A Complete Analysis of Shipping Costs: A List of Expenses That Foreign Trade People Must Know

Friends, the most troublesome thing about doing foreign trade is the shipping cost. Today, we will use the most down-to-earth way to break down and explain the shipping costs clearly, and we guarantee that you can use them after listening!

Basic freight: the "ticket money" of shipping

First of all, we have to talk about the basic freight, which is the "ticket money" for shipping goods from one port to another. Just like we have business class, first class, and second class seats on high-speed rail, there are two main ways of shipping: full container (FCL) and less than container (LCL).

Foreign trade veteran teaches you how to save every penny of shipping money

Dear friends who do foreign trade, we have to chew on this "big fat meat" of shipping costs! Today, I will break down and tell you about the experience of shipping costs that I have saved over the years, and I guarantee that you can save a few containers after reading it!

Tip 1: Choosing the right mode of transport is like finding a partner

The issue of full container load (FCL) and less than container load (LCL) depends on the volume of your cargo. Simply put, a full container load is to charter the entire container, which is suitable for large volumes of cargo and is cheaper per cubic meter on average. LCL is to share a container with other people's cargo, which is suitable for small quantities of cargo. But be aware that although the unit price of LCL seems low, it may be more expensive than a full container load after adding various surcharges.

Tip 2: Book a space accurately

There are also peak and off-peak seasons for shipping! Usually, the peak season is after the Spring Festival and before the National Day. At this time, shipping companies charge a peak season surcharge (PSS) that is particularly fierce. We can stagger the peak season, such as shipping in the traditional off-season of June to August, which can save 15%-30% in freight. Remember, book at least 2 months in advance for more stable prices.

Tip 3: Packaging optimization is a big deal

Container space is charged by volume! Many friends fill their boxes when shipping. In fact, as long as they slightly adjust the packaging method, they can save a lot of space. For example:

Use foldable packaging boxes

Reduce fillers appropriately

Plan the order of goods placement reasonably

Use more compact packaging materials

These methods can reduce the space of your goods by 0.5-1 cubic meters, which can save a lot of money in the long run.

Tip 4: port selection is particular

Don't just focus on big ports! Although some second-tier ports are not well-known, the cost can be about 20% cheaper. For example, changing from Shanghai Port to Ningbo Port, and from Shenzhen Port to Yantian Port, freight and surcharges can be saved. Of course, the premise is that your customers can accept it.

Tip 5: Pay attention to document processing

Don't underestimate the document fee! Miscellaneous fees such as telex release fees and bill modification fees may add up to hundreds of dollars. We need to do the following:

Confirm the bill of lading information once

Prepare customs clearance documents in advance

Choose electronic release (telex release)

Avoid temporary bill modification

Tip 6: Flexibly use shipping terms

The two trade terms of FOB and CIF can save a lot of money if used well. If it is FOB terms, the freight is borne by the customer, and we will focus on controlling the port of shipment costs; if it is CIF terms, we can strive for better shipping company prices.

Tip 7: Get in good terms with freight forwarders

It is so important to find a reliable freight forwarder! Freight forwarders with long-term cooperation can not only get more favorable prices, but also warn of various cost changes in advance. Suggestions:

Compare the quotations of at least 3 freight forwarders

Choose a strong freight forwarding company

Establish a long-term cooperative relationship

Regularly review the results of cooperation

Tip 8: Buy insurance reasonably

Don't buy less or no insurance to save insurance premiums! Insurance premiums are usually 0.3%-0.5% of the value of the goods, but if there is a problem with the goods, this money is worth spending. Suggestions:

Insure reasonably according to the value of the goods

Choose a reliable insurance company

Understand the details of the insurance terms

Keep complete insurance certificates

Tip 9: Monitor freight trends

Sea freight prices fluctuate greatly, and we have to learn to read the market. Several key points:

Follow the Baltic Freight Index (FBX)

Understand the changes in fuel prices

Understand the exchange rate trend

Follow port dynamics

Tip 10: Pick up goods in time to avoid demurrage

Many people will ignore this! Overdue storage of containers at the destination port will incur high demurrage fees, which may be as high as 100-300 US dollars per day. Suggestions:

Arrange customs clearance and pick up in advance

Choose door-to-door service

Set arrival reminders

Prepare emergency plans

Remember, saving shipping costs from sea freight is not a one-time deal, but requires long-term experience. Use these methods, saving tens of thousands of dollars a year is not a dream!