What is ship freight and how is it calculated?
What is ship freight and how is it calculated?
Freight forwarding logistics company "AF-Group" offers services for the delivery of goods from China with comprehensive support. Chinese-made products are distinguished not only by favorable prices, but also by constantly improving quality. The import of goods from China to Ukraine has become the key to success for many companies. Clothes, footwear, electronic devices, household appliances, household goods, furniture and even cars from the PRC are in high demand among Ukrainians.
Where to begin?
Accessing manufacturers in the Middle Kingdom is not an easy task for small businesses and aspiring entrepreneurs. The logistics chain and work with a large number of papers (which must be filled in in strict accordance with the current legislation) make the beginning of foreign economic activity a difficult and expensive undertaking for many representatives of the Ukrainian business community.
The potential benefit of buying a low-cost batch of products can be offset by high shipping costs or long lead times. Also, do not forget that the integrity of the cargo must be preserved along the entire route. It is especially unpleasant to receive an order with mechanical damage, the responsibility for which will lie entirely with the customer. That is why it is recommended to contact professional partners in the field of international cargo transportation.
Clients receive fixed prices that do not depend on the rapidly changing market conditions and a guarantee of the safety of the shipment. A step-by-step guide to importing Chinese goods will be given below. Please note that the information in the article is intended for reference only, and before starting the activity, it is recommended to try the work of the system on a small trial batch.
Stage 1 - defining import rights
Even when purchasing products from the PRC for personal use, an individual becomes an importer. In this case, you can use the services of international courier delivery services (DHL, FedEx, etc.). This is convenient when ordering several items, because the courier will bring the parcel directly to your home. However, at the same time, the price of such a service will be quite high, and due to the additional margin, it is unlikely that it will be possible to profitably resell the batch. This opportunity can be used to purchase products "for yourself", but when doing business, you should order the delivery of goods with a minimum logistics margin.
Please note that the customs authorities are carefully examining the composition of the imported goods to ensure that the order meets the stated goals. For example, if a parcel contains several identical products with the same characteristics, then this will no longer be classified as "for private use" products. You will have to draw up documents and pay duties in accordance with the rules for the commercial carriage of goods. We advise you to get a preliminary consultation to study all the nuances of passing customs control and prepare the necessary documentation for import from China.
Step 2 - selection of goods for import from China
Gather detailed information about the products you plan to purchase for subsequent resale. You will need to study customer reviews and request samples to obtain objective information on the quality of goods. Benefits from doing trade with China can be obtained only by selecting the optimal product group in terms of price-quality ratio. It is also necessary to determine the relation of products to the product category according to the classification by the customs control authorities. The final costs will largely depend on this (the TN VED code affects the amount of the duty).
Several recommendations for choosing products:
- choose the positions that you personally like
- study the reaction to products of friends and acquaintances (gather a focus group)
- find products with unique selling points (they can be sold at a higher mark-up)
- study the pricing for the transportation of goods (you need to choose the option of sending with the lowest cost).
The specialists of the AF-Group company have extensive experience in working with imports from China to Ukraine and will be able to suggest the nuances of choosing suppliers. An additional service is also provided for the purchase of goods and communication with manufacturers on behalf of the customer.
3 point - check the compliance of the goods with the current legislation of Ukraine
It will be necessary to determine whether it is possible to import certain goods into Ukraine. Different states have their own characteristics of customs legislation and some positions that are legally circulating within one country may be prohibited from being imported into another. All responsibility for the compliance of the imported consignment with the rules and provisions of the law lies with the importer, therefore, special attention should be paid to the study of this issue.
In particular, it will be necessary to check the requirements for the level of danger of products for health, the environment and other specific parameters. If there are restrictions, then penalties may be imposed or the entire shipment will be seized. This can result in a serious shift in delivery times or significant material losses for the business.
Stage 4 - classification of goods and calculation of the cost of logistics
Each imported product group has its own 10-digit code, which affects the ratio of the cargo to a certain tariff. The certificate of origin and classifier numbers will help determine customs rates and calculate the economic feasibility of buying these products in China.
Even before organizing the import, the totality of the purchase and delivery costs should be determined:
- manufacturer's selling price
- transport company services
- customs fees and duties
- transportation by road to your warehouse.
The sum of these elements (FOB) will show the total cost of one unit of production, and from this it will be possible to deduce the potential retail price. If this price tag is competitive in the domestic market of Ukraine, then you can proceed to the next stage.
Step 5 - finding a reliable supplier (or manufacturer) in China and placing an order
The success and stability of the business when importing goods from the PRC depends on the selection of a supplier who will provide favorable conditions for cooperation. We recommend selecting applicants not only by price (the lowest price is a signal of increased danger of receiving low-quality products), but also by the level of additional indicators.
It is easy to find a manufacturer of similar products in China, so make your choice based on different parameters:
- provision of the correct platform invoice or receipt (P / I) indicating the weight, dimensions and delivery times
- the possibility of cooperation with delivery to the specified port or warehouse (FOB) (this will help to minimize the costs of internal logistics)
- the partner must provide the opportunity to plan purchases for a long period (this is important due to the long period of container transportation, and for regular replenishment of warehouses, you will need to place orders before the arrival of the previous batch)
- provision of all necessary documentation for customs declaration
- availability of clear standards for the materials used and design features of products (often Chinese manufacturers seek to reduce the cost by making changes to the original characteristics)
- the level of interest in the client on the part of the manufacturer (if the supplier is inattentive to the customer, then his request will be fulfilled accordingly).
AF-Group managers will be able to give detailed recommendations on the selection of proven partners in China and suggest points to pay close attention to.
6 point - organization of international cargo transportation from China to Ukraine
Depending on the individual characteristics of the business, it may be necessary to develop a personalized logistics system to ensure uninterrupted supply. Sometimes the price is a decisive factor, and the best option would be to use budget transport with a long delivery time (railway and shipping lines). In some cases, the efficiency of transportation is more important, and then it is better to opt for a more expensive, but much faster option. Employees of a transport and logistics company will select the best option, taking into account the specific tasks of the client.
It is better to work with one partner who will provide control at all stages (from loading to customs clearance and collection of accompanying documentation). The presence of freight forwarders and agents in ports and warehouses in China is important, only thanks to in-house staff can timely loading into a container or other mode of transport be achieved. Also, people on the ground control the safety of the batch during temporary storage and reloading.
Step 7 - tracking cargo and planning the next purchase
Taking into account the fact that the import of products from China takes on average 20-25 days, the customer needs to monitor the status of the shipment online. Only with open access to the current location can you plan further actions to form the next container. Thus, it is possible to avoid overpacking of warehouses and organize a systematic replenishment of warehouse stocks, taking into account the needs of the business.
It will also allow minimizing the money “frozen” in the product. The faster the goods and money turn around, the more efficiently the whole system works. Due to the fact that AF-Group provides a personal manager and access to tracking, the company's partners always know the latest information about the ordered batch and can plan the correct date of receipt.
Stage 8 - receiving cargo from China to Ukraine
After the arrival of the order on the Ukrainian territory, it is important to promptly carry out customs clearance. Due to the fast processing of all documentation, customers can immediately receive the goods. Loss of time is always closely associated with losses, so AF-Group employees will immediately prepare all the papers at the moment the products arrive at the warehouse.
Import from China together with AF-Group
Logistic company "AF-Group" offers its clients comprehensive support for the import of products from China. Forwarders and agents on the territory of foreign countries will control the process of loading, unloading, and transportation. Each customer can be sure of the safety of their cargo and strict adherence to the delivery time.