When selling products, you may need to import them from other countries and have them delivered to a warehouse or home. There are different ways to do this whether by air, train, or by sea. During this process, there are fees and regulations you should be aware of. I will be explaining how to develop an international supply chain with three key elements: the type of shipping, selecting and booking your freight, and post-delivery supply chain.
Types of Shipping
There are several well-known types of shipping, such as Free Carrier, Free Alongside Ship, Cost and Freight, Cost/Insurance and Freight, Cost Paid To, Carrier and Insurance Paid To, and Delivery at Place, among others. In my experience, I have found three types that are used more than the others: Ex Work, Free on Board, and Delivery Duty Paid.
Ex Work means your goods are at the manufacture’s warehouse and you are responsible for shipping the product to your destination. In this case, you will have to pay for customs, customs bonds, taxes, and any charges that may come up during the process.
Free on Board (FOB) is when your product will be delivered to the port or ship. What does this mean? The manufacturer will get your product on the boat, but you will be in charge of getting it off the ship, through customs, and delivered to you. What I do not like about this type of shipping is that when the manufacturer drops the product off, it is unsupervised, and my insurance does not kick in until the next step. There is an uninsured moment, so I recommend avoiding FOB shipments.
Delivery Duty Paid (DDP) is one I deal with all the time and I also call it Door to Door. The goods are shipped to you and delivered to your warehouse or your house location. Whoever you negotiate with will pay all deliberate duties, and it is a good way to avoid unseen costs.
These three terms are extremely important when negotiating with manufacturers. I usually quote Ex Work or DDP, because, throughout the entire process, there is someone in charge of the shipment.
A freight forwarder is a person or company that deals with the shipment of goods from the manufacturer to a customer, market, or point of distribution. You have traditional ones, like DHL and FedEx, which more commonly do air shipping. DHL is usually the most expensive option, but the fastest large provider and can take two to ten days to deliver. FedEx can take up to two weeks, depending on the shipping type.
You can tell your freight forwarder where to pick up your product and where to deliver them to. The forwarder will handle the rest. They help you in handling customs, bonds, and taxes. There are plenty of companies that do this and can help you with all forms of transportation. I use freight marketplaces, which work like Expedia, giving you options and quotes from several freight forwarding companies. I regularly use Freightos and have had a good experience. Pro-tip: make sure to insure the full shipment, and don’t fudge your invoices.
Domestic Supply Chain
Once you have chosen your type of shipping and selected a freight forwarder, you need to find a place to store and ship your goods. What you will select depends on your business model. Some common solutions are Amazon FBA, delivering it to your warehouse, or use a third-party logistics or fulfillment center (3PL).
The ideal supply chain would be choosing Ex Work, using a freight forwarder, and ensuring shipment the entire way. You will have to pay for the cost of freight, taxes, and tariffs. The quickest route would be shipping to California, and from there, to your 3PL or warehouse. You can put everything in one location and distribute to the rest of the country.
Mastering these three key elements will guarantee the successful shipment of your goods and the success of your commerce. Having a good partner or a 3PL will add value to your business. It is important you do your research before you start importing products.
Scott Bartnick is a strong professional leader with a degree in industrial and systems engineering, specializing in public relations. Bartnick is a serial entrepreneur, published author, and successful business owner. He has extensive and diverse experience with eCommerce consulting, operational excellence, public relations, sales, and marketing. You can reach Scott at The Five Day Startup.