International Freight is easily one of the biggest obstacles new importers have when importing from China, so it was a pleasure to have the opportunity to interview Will Williams from Freighteo.com. Freighteo is a service designed to help businesses, especially importers, book air shipments from China more quickly, more easily, and more cheaply.
Will provides extremely in-depth answers to some highly relevant questions to importers, both experienced and new. On your next air shipment from China, I highly encourage you to at least get a quote from Freighteo.com first as it could potentially save you some money.
How did you first get started doing business in China?
While at high school I started buying small gadgets and clothing from China after realizing I could make a profit by selling them on eBay and to friends. I have loved international business ever since, and ended up dropping out of university (I was spending more time looking at business ideas from China than on study by a long way) to move to China and set up a small sourcing/trading company. I then worked for two years in the China office of a large Australian online retailer, doing all things from market research and product development to purchasing and logistics. This gave me a good foundation to then form an idea of what would help other companies who are shipping from China.
You’re launching Freighteo.com soon which is a platform aimed at helping importers to ship products from China more easily. Can you give some more detail about Freighteo and how it can help importers?
Freighteo is being built to offer instant pricing, booking and cloud management of air courier shipments initially from China to anywhere in the world. I realized how many small-medium businesses are now buying direct from China due to how accessible suppliers have become, but those businesses lack the information and time necessary to work out the best freight channel and pricing for their cargo. What we do is negotiate highly discounted rates (because we’re consolidating shipments from many businesses), and then automate the time consuming things like price quoting and endless back and forth emails in order to save costs on our side, and offer a better deal to the customer.
In your experience, what is one of the biggest challenges and/or mistakes new importers face when first having their products shipped from China to their home country?
It would be miscalculating the real landed costs of the product(s). In order to know if you will make profit – and then calculate that profit margin, you need to know what the product really cost you to land at your address.
Some things to double-check:
- What are the trading terms on your goods? Make sure this is the same term that you quote to your freight forwarder so they include all needed costs in their quote (most common terms are EXW and FOB – you can ask your supplier to quote the price for each).
- If you get a normal air or sea freight quote, make sure it includes all China side and destination (your local seaport or airport) charges such as export documentation, loading/unloading, security fee, dock or airport fees, customs clearance and of course final truck delivery to your door).
Is there a rough rule of thumb (in terms of package weight) for when it makes sense to ship air freight from China instead of sea freight?
There are three main channels for shipments from China – air courier (some call it express), air freight and sea freight. Shipments from 1 to 250-300kg are generally cheaper via air courier than air freight (air courier being what Freighteo currently focuses on), then it really depends on the needs of the customer. Sea freight often becomes cheapest at around 150kg depending on the destination, though the transit time difference is huge. You should never really be using sea freight unless your shipment is around 150kg or bigger, because you don’t save time or money.
As a quick reference:
1kg to 300kg: air courier (express)
300kg or bigger: air freight
Both have similar transit times of around a week – though you can pay more if the shipment was needed in 3 days for instance.
Use if your shipment is 150kg or more and you don’t mind the extra transit time. Sea freight from China to Australia is around 20 days in total (including port loading/unloading), but to the UK or Europe it could be over 35 days.
A lot of readers have no idea how much to expect to pay for a small order to be shipped from China. For a small box of hockey pucks weighing 25 lbs, and measuring 30”x25”x12”, being shipped from Shenzhen to New York, what could a reader expect to pay, using Freighteo?
The first thing to work out is if the real (dead) weight, or dimensional weight is bigger. The bigger is the value that will be used to calculate cost.
I’ve converted the dimensions to KG and CM as this is more commonly what the pricing will be based on.
Box of hockey pucks
Real weight: 11.33kg
Dimensions: 76.2cm x 63.5cm x 30.48cm
To get the dimensional weight in KG, we need to do this calculation:
(76.2cm x 63.5cm x 30.48cm) / 5000 = 29.5kg
In this case, the dimensional weight of the box is far bigger than the real weight. This means the dimensional weight will be used, and the real weight disregarded.
To give an idea of price, for a small-medium box sent from China to the your door in the USA:
11.33kg (rounds up to 12kg): $108.00 USD
29.5kg (rounds to 30kg): $185.00 USD
These prices are an example of what Freighteo would offer with our discounted FedEx courier rates from China.
If the shipment was to go via normal sea freight or air freight, the price would be far more expensive due to the number of fixed costs for each of those types of shipments.
Anyone who has ever had something shipped via sea freight knows there can be a lot of surprise fees when the shipment is delivered, such as dock fees, invoice charges, etc. When shipping via air from China, what fees can the importer expect upon delivery?
Via air freight, you have the same potential added costs as on a sea freight shipment as they both work in a very similar model (except one gets loaded/unloaded on a ship, and the other an airplane).
As for air courier (express), the pricing you are given, as long as you are sure it includes the fuel surcharge will be the final cost for the freight (all couriers charge a fuel surcharge which does change sometimes, though is easy to check, and often included in the final price). The only possible additional cost will be import tax/duty which the customs officials in your country may impose and this is usually billed once the shipment arrives in your country (customs will get in contact with you if there is any tax or duty to be charged by the government).
It seems drop shipping from Suppliers in China is becoming more and more common. On eBay, for example, I can purchase a pair of LED headlamps that ships directly from China for under $40 with free shipping. How do Suppliers get such affordable shipping from China to the U.S.? Is China Post really this cheap?
There could be a number of factors contributing to the very low prices from some sellers on eBay who deliver from China.
China Post really is very cheap on light-weight items: I have worked in setting up delivery solutions for small items shipped direct from China to consumers (B2C). The rates with China Post can be as low as $0.01 USD per gram – and calculated by the gram with no minimum. This means to deliver a 100 gram (3.5oz) package from China, the China Post cost would be as low as $1.00 USD.
Building reputation: Some will be hoping to gain a good reputation and feedback history as quickly as possible. This means they sell at or very close to cost in order to generate more sales and happy customers.
Lower profit requirements: An online seller in China may find it feasible to make far less profit per unit than someone in the USA or UK, because they have lower living/labour/office costs.
When importing samples from China under 20 lbs or so, is one of the big three, DHL/FedEx/UPS significantly cheaper than the other? Or are they all more or less the same? Are there any other carriers people should consider?
It isn’t usually a very large difference, though depending on the delivery country there will be price differences between all couriers. Some of them are very strong into certain parts of the world, and the delivery times may also be slightly different. Both of these things determine pricing and you should check between them all if you can (Freighteo will display all options to compare price and delivery time instantly).
What’s one handy website, app, tool, or blog you use or read for anything related to importing/shipping from China that other readers might not know about?
By far it is www.dutycalculator.com – a fantastic tool to check the import tax and duty you may be required to pay depending on the product type and value. It covers the majority of products and countries, and makes things much clearer in determining your final costs of landed goods.