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Sea freight shipping is the most popular shipping method for buyers when shipping from China. However, there are complex issues involved in shipping from China such as the freight related issues and the steep learning curve involved.
In this article, you’ll learn:
- The Process of International Logistics
- The most common incoterms used in sea freight shipping
- How to calculate the volume of full container load
- The most import documents you need to know when shipping from China
- Top shipping ports in China
The Big Players Involved In International Logistics
- Shipping Company
This refers to a company that handles the shipment of goods. The service of shipping companies is usually employed due to the following reasons:
- Convenience Shipping companies helps to make shipping convenient. They know the best way to package and ship goods. They also help in saving time, energy and money on packaging supplies.
- Shipping companies help to create a better shopping experience without any disappointment through the creation of an accessible shipping location.
- Shipping companies help you to send packages where you couldn’t send before. Some shipping companies enable you to buy your items, have them shipped to your mailing address and then forward them to you.
2. Custom Broker
Custom brokers prepare and submit documentation to notify or obtain clearance from government agencies. They also arrange local delivery of items through trucking companies. Custom brokers can be located at inland ports so that they can clear merchandise sent “in bond.” Most custom brokers are located at major airports and harbors that have international traffic.
3. Freight Forwarder
A freight forwarder (also known as non-vessel operating common carrier) refers to a person or company that organizes shipments for individuals or companies to move goods from the manufacturer to a market or final point of distribution.
Freight forwarder can be better to work with than customs brokers depending on your product, how frequent you are shipping goods, and through shipping by sea or air.
They handle inter-country movement of cargo by acting as the middlemen between the shipping lines and the importer or exporter. They are hired to get the product to the customer by a particular date in an undamaged state. They handle tasks such as:
All You Need To Know About Incoterms
Shipping incoterms refer to international standard codes that determine when and where a cargo will be transferred between the supplier and the importer. They are trade terms that are being published by the International Chamber of Commerce (ICC). These terms are usually used in international and domestic trade contracts.
The commonest trade terms include:
FOB means Free On Board. It indicates when liability and ownership is transferred from a seller to a buyer. When FOB shipping is used with an identified physical location, then the designation determines the person that will handle the payment of the freight charges and the point the shipment passes from the seller to the buyer.
Buyer and Seller Liability For FOB Shipping
|
Seller |
Buyer |
|---|---|
|
Delivery of goods and transfer of documents |
Payment and provision of documents.
Picks up goods. |
|
Handles export customs clearance procedures and payment |
Handles import customs clearance and payment |
|
Charters booking and pays the sea freight fee |
|
|
Handles insurance and pays insurance premium |
|
|
Bears all risks before the goods have crossed the port of loading |
Bears all risks and expenses after the goods have crossed the port of shipment |
CFR stands for Cost and Freight. It implies that the seller needs to pay the costs and freight that’s needed to bring the goods to a particular port of destination. In this case, the risk of loss or damage of goods as well as the additional costs (after the goods have been delivered on board the vessel) is transferred from the seller to the buyer.
In CFR shipping, the seller needs to arrange for the carriage of goods by sea to a port of destination and also provide the necessary documents (that will be needed to obtain the goods from the carrier) to the buyer.
Buyer and Seller Liability for CFR Shipping
|
Seller |
Buyer |
|---|---|
|
Delivery of goods and transfer of documents |
Payment and provision of documents.
Picks up goods. |
|
Handles export customs clearance procedures and payment |
Handles import customs clearance and payment |
|
Charters booking and pays the sea freight fee |
|
|
Handles insurance and pays insurance premium |
|
|
Bears all risks before the goods have crossed the port of loading |
Bears all risks and expenses after the goods have crossed the port of shipment |
CIF (Cost, Insurance and Freight) is a term that requires the seller to arrange for the carriage of goods by sea to a port of destination and also provide the buyer with the documents that are needed to obtain goods from the carrier.
Buyer and Seller’s Liability for CIF Shipping
|
Seller |
Buyer |
|---|---|
|
Delivery of goods and transfer of documents |
Payment and provision of documents. Picks up goods. |
|
Handles export customs clearance procedures and payment |
Handles import customs clearance and payment |
|
Charters booking and pays the sea freight fee |
|
|
Handles insurance and pays insurance premium |
|
|
Bears all risks before the goods have crossed the port of loading |
Bears all risks and expenses after the goods have crossed the port of shipment |
Shipping Containers
In case you plan to import full container loads, you can use any of the following four different container volume options:
FCL 20’’ (Volume: 33.2 cbm)
It has dimension 5.89m x 2.35m x 2.39m and maximum weight 24 tons. The actual cargo gross weight is 18 tons.
FCL 40’’ (Volume: 67.7 cbm)
It has dimension 12.03m x 2.35m x 2.39m and maximum weight 30.48 tons. The normal cargo gross weight is 26 tons.
FCL 40’’ HQ (Volume: 76.3 cbm)
It has dimension 12.03m x 2.35m x 2.69m and maximum weight 30.48 tons. The actual cargo gross weight is 26 tons.
Different shipping companies may have different container volume. You can save lots of money on sea freight cost that’s related to the container volume. You can do this by placing orders based on the units that align with a particular container size and not a predetermined quantity.
By doing this, you will be able to avoid situations you pay for empty space or ordering one FCL container and one LCL container.
Since LCL attracts higher port charges and ‘per shipment’ administrative fees than FCL shipping, the latter situation is often more costly.
Less Than Container Load (LCL) Shipping
Less than Container Load refers to a shipment that will not fill a container. In LCL shipment, you pay for your load to be shipped in a container with one or more loads from other customers of the freight transport provider. LCL is the most reasonable option to use if you cannot fill a 20-foot container due to the cost and convenience.
There’s no need to worry about returning the container after delivery when you are using LCL shipping. Since you’re sharing the container, the shipping container service company is the one that will worry about the likelihood of having return trips booked for that container. Shippers making use of LCL should only be concerned about the load that is being shipped.
Full Container Load (FCL ) Shipping
This is a type of ocean freight. It does not mean you need to have enough cargo that will fill an entire container. The benefit of FCL shipping is that you don’t need to share a container with other shipments. If you are shipping 6 standard pallets in a 20ft container, 12 standard pallets or more in a 40ft container, the cost effective means of shipping such cargo is by making use of FCL shipment and not LCL shipment.
Practical Example when shipping from China
As stated earlier, the theoretical loading volume for the 3 different containers are:
- FCL 20’’ (Volume: 33.2 cbm)
- FCL 40’’ (Volume: 67.7 cbm)
- FCL 40’’ HQ (Volume: 76.3 cbm)
However, in a real world, it can barely load the same volume. Based on my experience in calculating the loading volumes, here are two tips that I have for you; if the packaging volumes are lower than 0.02m³/ctn, then the actual loading volumes are:
- FCL 20’’ (Volume: 28 cbm)
- FCL 40’’ (Volume: 56 cbm)
- FCL 40’’ HQ (Volume: 68 cbm)
If the packaging volumes are more than 0.04m³/ctn then the actual loading volumes are:
- FCL 20’’ (Volume: 24-25 cbm)
- FCL 40’’ (Volume: 53-54 cbm)
- FCL 40’’ HQ (Volume: 63-65 cbm)
Note that the accurate loading volumes could be slightly different depending on your situation.
I once had a customer that wanted to buy quadcopter drone toys in 40 feet container and shipping from china to us. The outer packaging had dimension 670mm x 570mm x 505mm with 6 boxes.
In this case, the calculation was carried out as follows:
I added 5mm more for each side. That gives: 0.675m x 0.575m x 0.51m ≈ 0.198m³
Depending on the situation of the packaging, if it has swelled, we can add 1cm-2cm.
0.198m³/ctn > 0.04m³/ctn so we choose these number for 40 feet container
54/0.198 = 272 boxes
In total, we have 272 x 6 = 1636 unit drones
We can slightly load 10-20 more boxes in this case. However, 272 is 100% safe.
Packaging For Sea Freight Shipping
When selecting your packing materials, it is important to carefully examine the types of packages that are available. You need to take note of import restrictions such as quarantine requirements of the destination countries.
When you are packaging a product for export purpose, you need to consider factors such as:
How a product is packaged depends on the destination and the means of transportation. Your package needs to be designed in such a way that it can handle stress and repeated loading and unloading. When packaging for air shipments, lighter packaging materials must be used. Plain boxes without logos or brand names must be used to avoid theft.
Shipping From China Cost
When shipping goods to USA/Canada/Europe/Australia through oceanic routes, lots of factors should be considered to ensure a successful freight. The following factors determine the cost of shipment:
Size and weight determine, to a very large extent, the cost of your shipment. The distance covered and the commodity also influences the shipping rates. Thus, you need to consider the accurate measurements and weight of your cargo. You also need to identify the commodity that you are shipping.
Freight class also impacts your shipping cost. A detailed explanation of what freight classification entails can be provided by your freight specialist. Basic freight classification guidelines to LTL shipping involve:
The freight classification increases with the fragility and value of your products.
Dimensional weight is an important factor that influences shipping cost but can be confusing. Dimensional weight is a standard formula employed by freight shipping companies and considers the density of a shipment when determining shipping costs. Apart from gross weight, dimensional weight also determines the transportation fees.
Important Documents Used In Sea Freight Shipping
Bill of Lading (B/L) refers to the ticket that outlines the journey of the cargo from its origin to its destination. It’s synonymous to an airline issuing a ticket to a passenger. The bill of lading is issued by a carrier to a shipper and outlines the method and path of a shipment (irrespective of the path). It acts as a contract for the shipment of goods with the terms of the contract outlined on the back of the bill. It also functions as the receipt for the cargo and as a proof of ownership of the goods being shipped.
Bill of lading outlines the key players in the shipment of your goods. The players include:
Also, the Bill of Lading shows the goods that are being shipped as well as the specific handling instructions. The information often include:
Moreover, the Bill of Lading also maps out journey that the shipment will go through to get from the seller to the buyer. The details mapped out include:
A commercial invoice is a list of contents that seller provides to buyer which includes information such as the product name, specification, quantity, unit price, total amount, etc. It helps foreign buyers to confirm the goods that are paid for. It’s also useful for the custom clearance and for paying duty and tax when the goods arrived. Despite the fact that the commercial invoice is not a receipt (like bill of landing) for the goods, it is one of the most important documents in import/export trading process.
A packing list is a list of the details of the package. The packing list is the supplementary document of the invoice, which details the packing method and packing materials, packing quantity, the specification and the quantity of cargo, the weight and so on. It is used by the importer and the customs to inspect and verify the goods.
The data and content in a Packing list must be consistent with the contents in the bill of lading and other documents as well.
Top Shipping Ports in China
The top shipping ports in China include:
1.Port of Shanghai
This includes Yangshan Deep Water Port & Waigaoqiao Shipping Terminals and it’s been operated by Shanghai International Port (Group) Co., Ltd. The port now handles over 35 million Twenty-foot Equivalent Unit containers per year and it keeps growing with more plans on ground to increase its capacity.
2.Port of Shenzhen
It includes Yantian Port, Shekou Port, Dachan Bay Port and Chiwan Port, and it is being operated by Shenzhen Yantian Port Holdings and Shenzhen Chiwan Wharf Holdings. The name ‘Port of Shenzhen’ is a collective term that refers to the multitude of ports found in Shenzhen City.
3.Port of Qingdao
It includes Dagang Port Area and Qianwan Container Terminal. The port is operated by Qingdao Port (Group) Co., Ltd.
4.Port of Ningbo
It includes Zhenhai Port and Beilun Port and it is being operated by Ningbo Zhoushan Port Group Co., Ltd. It is officially called the Port of Ningbo-Zhoushan since Ningbo and Zhuoshan ports were merged in 2006.
5.Port of Guangzhou
The port includes Xinsha Port Area, Nansha Terminal, Downtown Port Area, Huangpu Port Area, and it’s operated by Guangzhou Port Group Co., Ltd.
6.Port of Tianjin
It includes South Port, East Port and North Port, It is operated by Tianjin Port (Group) Co., Ltd. It is located about 150km southeast of Beijing. The port made headlines in 2015 after various explosions (caused by poor chemical storage) led to damages and loss of lives.
7.Port of Xiamen
It includes Haicang Port Area and Dongdu Port Area. It is operated by Xiamen Port Holding Group.
8.Port of Dalian
It includes Dayaowan Port and it’s operated by Dalian Port Group Co., Ltd. The port is located in Liaoning province. It shares a border with North Korea and it’s China’s most northerly ice-free port.
9.Port of Hong Kong
It includes Kwai Tsing Container Terminals and it’s operated by Modern Terminals Limited, Hongkong International Terminals Limited, China Ocean Shipping (Group) Company, DP World, Asia Container Terminals Ltd. In recent years, its volume of shipping trade has fallen behind Singapore, Shanghai and Shenzhen. It remains an important port for trade with South East Asia.
Characteristics of International Railway Transport
Let’s take a look at the specific characteristics of railway transportation and the difference from air transportation and sea transportation to help you make more accurate judgments when using logistics.
1. Slow aging and good stability
One of the characteristics of international railway transportation: slow timeliness and good stability. In terms of logistics timeliness, rail transport is much slower than air transport. Taking China-Europe trains as an example, the overall signing time is about 20-40 days, while air transport is generally about 7-20 days, and commercial express air transport can achieve about 3-7 days. , The overall timeliness is much higher than that of railway transportation.
However, compared with sea transportation, the overall timeliness of railway transportation is faster, and the timeliness of European shipping is 30-50 days. However, in terms of stability, due to the continuity of the transportation mode and the mature transportation network, the railway transportation has high punctuality and stable timeliness. The poor timeliness of railway transportation is basically caused by the end delivery.
2. Low transportation cost
The cost of infrastructure construction for railway transportation is high, but the transportation cost is low, and combined with the large carrying capacity, the average freight price per KG is relatively low. The following compares the current air freight and rail freight quotations to learn more about the characteristics of rail freight.
To Germany: Rail transport can achieve the price of 40 CNY/kg, while the air transport price is around 70 CNY/kg (postal type). If it is a commercial express, such as DHL express, the freight for 1kg is between 130-140 CNY.
To the Netherlands: The price of rail freight is around 42 CNY/kg, while the price of air freight is around 72 CNY/kg (postal). If it is a commercial express delivery, the shipping cost of 1k is about 137 CNY.
3. Large carrying capacity and wide range of items to be shipped
International rail transport has a wide range of weights and types of items. In terms of weight, items weighing less than 2kg can be accepted, and goods weighing more than 500kg can also be accepted. In terms of item types, it can send built-in electricity, matching electricity, liquid items, paste items, cosmetics, kitchen knives, pure battery items, etc. However, most of air and sea transportation can only accept general cargo, and a few can take built-in electricity and supporting electrical items.
4. Small mailing range
The scope of international railway transportation is relatively small. According to the current intercontinental railway transportation line, the scope of mail is mainly through European countries, such as Germany, France, Britain, Italy, etc., and the scope of mail is relatively small. In contrast, air freight logistics has a wide range of postal services, basically allowing postal services to more than 220 countries and regions around the world.
5. Few transfers and high safety
There are few transfers in railway transportation, and transfers are basically needed until they reach the destination and hand them over to the terminal logistics service provider. There are few transfers, the goods do not need to be scanned, warehousing, and sorted multiple times, the loss rate and breakage rate are relatively low. In addition, the railway transport has a strong ability to resist natural disaster risks and is less affected. Moreover, railway transportation is almost unaffected by the climate, and can operate regularly and accurately throughout the year, day and night. So in general, the security is higher.
How to calculate the price of international railway transportation?
The price of international railway transportation is different from the calculation methods of international air transportation and international sea transportation. So how to calculate the price of international railway transportation?
The types of railway cargo transportation are divided into complete vehicles, less-than-carload, and containers. For LTL shipments, the minimum volume of one piece shall not be less than 0.02 cubic meters (except for pieces weighing more than 10 kg), and each batch shall not exceed 300 pieces. Railway containers are divided into 1 ton container, 5 ton container, 6 ton container, 10 ton container, 20-foot container, and 40-foot container according to the container type.
For ordinary buyers, these numbers are not always reachable, and the process of handling railway transportation by themselves is also very complicated. So buyers need to cooperate with forwarders . The forwarders can meet the requirements of rail transportation and reduce the freight by combining the goods of many buyers. And the forwarders will also provide door-to-door, door-to-station, station-to-door, and station-to-station services according to customer requirements. The following structure of railway transportation costs is for your reference:
Door-to-door fee: freight + container rental fee + customs declaration fee + station fee + domestic delivery fee + foreign delivery fee
Door-to-station fee: freight + container rental fee + customs declaration fee + station fee + domestic delivery fee
Station-to-station COC fee: freight + container rental fee + station fee + customs declaration fee
Station-to-station SOC fee: freight + station fee + customs declaration fee
The COC and SOC involved here to distinguish the types of containers. When the container is owned, operated or leased by the carrier, it is called the Carrier’s Own Container (COC); when the container is owned by the shipper (shipper), it is called the Shipper’s Own Container (SOC for short). Compared with the two, COC fee will be more expensive than SOC fee.
Usually railway freight forwarders will open dedicated railway lines. Accepts private addresses, can be delivered to the door, and can be delivered to the Amazon address; and will provide two-way customs clearance between China and the destination country, including the customs duties of the destination country, including the delivery to the door, and the Amazon warehouse service. Customers only need to provide cargo information. The only disadvantage is that during railway transportation, customers cannot inquire detailed logistics information until the goods arrive at the destination site.
The timeliness of railway transportation is similar to that of sea transportation, and some may even be shipped faster, but the overall cost is lower than that of sea transportation. So when your cargo exceeds 2CBM and you have no special requirements for transportation time, rail transportation is also an option that can be considered. You can obtain quotations and timeliness for sea, air and rail transportation at the same time from the freight forwarder, so as to choose the most affordable and most suitable transportation method for your needs.
Conclusion
I hope I was able to clear the air as far as sea freight shipping from China is concerned. Feel free to drop your questions in the comment section below and I’ll attend to them as soon as possible.
