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As a new business, you’re perhaps still learning the ropes on how you ship goods from overseas markets to a 3PL warehouse. You’re maybe still in the process of trying to find the perfect 3PL that can effectively ship and store your products. But importing (and exporting) goods is frequently a complicated process involving protracted steps and exorbitant fees.
No business should attempt to take on all the paperwork and regulations alone when importing goods becomes necessary. Fortunately, you’ll discover most businesses use a process called freight forwarding to take care of the above complex procedures.
With international exporting and importing a major part of business today, you need to know what a freight forwarder is. In addition, you should know their process, including what occurs through customs clearance and drayage from the port to the warehouse.
Let’s take a look at how you can define a freight forwarder and how to find a quality one.
You’ll find a lot of lengthy explanations online for what a freight forwarder does, yet you can basically define it as an intermediary who arranges the importing or exporting of your goods for a fee.
You may have to work closely with a customs broker or brokerage who is an “agent of the importer”. Customs brokers are frequently the importer’s only point of contact with the U.S. Customs Service and advises on the technical requirements of importing, preparing and filing entry documents, obtaining the necessary bonds, depositing U.S. import duties, securing release of the goods and arranging delivery to the importer’s premises or warehouse.
Freight forwarders focus on coordinating shipping and customs clearance services from the overseas manufacturer to the local warehouse. Typically, they don’t do the actual shipping but instead have relationships with any number of carriers. Freight forwarders usually leverage their pre-existing relationships with shipping carriers, such as air freight, rail freight ocean freight and truck freight, so that they can deliver the best pricing for their clients.
Furthermore, freight forwarding companies typically don’t offer storage and shipping services once the product arrives locally, although there are a few that do. For those companies looking to bring product from overseas and who utilize an outsourced fulfillment service, it’s important to choose the best option for managing these related but specialized services. Clearly, fulfillment services are far different than Freight Forwarding services, but you may wonder if fulfillment companies offer freight forwarding. There is no single answer. Should your company utilize separate companies for each step? Are there companies that perform both services underneath one roof? If you utilize one company, what things should you look for in making the best decision? Below, we’ll explore the answers to these questions so that you can make the best decision for importing and distributing your products.
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One thing they don’t do is actually do the transporting of goods. They work closely with those who provide transportation, including ocean cargo shippers, truckers, air freighters, and rail services.
All of these have complex fees involved in the moving of goods to your warehouse. A freight forwarder works as your advocate to negotiate better prices on the transportation. They do this through a bidding process so you can get the best possible price out of numerous transportation choices.
The operative word is “organizes”. The freight forwarder doesn’t actually move the goods but handles the logistics of their movement. This involves relationships with various shippers, by land (trucks and railroads), air and water. Any movement may involve multiple modes and shippers. Freight forwarding includes all associated paperwork, including data collection, and for international shipments, preparing and processing customs. Freight forwarders also have expertise in regulations and legal issues.
Specific papers a freight forwarder reviews on international shipments include commercial invoices, the shipper’s export declaration, the bill of lading and other documents required by the carrier or country of export or import. The work of the freight forwarder doesn’t end when a shipment enters the country. Drayage refers to picking up an ocean container from the port or rail ramp, delivering it to the 3PL warehouse, and returning the container.
While this is a general overview, you should learn about each procedure in detail and how much knowledge the best freight forwarders have to make importing simpler.
Working with an experienced freight forwarding service helps you navigate the frequently complex steps involved in customs clearance. They understand import documentation, which frequently involves handling the purchase order of the buyer, the sales invoice of the supplier, the bill of entry, and the bill of lading.
The forwarder also needs to deal with the packing list, and certificate of origin. However, this is frequently just the start because different regulations from the importer, or financial institutions, can complicate documentation further.
Sometimes businesses go through customs brokers to handle the customs clearance processes. Nevertheless, freight forwarders with extensive experience should already know the details.
It works easier when you properly communicate information to your freight forwarder. The importer needs to make sure their shipping containers are properly loaded. Also, be sure to provide accurate paperwork to your freight forwarder so there aren’t any mistakes.
If you’re still unfamiliar with the term drayage, it means trucking service transporting your goods from a port to another destination. In your case, it could mean transporting directly to your 3PL warehouse in another part of the country.
Many freight forwarders work near ports, and they’ll negotiate the fees involved with those transportation services. It doesn’t always mean trucking services and can often mean negotiating prices with rail services or air freight.
Thanks to a freight forwarder’s knowledge of pricing in this industry, they’ll know which price is the best for you. Their experience also tackles complicated banking procedures involved with payment to importers.
There are two ways to get goods shipped internationally: air freight forwarding services and sea and ocean freight forwarding services. The primary differences between the two freight shipping methods are time and cost.
Air freight forwarding services are when freight is sent worldwide by plane. Air freight is the fastest method of moving items around the globe since you can get goods from one country to another in less than a day. Your air freight services usually take only a few days when factoring in the warehouse and customs processing times.
Sometimes, companies will ship items on special planes made just for cargo. Other times, carriers place the cargo in passenger planes when there is room below the cabin.
The primary issue with air freight services is the challenge of shipping large or heavy products. The items companies ship by air needs to fit in a way that will not compromise the plane’s balance during flight.
In nearly all cases, shipping by sea is cheaper since it is less costly to the shipping companies, even though it takes longer. The high cost of air freight is especially true when you have large objects. In some cases, smaller and lighter products may ship cheaper by air, depending on the shipping company and the destination of the goods.
The other method you can use to ship goods overseas is sea freight forwarding, also called ocean freight forwarding. Sea freight forwarding is when goods placed in large shipping containers are sent internationally by boat, usually across the ocean.
Sea freight forwarding takes longer than air freight forwarding. Depending on the shipping port, the destination, and the boat and sea conditions, it can take as long as a couple of months for products to ship across the sea.
However, sea freight is typically cheaper since boats are cheaper to run, and there is less time expectation. You can generally predict how long it will take for cargo to ship across an ocean, but companies often provide a time range in case of delays.
There are two essential terms regarding sea freight: FCL and LCL. Each one is a method of shipping goods across the sea.
A full container load is when a company has enough goods going to one destination to fill an entire container. Having an FCL may be difficult for small companies. Larger corporations often benefit from using FCLs, primarily if they regularly ship to the same port.
On the other hand, a less than container load is when a company ships a container across the sea, but it is not complete. Typically this happens when one company uses a container to ship their goods, but they do not have enough to fill a container. If companies have a joint shipping arrangement, they will often combine LCLs to make shipping more efficient and create FCLs.
The following list isn’t exhaustive but provides a few basic terms to assist as you consider whether to handle freight forwarding internally or delegate it to a third-party.
3461: U.S. Customs and Border Protection Application for Entry/Immediate Delivery. This form details the content of cargoes entering the U.S.
BOL: Bill of Lading. The carrier issues this document and provides details of a shipment.
Customs Status: Customs Clearance status on a shipment, required before release into the U.S.
Drayage: Picking up an ocean container from the port or rail ramp and returning the empty container.
OBL: Ocean Bill of Lading, used by a steamship line to show receipt of cargo and associated details.
OBL status: Steamship lines require payment before releasing cargoes.
POD: Proof of Delivery. Used by carrier to show that cargo delivery.
Now, let’s look at some countries where sending sea freight to the US is popular. There are three popular international destinations for bringing products into the US from overseas
Some factors can affect the time it takes to transport goods between these three popular Asian shipping destinations and the US.
First is China, one of the world’s most high-volume sea freight routes. The time it takes to ship goods from China to the US varies depending on what you are shipping and whether or not you pay for express shipping times.
Sea freight between China and the US can take anywhere from 3 to 60 days. While this is an extensive range, you can expect the biggest and heaviest goods to take closer to 60 days. The smaller and lighter items typically arrive quicker.
The exact timing depends on where the sea freight is being sent in the US and the weather conditions the freight liner experiences at sea.
If you need to get something shipped between the two countries quicker, you can pay extra fees for expedited shipping, which will send your package in about three days. If you have a larger package, expedited shipping will cost more. However, this also means you will receive your items in significantly less time.
The cost to ship goods by sea from China to the US has increased recently as the supply chain continues to have issues and move slowly. Today, it costs approximately $20,000 to ship a 40-foot shipping container from China to the US.
If you are shipping containers worth of goods, that is quite a high price, especially if you are shipping multiple containers. But, for a small package, the cost is much lower, and you will only have to pay a small portion of the thousands of dollars it costs to ship the whole container.
Sea freight from China to the US can take up to two months. But, there is also the possibility that your goods ship across the ocean in just a few days.
You should see how long it is estimated to take when you ship something. If it is too long for you, you can add on expedited shipping if available. Or, you can choose a different shipping method other than sea freight if your shipment is time sensitive.
Vietnam is another country in Asia where a lot of sea freight to the US comes from. As with China, shipping goods by sea is the cheapest option, but it takes the longest.
Sea freight between Vietnam and the US can take a while, as it is the slowest way to get products between Vietnam and the US. The average time it takes goods to ship from Vietnam to the US by sea is 37 to 41 days.
However, despite the extended shipping times, shipping by sea is the cheapest way to get goods between Vietnam and the US.
Sea freight costs from Vietnam to the US are much cheaper than shipping from China. To ship a 40-foot container to Los Angeles, you can expect to pay two to three thousand dollars. And, it is only one or two thousand dollars more if you are shipping to other parts of the US like New York.
These rates are for the average weighted container. You will have to pay more than these rates if you have a significantly heavier container. But, it will likely still be cheaper than if you were shipping from China.
You can always pay more to expedite your shipment, but the larger it is, and the faster you need it shipped, the more it will cost. And the expedited shipping cost is on top of the cost you are paying to ship the item in the first place.
The amount of time it takes goods to ship over the sea from Vietnam to the US varies depending on how big the goods are. The bigger and the heavier the goods are, the longer it will take to ship them.
Small goods will ship the fastest since they are easy to transport and can usually be sent out on the next available ship. But, the larger the goods, the longer it will take to ship them. Large shipments and items need to go on certain boats where you know the cargo will not exceed the weight limit. And the cargo loads need to be evenly distributed for large shipments for weight reasons on the boat.
Another popular place that products ship from to the US is Taiwan. Sea freight is a common way to transport goods between the two countries, and the shipping cost and time can vary, which I detail in this section.
It can take 24 to 28 days to ship goods between Taiwan and the US by sea. Shipping goods by sea is the slowest method, so it is not a good way to send important or timely goods worldwide.
But, if you are not in any hurry to send your items, you should ship them by sea to save money. And it is better for the environment.
Even though shipping by sea is the slowest method, it is also the cheapest way to ship goods between Taiwan and the US. The cost to ship to the US from Taiwan is similar to that of shipping from Vietnam.
Shipping one container from Taiwan to the US costs between $1,500 and $3,500. The lower cost compared to Vietnam and China is the fastest shipping time between the two countries. So, the less time needed to ship the goods, the cheaper the cost.
Sea freight between Taiwan and the US takes less than a month, usually between 24 to 28 days. The time it takes to ship something between Vietnam and the US depends on many factors.
Weather can cause some delays in the shipping time. And, the heavier and bigger the shipments, the longer it will take to transport them across the ocean to the US safely.
There are five major ports that freight ships to via sea in the US. The five top US inbound freight forwarding ports are:
This port is the largest in the US, with most goods from China, Vietnam, and Taiwan getting shipped to the port. The port is big, but with all the goods coming in, the port often gets congested, especially with all the supply chain issues.
This port is just south of the Port of Los Angeles. The two California ports are the cheapest to ship to from China and the rest of Asia since they are the closest; therefore, goods have less distance to travel.
This is the biggest port on the east coast of the US. Similar to the port in LA, the port of NY and NJ is experiencing high volumes, and the amount of shipment arriving continues to increase. The port can welcome large shipments and containers thanks to its massive container cranes.
After the port of NY and NJ, the Port of Savannah handles the most incoming international shipments on the east coast. The port is in the southeast part of the country, so it handles shipments coming into the south so the ships do not have to go further up the coast.
The third largest port on the west coast is the NWSA which handles shipments coming into the northwestern part of the country.
All five of these ports have seen an increase in volume in 2021 as consumer demand increases and the number of goods shipped to the US increases. As the volume increases, so does the time it takes to get goods into the ports. These ports are big and were made to handle a lot of cargo, and they have taken steps to reduce the amount of time it is taking goods to enter the ports and the number of ships delayed at these ports.
You can find various sources online that help you track down the best freight forwarders across the United States or abroad. What you’ll appreciate is that many of them charge modest rates, even though this can vary depending on their expertise.
Before you get to this point, you’ll need to find a 3PL warehouse first. We can help you find the right one with our reliable vetting resources here at WarehousingAndFulfillment.com.
Some fulfillment companies do not offer freight forwarding services because (as you can see) it can be complicated and even labor intensive. In that case, you would need to hire a separate freight forwarding service. That is not, necessarily a bad thing. On the upside, you get to enjoy the benefits of the expertise of both firms, and as one focuses on brining product in from overseas, and the other on storing and shipping upon arrival, it can mean substantial savings. On the downside, it means two relationships to manage and high prices if you are not a bulk importer.
In this case, you can choose the best freight forwarding company based upon research and/or recommendations from others. While you won’t necessarily receive bulk discounts unless you have a large volume of import shipments, you can choose the company that you’re most comfortable with and you can certainly use the bidding process to leverage a better overall rate. If you don’t have any referral sources, you can either research companies individually or through the use of an online quoting service. Nonetheless, be sure to pay attention to these points:
Of course, some fulfillment houses, create partnerships with a freight forwarding firm that they recommend if you are importing or exporting as part of your e-commerce work for managing import transportation. Again, there are pros and cons to consider. The upside is that you have a more streamlined approach, and if you encounter problems, you can contact the fulfillment center as well as the freight forwarder. Both have reputations at stake. Of course, you may not get the best pricing because one might earn a referral bonus or commission off the other. You also need to double check references. Though you might like the fulfillment center, it does not mean their preferred freight forwarder is all you need or the best fit. Again, you also have two separate relationships, but there is a connectedness that is of benefit to you.
Lastly, there are some fulfillment centers that actually have “divisions” operating as freight forwarding firms. This means a single relationship with a range of departments or experts that offer the individualized services. The downside to such opportunities is that they are usually much larger companies if they can afford to have a completely separate freight forwarding and international shipping division. This means, of course, that they may only focus on larger volume accounts with larger companies. While this isn’t always the case, it may present challenges for smaller shippers and e-commerce companies.
So, a fulfillment center can help with customs brokering and freight forwarding, but it pays to find out what the overall pros and cons are of the different approaches. Before you make a decision on your import solution, consider the various relationships that are involved. Take the time to find your freight forwarding, customs brokering and fulfillment center providers to be clear about all of the costs, logistics and demands involved in your ecommerce enterprise.
Contact us to learn more about what to look for in 3PL’s and in freight forwarders, both of whom need to work in tandem.
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