiny details. You instead need to wake up every day and take the next smallest step you can to achieve that dream.

Don’t be afraid to make mistakes. Through making mistakes you learn how to overcome them the next time and make even more money. Mistakes are a part of entrepreneurship. Learn from others, and learn from your own as well!

The most difficult thing of all is not giving up when your first couple of ideas fail. What successful stories don’t often admit to is that they failed a few times before they succeeded. If you ask, almost everyone will tell you about their disastrous first few attempts before they got it right.

The only thing to do now is TAKE ACTION day by day! If this guide intrigues you, at least try to put this stuff into action. There’s money to be made and no better time than acting now.

Make it happen!

Work the way you like and have the life you want!

 

Why do we write such huge free guide ?

 

We are a China based shipping agent, freight forwarder, third party logistics provider and supply chain specialist with a global reach.

We handle shipping containers, pallets, boxes, parcels, samples and documents from China to USA, UK, Australia, Canada and all over the world.

We’ve been in the freight industry for over 20 years, and have worked with thousands of Chinese suppliers, and thousands of worldwide importers.

It’s not bragging, just meaning we are on the ground, dealing with shippers and consignees on a daily basis.

For some people, it’s a confusing and daunting process, while for others it’s proven to be a profitable business model.

We are proud of what we are doing, and we are good at it.

Hundreds of inquiries come to us for answers about exporting and importing everyday.

Instead of explaining everything in details, we decided to make it a guide.

 

Disclaimer

This publication may qualify as a “guidance document” as set forth in Executive Order 13891 and interpretations thereof; such guidance documents are not binding and lack the force and effect of law, except as authorized by law or as incorporated into a contract.

We cannot overemphasize that although the information in this guide is provided to promote understanding of, and compliance with, importing laws and regulations, the information provided here is for general purposes only.

Importers may also wish to obtain guidance from private-sector experts who specialize in importing, for example, customs brokers, freight agents, attorneys or consultants.

As with any business, your results may vary, and will be based on your individual capacity, business experience, expertise, and level of desire.

There are no guarantees concerning the level of success you may experience. Each individual’s success depends on his or her background, dedication, desire and motivation.

The use of our information should be based on your own due diligence and you agree that we are not liable for any success or failure of your business that is directly or indirectly related to the purchase and use of our information.