E165: Shipping from China Made Easy with FreightosJuly 23, 2018 in Ecom-Crew-Podcast
Last week, we hosted a webinar about importing products from China. Today we’re going to talk about the nitty gritty of shipping products from China to western countries like the United States and Canada. Joining us in this episode is Noah Alhadeff. He’s a sales manager at Freightos, a “digital freight marketplace” that connects importers to freight forwarders.
Noah likens Freightos to Expedia in that it allows importers to instantly compare “all-inclusive” rates from as many as 60 different freight forwarders, depending on where you intend to ship your products to. In addition to comparing rates, the marketplace allows you to narrow down your results based on reviews, shipping method (air or ocean), bonds, insurance and so on.
Noah also offers some great advice for those who are new in their importing journey.
- Make sure you choose a freight forwarder who knows what they’re doing with Amazon. You’re go-to forwarder might be reliable when shipping directly from point A to B but Amazon has specific pallet requirements that your forwarder of choice should know about.
- Ensure that you get the closest Amazon Fulfillment Center to your factory. If your shipment is coming from China, that would be the Fulfillment center located in Moreno Valley, or if you’re shipping from Europe, the best choice would be the Amazon Fulfillment Center in New York
- Get paperwork filed quickly and accurately, preferably 7-10 days before your goods are ready. This includes Material Safety Data Sheet and Dangerous Goods Document.
In addition, Freightos is also offering a 5% discount to EcomCrew listeners on the first shipment. Just enter the code ECOMCREW5 on checkout (this is not an affiliate code; they just know how much even a 5% discount can help ecommerce owners especially in a very low margin business).
As part of what led to this interview, check out Freightos’ Experts Guide to Importing from China, for which we contributed a chapter. This guide is brought to you by some of the best in the business–people running ecommerce, sourcing and freight companies.
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If you have any questions or comments, feel free to leave them below. Happy selling!
Full Audio Transcript
Mike: This is Mike, and welcome to episode number 165 of the EcomCrew Podcast. So glad to have you with us today. If you have any comments or questions about this show, you can go to EcomCrew.com/165 to get to the show notes for this episode. Today, I have Noah from Freightos on with me. Freightos is a freight forwarding company. I mentioned it in the introduction when I introduced him. They did not pay to be on the show. There’s no compensation on affiliate deal. We just thought it be great to get them on the talk about free getting your stuff from China over to the United States and so much more. So on the other side of this intro, we’re going to get right into it with Noah.
Mike: Hey guys. Welcome to this edition of the EcomCrew Podcast. So glad to have you here today. I have a special interview lined up today my buddy Dave Bryant lined up for the EcomCrew Podcast. Let me give you guys a little bit of background on kind of how we got here. So Dave was asked to contribute to Freightos. They did like an importing guide, and we got written up in there which was really cool for EcomCrew. It got us some exposure.
And we also wanted to do a favor for them in return by getting Noah on the line with us. He’s going to be joining us here in just a minute. And Freightos is a freight forwarding company. They are someone I have not personally used. I think Dave’s had some experience with them. But we get asked questions a lot about freight forwarding. I’ve heard a lot of really positive things about these guys. And with that I wanted to get them on here to talk about importing and how to get your stuff efficiently in from China over in FBA warehouses or into a 3PL and all that good stuff.
So that’s kind of the basis for today. I will mention just quickly that they have not paid to be on here. This is not a sponsorship or anything like that. We did this because we think it will be valuable to the community. And we also got a discount offer we’ll tell you about at the end for some money off of Freightos services. Again that is not affiliate offer or anything like that. We’re doing this because we think it’ll be valuable to the community. And with that I want to introduce Noah from Freightos, and welcome to the show my friend.
Noah: Hey thank you so much for having me Mike.
Mike: Of course yeah. So, maybe just to start out here, give people just a quick overview 30 seconds to a minute about yourself and what Freightos does and then we can maybe try to help people out with a bunch of value bombs today on importing from China.
Noah: Excellent. So sure, my name is Noah Alhadeff. I work for Freightos as a sales manager. We are a marketplace for freight forwarders much like Expedia or Priceline or whatever, Orbitz whatever. We connect buyers and sellers, buyers being importers and sellers being freight forwarders. We help people compare rates instantly where typically shipping can be done in the Stone Age with Excel spreadsheets and PDFs and no real way to compare from one freight forwarder to another. We really brought that into the digital age.
Mike: Got you. Okay. And as far as the types of shipping that you do, because there’s other types of freight people out there that we’ve worked with that do something similar, but it’s for like domestic shipping like LTL trucking internally. It sounds like you guys are more focused on international like large shipments via air or container shipments. Is that right?
Noah: That’s right. We focus mostly on international. Our main lines are China to the United States, China to Europe with a heavy focus on the UK, US to most of the world. We’ve also got freights to the Far East and to the west. That’s our main focus, but we also do domestic LPL. We’re branching out into the Amazon pretty heavily, Amazon world. So we’re growing really every day every week, we’re building something new.
Mike: Okay cool, so let’s — I mean it’s like running through an example so people can kind of conceptualize this. I got six pallets let’s say, six CBM or something like that coming over from China. You work with Freightos and tell them basically the dimensions and the way to the shipment, and in a Travelocity type way they’re going to go through and find the cheapest air option depending on what flights are coming out of China, or if you’re going LCL that the cheapest freightliner whatever on a boat and compare basically the best offer.
Noah: That’s right, that’s right. We’ve created a platform just like what you just mentioned. Right now if you want to book a flight to New York City, you’re going to go to Expedia, Kayak, any of those many digital travel agents, put in the details of where you’re coming from, where you’re going to, how long you want to stay, there you want to add some extra services like a hotel or a rental car, same thing with Freightos. We are giving you the — we’ve got 60 different freight forwarders [inaudible 00:06:15] always.
I’m adding some and they give you the rates in [inaudible 00:06:18], right on our platform. You can see them, you can search sort by mode if you want to ship only by ocean, you want to ship only by air Express, you can do that. Sort by cheapest or quickest, you can even sort by customer reviews, just like on Amazon. So it’s really, really just a digital trade marketplace. And there’s nobody else doing anything even remotely similar. There are digital freight forwarders; we are the only marketplace for such a thing.
Mike: Got you, awesome. Well, definitely really cool stuff. So as I mentioned at the top of this, I mean our goal is to try to give as much value bomb here with this podcast as possible. And we have people that listen to this podcast that are all over the spectrum on just getting started to seven figure sellers. So, I want to try to ask a bunch of different questions that hit on all those various stages. But one of the things that we have in our EcomCrew Premium area is a course on how to import from China.
So, because we’re interacting with students all the time, I’m privy to know like the questions that come up all the time. So we have a little bit of an advantage of some of the questions they want to ask. There’s ulterior motive to it because these questions get asked a lot. So the first one I had was, if you could just take a moment to explain the difference between the different types of shipping from like air carrier, air freight and then obviously there’s sea freight which that encompasses LCL and full container, and what’s the difference between like a 20 foot container — let’s just kind of go over all the different options in like as plain English as possible without using acronyms so people can fully understand all the different options.
Noah: Okay sure. You hit it there. I mean, it’s air, ocean, and express. Air carrier is mostly called Express. Let’s start from just air shipping. Air Cargo is going to be something like Delta cargo or Lufthansa Cargo. It’s going on a plane just underneath where you’re sitting when you’re on that flight to New York. It’s pretty standard shipping. It’s also the freight forwarder seven to 10 days is pretty much the rule, the general rule of thumb for shipping. If you’re shipping to Amazon it could take a little bit longer, but it’s the same standard shipping rules, a lot of variable costs.
Now when I say variable costs, if you’re paying by the cubic meter or by the weight whichever really is sensitive to the airline, you’re going to pay the higher. So if it’s very, very light but it takes up a lot of space, you’re going to pay for the space, right? That’s called chargeable weight. But if it’s very, very small, don’t take a lot of space, but it’s very, very heavy, you’re going to pay for the actual weight that it takes on the plane. You’re still going to have things like customs, clearance, bonds. Everybody shipping to United States or Canada has to have a bond, a importing bond insurance if you like to have insurance, but that’s pretty much the standard on air.
And express courier is one step above air, a little bit faster about half the time, it’s three to five days in transit from door to door or from port to port wherever you’re going. These are typically your small parcel services like UPS, DHL, FedEx, those guys. A little bit different with the shipping rules, meaning it’s a lot of fixed costs. A lot of cases DHL for example, they’ve got rates setup for the entire country. So, it doesn’t necessarily matter where you’re coming from, whereas with air if you’re going from this ZIP code to this ZIP code it’s different prices, whereas with Express, it’s more general like we’ve got a rate for all of Greece, going to all of Italy.
So, a little bit more fixed costs, very much higher, it’s the most expensive way to ship, but a little bit different. You don’t have to worry about bonds typically, customs, clearance. If you’re good, you’re under $2500 for example for the states. Every country is different, but that’s more or less the states. You don’t have to worry about customs brokerage or customs clearance. Typically insurance is provided by the carrier. DHL typically offers some kind of coverage for your goods, but you want to have real insurance if you want to protect your items for loss or damage.
Mike: Got you. Just real quick, one of the things I’ve noticed having done a couple — we try to stay away from this, not that is so expensive but in the days when we were doing some air carrier, we found that the rates almost trade like pork bellies or soybeans. It’s very much commoditized based on the supply and demand of the time of the year and just other demands. So, is that still applicable where if it’s around the holidays, for instance, which is when we had to do it in an emergency, it’s more expensive that time of year because the demand is greater than the supply. Is that pretty typical?
Noah: Sure, that’s across the board air, ocean, or express. You’re definitely going to run into peak season, right now we’re in peak season. I can share with you a pretty cool award winning tool which our developers at Freightos have created a freight index. I can share with you that link where you can kind of see exactly what the rates are, what they were last year at this time, what they were five years ago. So you can see China to — West Coast to East Coast, so absolutely there are certainly peak fees. As you get closer to quarter four, as you get closer to Chinese New year, you’re definitely going to see some spikes.
Mike: Yeah I mean I’ve seen it with ocean freight as well; just it isn’t anywhere near as profound. It might be five or 15% the most like one way or the other at least in our experience with containers, but on air was like 50% more or something crazy. Maybe we just hit it at a really bad time and it just seemed like Murphy’s Law where you’re like, oh gosh, we’re going to run out inventory if we don’t air ship it.
And then it was like oh, sorry there’s like a high demand right now. And this is the quote, and you’re just like oh my god, like Sanford and Sons doing the whole heart attack thing. Okay so let’s move on to the other component we didn’t get to yet which is the sea part. So we kind of talked about the options that you have via air, what are the sea options?
Noah: So by ocean you can as you mentioned you can ship LCL, FCL now. LCL is less than container load, FCL being a full container load. That can be either a 20 foot container or 40 foot container, 40 foot high, 45 foot high. These are just different kinds of containers you can ship. You’ve all seen pictures of port all over the world. Very cool, these big machines picking up, so those are different container sizes. The transit time standard for ocean is about three to 40 days, a lot of variance because a lot of different factors. But if you’re shipping from China to the states, East Coast, it’s going to be a little bit slower than China to the west coast.
Relatively standard shipping rules, meaning customs brokerage is going to be the same as air cargo. You’re going to have still a bond; you’re going to still have your customs bond. However, when you ship with ocean, you’re also going to have what’s called an ISF filing, not 100% sure what that stands for, ISS.
Mike: I’m not sure honestly. I just know our freight forwarder just takes care of it also, I don’t have to worry about that.
Noah: Yeah, but that’s unique to the ocean. You can get different kinds of bonds just to kind of break down real quick for bonds. You can get a single use bond, which only holds for a single entry, or you can get a annual bond for five — well, we charge $500, but the market ranges about 300 to 800 somewhere, but we kind of split in the middle, we called it 500 and then you can ship as much as you want.
Mike: Yeah and that’s what we’ve done, we have an annual bond. And I’d like just want to buy a service, importer security falling. So it sounds like it’s something to do with Homeland Security now with all the things that have been kind of happening, so it’s something to do with that.
Noah: Sure. Same again we also have insurance. If you want to have insurance, you can do it for ocean, a lot of high fixed cost. Now what’s cool about — I don’t know, I think it’s cool but LCL shipping, so less than container loads, if you’re just doing a couple of pallets, whether you’re shipping like 100 kilos or 500 kilos, your rate may be the same because again of those high fixed costs. It costs the same to pull a container; it costs the same to stuff a container whether you’re shipping just one pallet or five pallets. There’s some play there, there is a breaking point. But if you’re shipping, we can kind of get into this a little bit later, but there is a breaking point when ocean and air starts to make sense. You should really find that sweet spot.
Mike: Yeah, I mean that was actually was literally my next question, so let’s just go right into that because this is something that comes up all the time. So, what is kind of that breaking — I mean there’s two main breaking points that we’ve noticed ourselves in this business, so we can talk about both. The first one is if you’re doing a small enough shipment, it doesn’t make sense to do sea, but at some point you have that breaking point.
And then the other breaking point is when you start to do sea freight, you’re doing less than container load, at some point even though you don’t have a 20 foot container currently full, there’s a breaking point of well it’s better to ship a half full or two thirds full 20 foot container than do LCL, less than container because of a bunch of other factors. So let’s talk about both of those breaking points.
Noah: Yeah, so when you’re shipping by air cargo, the general rule is about one to two cubic meters and around 200 kilos, sometimes less. Now this is not hard and fast, so this is the general rule you should keep in mind. If you’re shipping about that much, one or two cubic meters CPM, and 200 kilos, you want to start maybe considering air. Okay yes, it’s going to be more expensive, it’s rare that will be cheaper, but around then you might pay a little bit more but you’ll get in a third or a fourth or a fifth the time, just like it’s a no brainer. A couple hundred more dollars and you can get it in a few days or a week. I mean, why not?
But anything more than that, it might be that if you’re shipping two and a half cubic meters but 300 kilos, maybe now it’s time to go ahead and look at ocean because now it’s $700 more and your goods are only worth I don’t know, a thousand bucks. So, you have to find what makes sense for you. If you’re in fast fashion for example you got to have it, so you have to make those kind of questions yourself. But that’s the general rule. For ocean, for LCL versus FCL, you want to look at the number of the cubic meters because it’s less about the weight with ocean. Okay obviously there is at some point a maximum weight that a container can hold, but if you’re shipping LPL, the chances of you going over that are minimal.
So it’s really about CBM. You want to look at how much space you’re taking up on the container. For a 20 foot container, they generally hold up 33 cubic meters, the interior maybe like 32 and a half tons of the border. For 40 foot, it’s about 67 cubic meters I believe. And again, the interior is a little bit less. But if you’re shipping LCL, if you’re shipping, hey, you’ve only got a few palettes, but you know what, it actually ended up being about 14 cubic meters. Hey, maybe let’s check in. Let’s look into a full 20 foot container. Maybe it’s a few dollars more, but there’s a lot of benefits the shipping in FCL.
So you may pay a little bit more, but it’s going to be faster transit time. Why? Because they don’t have to open it up, right? If you’re shipping LCL, you’re shipping with a lot of other people who are shipping LCL. And that means it is going to be opened multiple times, there are chances of your goods getting broken. There’s more delays to customers because it’s going to go through more times. If you’re shipping just a full container, they’re going to close the container at your factory or at the port of origin, wherever that may be in China or Europe, whatever, and they’re not going to open it again until the final destination. So there’s a lot of benefits just shipping that full container.
Noah: Do you want to have 14 to 15 cubic meters for 20, and again, about 25 maybe cubic meters to 30 cubic meters for a 40.
Mike: Yep, it makes perfect sense. That’s exactly the range that we’ve kind of run into. So, just to reiterate what you’re saying basically, so 15 cubic meters. So basically, everything is measured in cubic meters when it comes to comes to freight. And that might not be a number that you can kind of get your head around. But it seems to be about what is it, one pallet per cubic meter, something in that range.
Noah: Generally, if you’re talking about the Euro standards it is about 100 by 100 by 100 meters, that’s a cubic meters. So, that’s a pretty standard palette.
Mike: So that puts things in more of a perspective for people. And so if you’re shipping more than 12 to 15 pallets, that’s probably the threshold of when you’re going to want to be doing your own 20 foot container. And if you’re doing more than one or two pallets, even really more than just one pallet, you’re probably going to be looking at that breaking point of air shipments to get more efficient to just stick it on a boat and let it go across the sea. So, hopefully that kind of people…
Noah: Yeah, just one more thing if I may add about that one pallet on air just as like kind of a little pro tip for you. If you are going to ship a pallet by air, you want a palette pricing at destination and not origin so you don’t pay for that extra space and weight. A pallet weighs a little better.
Mike: Definitely a great tip yep. All right so let’s talk about some more advanced stuff now. I mean let’s cut — I mean a lot of people that are listening, not everybody that’s listening does Amazon only, but Amazon is a large portion of it. And for us, one of the efficiencies we’re looking at is how can we get stuff from Asia into China more efficiently. So let’s talk about a couple different things there. What are some things you can do to get goods from China directly into FBA warehouses more cheaply and more efficiently?
Noah: Sure, a key a key ethic is knowing your INCO terms. INCO term is a fancy word for the three little letters that indicate what method by which you have negotiated with your work factory. I say that again, you can do a lot of different ways. Everybody took accounting maybe in college, maybe not everybody, you get certain terms of your supplier. You negotiate certain terms with them whereas when you take ownership of your items, are you going to take ownership the second day you put the label on the pallet and they say done, or are you going to take ownership when they bring it to the port in Shanghai or Chengxiang, or are you going to take ownership when it comes to the states? You have to negotiate that.
So, know your INCO terms, what you have negotiated with your supplier. The three key ones that you want to pretty much I would say only work with are EXW value which is Ex Works and then FOB. There’s another one FCA for when you are picking it up when the factory is trucking it, when they put on a truck, but let’s just only work with EXW and FOB. FOB is Freight On Board, that means they’ll bringing it to the port.
So EXW, I might back up again, that’s taking the ownership from the manufacturer’s door, so they have finished the product and it is now ready for shipping, it’s now yours. So, you are bringing it from them all the way to the final destination being Amazon, or FOB is Freight On Board picking up from the factory. The freight forwarder will take over from them and they’ll bring it to Amazon.
Mike: The two, so the Ex Works being it’s you’re paying to get it from the factory to you and FOB being you’re paying to get it from the nearest seaport to you. So the factories haven’t — with FOB that’s more of the changes because they’re getting it at least a little bit further down that pipeline for you.
Noah: Sure, and you have to keep in mind though that when you do have — basically you’re having then two shippers, right? You’ve got one shipper being your factory and you’ve got another shipper being the freight forwarder. So, it’s just something can get lost in transition, you might lose a day or two. So, if speed is important, you might want to have one freight forwarder doing the whole thing, so that’s EXW. You want them only one person picking it up. If you’re having to change hands, that could be the other day between the time they come online in China and you go to bed. You can lose a day or two. So keep that in mind, you might lose a day FOB.
Mike: Yeah that makes a lot of sense. I had actually never thought about that, but in every day in the processes is a huge difference. We actually have been really working on that. That’s another whole conversation but just from a cash flow perspective trying to make this as efficient as possible, getting an extra day or two might be worth 100 bucks, or whatever more it costs to do that.
Noah: Everybody knows the Amazon fees can be outrageous if your goods they’re delayed. I mean, we’ve had customers who have air shipped dozens of pallets because of Amazon fees. So, absolutely that can play a huge role even a few days. Another tip if I may Mike would be ensuring your get your goods as close, ensure you get the closest Amazon fulfillment center to your factory. Now, what that means is everybody wants to go to Moreno Valley in California, that’s the closest one to China. So that’s really the key. If you can get your goods closest to your supplier, if you’re coming from Europe, then obviously New York would be the best. There’s some other big ones like in Savannah, but you want to be close to where your goods are.
And how do you do that? By utilizing the ship from location when you’re preparing your Amazon shipping plan. You want — it’s kind of a catch 22 a little bit of a chicken and egg situation because Amazon wants to know where you’re coming from, but you don’t really know that because you don’t know which Amazon fulfillment center you’re going to. So you kind of have to play the game. And what we typically say this is not set in concrete, but if you tell Amazon you’re coming from A address in Los Angeles, many times they will send you to Moreno Valley. Same goes for if you’re coming from Europe, tell them you’re sending it to New York, they’ll give you a New York based fulfillment center.
Mike: Yeah, that’s exactly what we do. We use the address of the port that it’s going into. So if it’s going to Long Beach or LA, we use that address. And for us, it always goes into Moreno Valley if it’s not oversize. If it’s oversize, then it gets split up.
Noah: Yeah, yeah, absolutely. And if you are getting split up, we have solutions for that. So you can send it to the freight forwarder’s warehouse, and you could have them send it out to the different locations. If you’re going to the big three, which is FTW, you want to Dallas Joliet, Illinois Moreno Valley, you can have the freight forwarder send to those different locations, not just chuck it out there. Or you can do the Amazon UPS subsidized option which a lot of people choose as well, which is pretty competitive, actually.
Mike: Yeah. And it’s actually shocking. This is something that we’ve noticed more recently in the last couple of months because I guess just mentally you think, well, I’m shipping six pallets of stuff, it has to be cheaper to go on a truck. But a lot of times actually the UPS rate is the same or even possibly cheaper, and it gets there two weeks faster sometimes, and that two weeks is worth a ton of money getting it there that much quicker. So, it’s actually something that people — at least I did. I don’t want to speak for everybody, but I think a lot of people just kind of brush off using UPS for large shipments, but it actually if you look at it can be competitive.
Noah: Absolutely. Another tip Mike would be getting your paperwork filed quickly and accurately. Now, I’m talking about your commercial invoice, your packing lists, MSDS or DGD. The MSDS is your material safety data sheet and the DGD is your dangerous goods document. If you have hazardous items such as lithium ion batteries, alkaline batteries, what else? Liquid perfumes, anything that can be tricky for customers. If you’re shipping plutonium, we’re not going to help you. But the regular stuff we can pretty much help you with. But you got to get that paperwork in.
You want to get that in about — we say about seven to 10 days before your goods are ready. You want to go and start taking or placing your shipment. So we can go over those documents, make sure they’re no extra fees for that lithium ion battery, whatever, all of those things, all those hover boards. If you’re shipping hover boards, you got to make sure those batteries are safe to ship.
Mike: Got you. Yeah, that makes a lot of sense. So, we’ve come to the point where there’s a couple of questions that I wanted to ask or this question specifically for my own benefit, because I’m hoping that there’s more efficiencies. But what I’ve kind of basically figured out at this point is that a 40 foot container, a 40 foot HQ is the best you’re really going to do as far as efficiencies and freight.
But I’m wondering I mean, is there stuff you can be doing as you continue to grow past the point where you’re shipping a 40 foot container every time? Is there a frequency of shipping 40 foot containers whether it’s multiple containers at a time, or you’re shipping one or two containers every single week? Is there are some other price breaker things that a volume discount when you get above a certain level, or is the 40 foot container the Holy Grail and you’re kind of done at that point?
Noah: No, there’s always where to grow. I mean just to clarify you’re talking about with freight or just in general?
Mike: In general yeah I mean…
Noah: In general okay. So I mean certainly if you – look, I mean the world, most of world freight ship are like Wal-Mart, the big companies are shipping hundreds of thousands of containers and they’re getting crazy discounts. But for guys who are starting, shipping one container a month and then all of a sudden they’re shipping one container a week, you can absolutely start to get some better pricing from the freight forwarders or 100%. If you’re shipping to Amazon or you’re kind of in a box in some regards because you need — not every forwarder can ship directly to Amazon.
Most can, that’s true. But there are special requirements that Amazon has. I mean Amazon has special palette sizing requirements. So, you need to make sure that you’re working with a forwarder who understands Amazon. Don’t just go from one guy who you’ve been using for years who ships your containers, no problem, and then all of a sudden you want to go to a new guy, double your output and also request Amazon requirements. Make sure they know what they’re doing with Amazon at least. It’s not so simple.
Now, I would also say one more one more thing to notice, if you’re not shipping floor loaded to Amazon, you might want to consider that. Yes, 40 foot container, 40 foot HQs as you mentioned, or I guess the Holy Grail but you you’re losing space. If you want to keep your unit costs down, you want to keep your economics where you want them to be, ship by floor loaded, move those palettes, take them out, just stack it floor to ceiling. This is tricky. It’s not something that everybody can handle. You may want to consider bringing in an FBA pack and prep kind of solution to help you with that. But if you know what you’re doing, that is the way to go. That is how you get the most out of those containers for sure.
Mike: We’ve been sending 40 foot HQs directly in Amazon floor loaded without any special prep. Is there other things that they’re just letting us get away with that we’ve been lucky, or what are the other things you’re supposed to do?
Noah: So I’ve actually worked with — it’s so funny that you say that because I was like it could go either way. Some people — I talk to people all the time. I mean, I literally do this all day every day and every buyer has had a different experience with Amazon. I think it depends on the facility you’re going to, so Moreno Valley is a little bit more well equipped than say, I don’t know Savannah or Seattle, Washington.
I think it depends with the fulfillment center. I think it’ll depend on your stature as an FBA seller. Some buyers have – excuse me, some FBA sellers have better stature at Amazon, and they kind of get away with that kind of stuff. I’ve got buyers who’ve been doing it for years, and I’ve got buyers who said they’ve never even tried it because they’ve been told by so and so that it can’t be done and freight forwarders will do it. So, I would say that I would love to pick your brain that actually, I might take a little more information from you, because it’s not what I hear every day.
Mike: Yeah, I mean, it’s actually quite simple. We just send in — typically we only do it with containers that have one skew because we’re afraid that they’ll just scatter things up. But we have a couple of products that sell through really well. We’ll send them a 40 foot container, it’s just stacked floor to ceiling with one product and we have the case labels put on it, and we’ve never gotten anything about it.
Noah: That’s great. I really don’t hear that as often as I would have thought.
Mike: I know there are special rules. You’re supposed to have it like X number of inches away from the walls and like they’re supposed to be like boards or something in there to like help so they can go in there like grab it or whatever. But yeah, we just ignore it.
Noah: I’d be interested to hear some of the feedback from this podcast what people say, to see what their other experiences have been in regards to that if they’ve tried.
Mike: Me too actually. I wonder if we’re just lucky. It’s just the one thing; God knows that we’re not lucky with a lot of other things with Amazon. So I’ll take this one little thing.
Noah: Hey, yeah.
Mike: So, yeah, I mean, what volume do you get it — is there — because we didn’t quite answer the question. If you’re shipping 40 foot containers on a regular basis, how many do you need to ship per year before you can strike up a conversation with a freight forwarder and get some type of substantial discount and what would that be?
Noah: Okay, so hard numbers? I don’t know if I can give you a hard number. I mean, I think typically, anything less than 20 containers a year is considered small. All right I mean, that’s pretty much the number that most forwarders will like — and you’re not going to call up [inaudible 00:31:48]. You’re not going to call them up and be like, hey, I want to get some volume discounts. These guys are shipping hundreds and hundreds of containers a week. And so 50 containers a year is just not going to — they’re not going to pick up the phone.
So you need to find – it’s just turned to the size of the forwarder. Maybe you could call a forwarder based in your hometown who maybe they’re doing, I don’t know, 100 containers a year for other guys and you come in with 50 containers here, they might give you rock bottom prices. It could be, it’s going to depend on the forwarder, it’s going to depend on a lot of different factors. I don’t think there’s any one number, but I would say anything less than 50 containers a year, there’s not a whole lot of a conversation.
Mike: Got you. I mean, it’s actually really interesting like how the whole freight business works because there’s like these immense savings as you grow. You go from doing air freight to doing LCL to doing a 20 foot container to doing a 40 foot container, like each one of those steps saves you so much money. You get to this point where until you’re now shipping over 50 containers per year, which is that’s a lot, we’re definitely not at that point yet, then there’s no more cost savings for quite a while there.
So I think that kind of one of the things we talk about in our course is actually this exact thing that you’re kind of racing towards, the sufficiency of being able to ship in 40 foot containers is it just makes such a big difference, and it sounds like you’re kind of reiterating that.
Noah: Yeah absolutely yeah. I mean you can start to look into tender rates; it’s called tender rates meaning you get them for the year, they’re set. But it’s really for much bigger guys.
Mike: Got you okay. Man, I have a whole bunch more things I wanted to talk to you about. We’re already at 30 minutes. We try to keep these at 30 minutes. I do want to ask at least one more question because this is something again that comes up a lot. People will ask how much does it cost to ship a container and most of the time the rate that’s quoted or people talk about is the rate like just for the container. But I look at the invoice that I get when we ship and it’s like the fees are there’s more fees than when you buy a house.
You’re from out of the United States, you buy a house in the United States and there’s like a documentation fee and a notary fee and like the real estate fee and a filing fee, and it’s just like the fees it’s like 12 pages of fees. And then you get like all these disclaimers that you know that you acknowledge all these fees. It seems like a pretty similar thing in freight. So, if you can just maybe talk about a little bit about that real quick to kind of wrap things up of what fees people can expect to pay and what on average, let’s just say like a 20 foot container and a 40 foot container going from like China in general to LA costs, like all in. What’s like the real all in cost of a container and what are the fees?
Noah: Sure. So I mean, all in can mean a lot of different things. So I just want to clarify door to door?
Mike: Yeah, door to door.
Noah: Okay. So we’re talking picking up from the factory in Shanghai. Shanghai is actually pretty good because they don’t drive far to the port. Some of these — most, I mean, be real, 90% of the Chinese factories are located in the five major cities or at least nearby. Some of these factories, I get requests from some guy who’s got a factory in like way in the mainland China, and it’s like just as much to get the truck from there to the port as it is to get the ship to the States.
So, a typical door to door 20 foot container, you’re looking at right now actually we’re kind of peak season. I mean, mostly port to port rates, but I’d say you’re looking at 2,000, 2,500, somewhere in that neighborhood depending on exactly where you’re going to in the states. To LA, for example, 40 foot is going to probably about $3,000 and the fees what you’re referring to like destination charges, port handling, chatty rentals, DPA, because all these different points…
Mike: Congestion fee was my favorite one.
Mike: Yeah, so like let’s say you get x-rayed, it happens. Your stuff just gets x-rayed because they will do that because they have to check 1% of all containers. I mean that’s still a whole lot of containers even if they’re only checking half a percent, it’s still hundreds and hundreds of thousands of containers. So, it absolutely can and will happen, I’m sure you can attest to that.
Mike: We’ve been snagged with a few things. And it’s hilarious because like the government decides that they want to do this, but then you have to pay for it. It’s like…
Noah: You are lucky one.
Mike: Yeah, yeah, they are lucky, right? This doesn’t exist like in anything else in life. It’s like, we want to audit you in some way, or have you, inspect you for whatever reason, and you’re going to pay for it. It’s like okay, sure, no problem.
Noah: It’s like traveling to Canada or something to go visit somebody and they’re like, oh, we’re going to search your car and by the way here’s the bill.
Mike: Right, exactly. Yeah, just it’s phenomenal. But yeah, that does exist but I mean, there’s two things that you already brought up here that are appropriate I think that kind of wrap things up here. First thing you mentioned, 2,500ish, and again, we’re using round numbers for a 20 foot container, but about 3,000ish for a 40 foot container. So, this kind of goes to exact what I’m talking about. If you double the space of a 20 foot container, you would think that it would be $5,000 to ship 40 feet of container. But that’s not the way it works. It’s only $500 more, 20% more to ship 100% more stuff. And that’s why that 40 foot container is such the “Holy Grail.” But the real thing is that what would you say now, like the percentage of that $3,000, how much of that is ancillary fees versus the actual freight fee?
Noah: I would say it’s mostly the fixed costs. It’s a fixed cost pulling the container; it’s a fixed cost of stuffing and unstuffing. It’s mostly container. I mean obviously there’s other fees, but it’s much less. And I’m trying to think specifics. There’s definitely, specifics we’re talking about the trucking, right? You got the trucking, I don’t know, if it’s in LA, a couple of hundred bucks. The trucking aspect in the states is pretty cheap nowadays. So it’s really mostly just, it’s fees, but it could be actual port to port from like Shanghai to LA is like nothing. I mean, it’s like a thousand bucks. But then you got all this other stuff, the trucking and the other fees.
But what’s called Freighto’s just to kind of bring it home for a second. The cool thing is our rates are all inclusive. You can compare one to the other. I mentioned at the beginning of this that most freight is kind of done still on PDFs or Excel documents and you can’t really compare the two, because one including customs and one will not, one got all the charges and one doesn’t. How do you compare the two? So, Freighto’s rates are really all inclusive. So, we really try to bring everything that we’re discussing now we’ve tried to really negate that and cancel that, and put that in the tabs.
Mike: Perfect. And since we’re talking about Freightos and we’re kind of wrapping up here, let’s talk real quick how do people find it? I assume it’s just Freightos.com, and they can sign up and start getting quotes. You mentioned also a really awesome tool. We’ll throw the link to that in the show notes, but is that a short enough link just to mention on the podcast?
Noah: Yeah, let me see if I – yeah let me grab it here. It’s Freightos.com/international-freight-index.
Mike: Freightos.com/international-freight-index, perfect. And we’ll throw that in the show notes so people can get to that if they want to just be able to click through. And then as I mentioned off the top, we have a special discount code here. EcomCrew5, E-C-O-M-C-R-E-W then the number 5, and that’ll get you 5% off your first order with Freightos. And as I mentioned, this is not an affiliate code. We’re not being paid for any of this. So I just want to mention that.
And go check them out and try comparing some shipping rates. If you can save 10, 20% on freight in a low margin business like e-commerce that can make a big difference really fast. So, definitely encourage you guys to check them out. And any last words Noah before we depart for the day?
Noah: No, I appreciate the time. I think Freightos is an excellent option. You can really just do anything with our platform. You can search rates. We’ve got live chat, email, phone, so we’re always available and we’d love to work with you guys.
Mike: Excellent. Well thanks so much for coming on and thank you for your time today. Just to mention, I mentioned at the top but Noah is over in Israel where it is about to hit 10 p.m. at night. So, I definitely appreciate your time doing it this late. That’s really awesome of you, really generous for you to do that for the EcomCrew community. And we’ll be in touch.
Noah: Happy to be here. Thank you.
Mike: Thanks a lot.
And that’s a wrap folks. 165 episodes of the EcomCrew Podcast in the books. You can go to EcomCrew.com/165 to get to the show notes for this episode. And before I run, I just want to mention real quickly, it does help if you leave us a review in iTunes. Take a moment, pull over the side of the road, park in the parking lot wherever, and leave us a review. It means a lot to us, we really do appreciate it. So go do that over at iTunes. And besides that we hope you guys have a great day. And until the next episode, happy selling. We’ll talk to you then.
Michael started his first business when he was 18 and is a serial entrepreneur. He got his start in the online world way back in 2004 as an affiliate marketer. From there he grew as an SEO expert and has transitioned into ecommerce, running several sites that bring in a total of 7-figures of revenue each year.