9 things you should know
Shipping rates can vary tremendously. Many new transport buyers feel that it is difficult and frustrating to get an overview of shipping prices to transport goods from A to B. Here, you will get 9 tips, which will help you along.
The frustration is partly because we as consumers have become accustomed to finding and comparing prices on everything, from flights and hotels to electronics and clothing, in an instant online. With shipping rates it is usually a bit more difficult and “old school”. In addition, it is because most people, who are not experts in the transport market, do not know the basic ‘product types’ found in the transport world, such as FOB and Ex-Works.
1. Where can I find shipping rates?
The vast majority of the transport market is still offline. In other words, you have to call the shippers to find the shipping rates for your goods. There are, however, some alternatives turning up in some markets:
transporteca.com – transport to and from the UK by sea, air and truck
timocom.dk – truck transport in Europe
freightquote.com – Trucking within US
xpressrate.com – cargo to and from the United States by sea and air
flexport.com – cargo to and from the US
nimber.com – transport of small things for private
2. What is included in the freight costs?
Export customs clearance
Sea freight, air cargo or road
Import customs clearance
As you can see from the above list, you have the transport in the middle (point 4) and the same three elements (pickup / delivery, customs clearance and handling) at each end.
Full container shipping cost
If the goods have been sent from one EU country to another EU country, the clearance stage at both ends (points 2 and 5) can be removed from the process. In cases where you send a full container or an entire truck, then stages 3 and 6 can be removed from the process. Otherwise, all 7 stages apply.
When two parties enter into an agreement on the trade of a consignment, then they should also agree on the conditions of transport that will take place. For this, you will use the so-called Incoterms. The most used are FOB and EXW, if you are importer, and CFR and DAP if you are exporter.
As an importer:
EXW means Ex-works, and includes payment for all stages, ie 1-7 above.
FOB means Free On-Board, and includes payment for stages 4-7.
As an exporter:
DAP means ‘Delivery At Place’ and includes payment for all stages, ie 1-7, except for step 5.
CFR means ‘Cost & Freight’ and includes payment for stages 1-4.
3. How do freight forwarders quote shipping rates?
A basic understanding of the carrier’s way of working and determining prices can facilitate the conversation considerably. A forwarding agent can basically always give you a price on the freight, ie stage 4, as well as local costs in their own country.
In other words, if you ask a UK shipping agent about the price of an import shipment from Vietnam to the UK, the freight forwarder can easily give you prices on stages 4-7, similar to FOB. However, the prices of stages 1, 2 and 3, might not be readily available to them and therefore they would need to ask a local agent in Vietnam.
The freight forwarder needs to do this for every request that comes from the customers. This is a lengthy process that a freight forwarder would normally only perform if they have a pretty good feeling that you actually want to buy cargo with them. In other words, freight forwarders will usually give you shipping rates as FOB instead of EXW.
The same goes for export. A UK customs agent can quickly give you prices on stages 1-4, i.e. the equivalent of CFR, but will have to ask a local agent of the recipient country to get rates for stages 5-7. Therefore, freight forwarders will usually give you shipping rates on CFR instead of the DAP when you are exporter.
Keep these factors in mind when you talk to your forwarder for shipping prices.
4. Make sure you always have an all-inclusive price
You will often find that instead of sending you a total cost of freight, the freight forwarder will send you a whole list of elements of the price with an unspoken expectation that you will work out the total cost yourself.
This list usually contains multiple currencies and a host of abbreviations that are incomprehensible to the layman. This is an example from the real world at such an offer:
Freight all-in: £2,600
Port charge: USD 13 per W / M
Offload on warehouse: USD 3.3 per W / M
Clean customs: USD 25 / bill
Document: USD 32 / bill
ESA: USD 30 / bill
Telex release: USD 16.5 / bill
Commodity inspection fee: USD 16.5 / shpt
Truck up: USD 400.00
Can you figure out the final shipping cost? When you receive such an offer, ask the forwarder to determine the total cost of your shipment.
What is customary? The different transport modes have their own ‘price culture’, that is their own way to give their freight rates. It can be helpful to know these differences.
5. Shipping cost for road transport
The crucial point is whether the transportation takes place between two EU countries or not.
If the transport takes place between two EU countries, the freight forwarder will usually give you a single all-in price, so you don’t need to do more. On the other hand, a quote for transport in or out of the EU, such as from Switzerland to the UK, will normally consist of a price for the load, as well as a price for export customs in Switzerland and a price for import clearance in the UK.
6. Shipping cost for ocean freight
For sea freight, the forwarders will usually give you an all-in freight price for the stages that they are responsibly for. This will typically be sea freight and costs in the carrier’s home country, for example Denmark for a Danish shipping company. The costs accrued at the ‘other end’ usually come in multiple lines, as is in the example above.
7. Shipping cost for air cargo
Standard air cargo is cargo carried by passenger flights, such as SAS and Lufthansa. Standard air quotes are similar in construction to sea freight quotes, meaning that the freight forwarder can quickly and easily give you a total price for the air freight and local costs from the home country. The overseas costs will, however, take time to get and will come in several lines.Prices for air freight
Courier-goods are sent by one of the global courier companies, such as FedEx, UPS, DHL or TNT. Here you always get an all-in price that includes all seven elements. In other words, the prices are always based on EXW (for imports) and DAP (for export). You might be allowed to send FOB or CFR, but the price is the same, so it can rarely pay off.
8. The difference between customs and clearance
Many people often find it difficult to distinguish between the two concepts customs and clearance. Duty is the tax that the state requires you to pay to pay when you import or export goods. Customs collection comes directly from HM Revenue & Customs.
Customs clearance is the job associated with declaring the goods you import or export. Freight forwarders usually perform this by entering details, such as the type of goods and the value of the customs system.
A distinction is made between the VAT on transport and VAT on the goods transported. There must be a settled VAT for the whole journey, if it takes place between two EU countries. It is the responsibility of the carrier to charge this. For example if you get a pallet home from Italy to the UK, then it is the responsibility of the carrier to charge 20% UK VAT.
If transportation is to or from a country outside the EU, the stage of transport within the EU should be taxed. In other words, if you import a pallet of goods from the United States, where the total transport cost is £800, of which transport costs for transport inside the EU (VAT base) is £200, the VAT amount (20% in the UK) represents £40. It is the responsibility of the carrier to calculate and charge this.
Shipping Rates with Transporteca
On the portal you can search shipping rates and book your transport online. All prices are comparable and all-inclusive.