Transporting Goods Overseas
For goods exports, transporting your product to an overseas market efficiently and competitively is crucial. Using a good freight forwarder is very effective, but it is also essential to understand the basics of shipping terms, pricing and documentation.
Where do I start to learn about shipping and service delivery?
Using a good customs broker and freight forwarder is the most efficient way to ship your goods. These companies are expert in documentation, freight rate negotiations and finding the most economical way to get your product to the buyer.
Your product may be suited only for ocean shipping or for airfreight. It is important to understand the basic principles of both sea and air cargo as rates can vary when new capacity is offered on trade routes and when new markets are serviced, often with a range of intermodal services.
What do all these shipping terms mean?
Sea and airfreight have a well-ordered series of conventions and these need careful study. A good starting point is to learn what are known as INCO terms (International Commercial Terms). Introduced in 1936 and modified since, INCO terms are critical for the consignment and payment of goods shipped internationally, and have precise definitions.
Letters of Credit (L/C) are a common form of payment, known as a documentary credit, established by the buyer and guaranteeing payment to the seller providing all the documentary terms of the instrument are strictly adhered to. Your bankers will provide you with detailed background information, essential for any exporter.
How do I negotiate the best freight rate for my cargo?
Freight forwarders will provide you with a range of options to find the most cost-efficient rate, but be familiar with freight markets so you can gain the most competitive rate.
Your overseas buyer will often specify the preferred option and this could depend on ease of customs clearance at the port of discharge or the frequency and reliability of sailing. Transhipment is a common feature of liner shipping.
‘Hub’ ports such as Singapore, Hong Kong and Dubai distribute containerised cargo to other ports by ‘feeder’ vessels. Make sure, however, that the transhipment hub is efficient so your cargo does not suffer delays.
Most freight forwarders have space and freight rate deals negotiated with sea and air carriers. What’s important is to locate a forwarder who caters for your business profile – both in scale of operation as well as geographic coverage.
Isn’t export documentation complex?
Export documents require careful preparation to avoid delays in customs clearance at their port of discharge and also to comply with documentary letters of credit that specify conditions such as precise product descriptions, packing lists and attestations including quarantine certificates and certificates of origin. Electronic documentation has made a complex process much easier, but mistakes can be costly. It is imperative to understand the export documentation process and to ensure that the preparation of documentation is carried out with meticulous accuracy.
What do all these shipping terms mean?
International Chamber of Commerce (ICC) – www.iccwbo.org/index_incoterms.asp
Has a detailed review of Incoterms.
