Importing from China VI: Transport Management
Transport management is the most systematic approach and the only step of the process that we can manage in the place of destination thanks to new technologies. However, the easiest way to do it is by hiring other companies that can do the work for us. Besides, these companies usually work with big amounts of goods so they have preferential treatment with forwarders as well as customs officers.
The question is: how should we do the transport management?
Negotiating Incoterms. It is usually the supplier who has more power of decision than the other parts of the negotiation. However, we can always negotiate it. If we are a small company, we would like to use either Incoterm CIF or DDP so that we do not have to manage the operation. However, if our supplier owns a small factory, he will try to use either Incoterms EXW or FOB for the same reason.
The most common way is to buy using Incoterm FOB and to hire a firm which manages the whole import operation until we receive the goods in our warehouse.
To calculate the rates: As we have commented previously in this entry, we need to find out the Taric code or HS code of our product so that we can calculate the duties we have to pay in the custom office of the country of destination.
To hire a freight forwarder: One of the most commonly things in the import/export business is hiring a freight forwarder that manages the transportation of the goods. They can deal with customs officers and they are specialists in groupage.
To purchase an insurance policy: It is always advisable to purchase an insurance policy. The price varies around 0.5% of the cargo value. However, the amount we have to pay usually varies depending on the values we want to ensure. It will be higher if we want to ensure both the goods and the cost of transportation rather than only the cost of the goods.
Preparing the documents: The most important documents are the Bill of Lading (B/L) and the Certificate of Origin. These documents verify the main features of the goods, their value, the place of origin of the goods, the parts involved in the shipment and the responsibilities of each of them. We will talk about it in further detail in the following entries.
Once we have followed these steps, we will not have any problem in receiving the goods in our place or warehouse. We hope you have found this information useful and please, do not hesitate to contact us writing down a comment in this website.
If you are thinking about getting into the import business from China, do not hesitate and contact us with no obligation.