We'll provide an overview of ocean sea freight in this blog, along with the detailed instructions you must follow in order to book ocean freight and receive your goods.
When placing sample orders, air freight or air courier is reasonable.
Whether shipping by air freight or air courier is actually more cost-effective is the first thing to take into account when using ocean freight. In our piece here, we go over some important distinctions between air freight and air couriers.
However, as a general rule of thumb, shipping by air rather than by sea is almost always more affordable and convenient for shipments weighing less than 200 kg. The typical cost of air freight is between $5 and $10 per kilogram, but it does not have the high fixed costs associated with ocean freight.
In this article you will learn:
- What Is the Price of Ocean Freight?
- When Are Less Than Containers (LCL) and Full Containers (FCL) Shipped?
- There Are Several Surcharges and High Fixed Costs for Ocean Freight
- The Kind of Ocean Freight That Is Very Different From What You Are Used To
- A freight forwarder is necessary when shipping by air or sea.
- What is the duration of ocean freight?
- When Your China Shipment Gets to Your Country
- Right now, your goods are being held ransom.
- Making Payments to Your Provider
- How to Pay Your Forwarder of Freight
- Covering Customs
- After paying the ransom, you can retrieve your belongings!
- Do You Want to Send Products to Amazon?
- For Your Business, Should You Hire a Third-Party Logistics Company (3PL)?
- Conclusion
What Is the Price of Ocean Freight?
The least expensive option is typically ocean freight for shipments weighing more than 200 kg.
Although ocean freight has high initial costs, it scales extremely well. For instance, shipping a 20 kg box by ocean freight might ultimately cost you $300, but shipping 200 kg will cost you $310, shipping 2000 kg will cost you $390, and so on. There is essentially none at all for air freight. You will pay $100 for a 20-kg box and $200 for a 40-lbs box.
There are two types of sea freight: Less than Container Load (LCL) and Full Container Load (FCL, 20' and 40' containers). Moreover, there are three standard sizes for containers: 20′, 40′, and 40'hq (40′ high cube).
To ship goods with other companies in a container with one or more pallets is known as LCL freight. When a container is full, it is yours exclusively. Easy enough, huh? You can arrange for LCL or full container shipping with any freight forwarder.
Complete containers range in price from $1000 to $4000 for a 20' container shipped to North America (always less expensive to the West Coast). Less-than-full (LCL) shipping costs are approximately proportionate to the portion of the container you use; for example, if you use 25% of a 40' container, you will pay about 25% of the 40' container's cost. Sample sea freight quotes from October 2018 are shown in the image above.
Most major ports can receive sea freight deliveries. The major ones on the West Coast are Los Angeles, San Francisco, Seattle, Vancouver (Canada), and Vancouver.
Residing in a landlocked region such as Denver, Colorado? No worries, you can still ship a container there; it will just be loaded onto a train and transported into your city. The cost of inland delivery is a little higher, but it is still quite affordable.
When Are Less Than Containers (LCL) and Full Containers (FCL) Shipped?
When is it appropriate to use FCL and LCL ocean freight, respectively? If you have enough items to fill a container, shipping full containers is the obvious solution; if not, shipping LCL. Not quite true, though.
Financially speaking, shipping a container that is 75% full or more full is typically less expensive than shipping less than container load (LCL) because LCL carries a prorated surcharge of about 25%. But there are two more crucial factors to take into account. Compared to FCL, LCL requires approximately one to two weeks for transit. This is a result of the freight forwarder having to share the packing and unpacking of your belongings.
Second, because of this extra handling, LCL cargo is more likely to be lost or damaged—though these occurrences are extremely rare. Sometimes it makes sense to ship even a partially empty container if you value time and care.
There Are Several Surcharges and High Fixed Costs for Ocean Freight
When an ocean freight shipment arrives in your country, there are often a number of unexpected costs. You might be surprised to learn how many fees are added on top of the actual ocean freight when you receive an invoice from your freight forwarder. Here are some examples of fees that you should expect to pay:
- Dock fees range from $50 to $100.
- Administration Fee for Freight Forwarders: $75-200
- $50–$100 (usually on full container loads) is the security fee.
- $100–200 for customs clearance (plus any applicable duties or taxes)
- Final Truck Transportation: $200+ (unless you personally pick up your shipment) from the bonded warehouse to your doorstep
You can calculate and pay for the final two fees—the final truck transportation and the customs clearance fee—on your own. Actually, nobody ever completes this on their own.
These are the only costs you will incur when your package reaches your nation of origin. They don't cover the actual cost of the sea freight itself or the fees from within China, which can differ greatly based on your incoterms.
The Kind of Ocean Freight That Is Very Different From What You Are Used To
The majority of us are used to sending items via small parcel services like FedEx, USPS, etc. When you give it some more thought, you'll see that while ocean freight initially appears to be very different from these kinds of services, they are actually very similar.
You are aware that shipping something via USPS requires you to deliver it to a post office. The same applies to ocean freight: someone needs to deliver it to the post office! With one exception—here, the port is the post office.
Kansas is a long way from the ocean if you were to imagine the United States for even a brief moment. Therefore, the goods must be shipped up to New York in some way in order to ship a few pallets, say, to the Port of New York. The same holds true for orders you place to the Port of Shanghai from your supplier in Chengdu, central China.
Fortunately, you don't actually need to make plans for your goods to be picked up by some random Chinese truck driver. The majority of freight forwarders will gladly set up a time to collect your goods from the factory of your supplier. But the price will go up. For this reason, items referred to as Incoterms are crucial.
For instance, if the shipping terms FOB Shanghai are agreed upon by you and your supplier, your supplier will cover the expense of shipping your goods to the Port of Shanghai.
You will be responsible for the cost if you accept EXW Chengdu (see my warning on EXW here). Always keep in mind that shipping goods hundreds or thousands of miles by truck is not cheap, regardless of the country you are in!
Your goods are placed in a container once they are shipped to the port, and you should hear from them again when they get back to your country.
A freight forwarder is necessary when shipping by air or sea.
So how is sea freight actually booked? A freight forwarder is what you need (in fact, the same goes for air freight as well). In essence, a freight forwarder is a broker who purchases container space on ocean liners. You need a freight forwarder to reserve this space on ships because you cannot do it directly.
Thousands and thousands of freight forwarders compete in the fiercely competitive field of freight forwarding. These days, FlexPort and Freightos are two highly well-liked brokers for freight forwarders—basically, they're brokers of brokers. A quote is available for almost any shipment.
But the simplest way to ship your goods is to just let your foreign manufacturer handle the freight arrangements.
What is the duration of ocean freight?
My all-time favorite website for figuring out freight estimates and transit times is SeaRates.com. Here are some approximate shipping times from China to different ports, generally speaking:
- 18 days from Shanghai to Los Angeles
- 35 days from Shanghai to New York
- 30 days from Shanghai to London
These are only estimates and can vary greatly based on the route and other variables. Additionally, they fail to account for the time it takes to load and unload containers, which can easily add days—or even weeks—to these transit times.
When Your China Shipment Gets to Your Country
Your freight forwarder will contact you via phone or email when your goods are almost ready to be picked up in your city. They will also let you know where to pick them up, an estimated time of arrival, and how much you owe them (more on this later).
Using the USPS as an example, you are aware that you will need to pick up your package at the post office if the mailman attempts to deliver it to you while you are away from home.
For ocean freight, the same holds true, but they won't ever attempt to deliver your package to your house. It is always your responsibility to pick it up from a nearby warehouse or the port.
It's highly likely that you will pick up your container at the port if you ordered a full container. This is the Port of Vancouver in my instance.
Remember that you share a small portion of that container with a number of other customers if you ordered LCL freight. They must provide a means for you to retrieve your goods, which may be at the very back of that container.
Since time spent at the port is very costly, your container will be moved to a nearby warehouse (which could be up to 30 miles away) and emptied, or packed, into a warehouse for easier and less expensive pickup.
As you can see from the graphic below, the goods are transported from the Port of Vancouver, where the container is unloaded, to Richmond, a nearby city, and finally to a warehouse.
Using the post office as an example again, you are aware that the package won't be held there indefinitely. They'll eventually just send it back to the sender. For maritime freight, the same holds true. Generally, you have five days of free storage.
Following this, they will begin to charge you for storage (the cost of storing a container is approximately $100 per day, and the cost of storing LCL freight, depending on its size, is approximately $50 per day).
It's likely that you have other plans than to personally retrieve your cargo from the port. In this situation, your freight forwarder will be pleased to set up overland trucking to the final destination if you let them know the address you want your goods delivered to (ideally before the order actually ships).
It is important to note that the cost of overland freight, even for short distances, can often be comparable to that of ocean freight over thousands of miles. For example, I had to pay $2000 to ship a 20-foot container from Shanghai to Los Angeles, and another $1100 to ship it 30 miles further to San Moreno.
Right now, your goods are being held ransom.
Your goods have made it back home, which is fantastic since you know the boat didn't sink, but they are essentially being held hostage at this point. You will not be allowed to pick up your goods from the warehouse or the port until you have paid the three parties. Those three individuals are:
- Your seller
- Your shipping representative or freight forwarder
- Personalized
Making Payments to Your Provider
You ought to have made payment to your supplier by now. But your products are similar to a car in that you cannot claim ownership of them unless you have the title. The original Bill of Lading serves as the products' legal title.
One of these Original Bill of Ladings must be given to the freight company in your home country (usually in the port city, but not always). Your supplier will mail you two or three physical copies of this (photocopies are not allowed – they must be original).
Your supplier has the option to Telex Release the goods to you, which entails calling the business and requesting that the goods be released to Dan's XYZ Company rather than requiring an OBL. If your supplier is sending you a Bill of Lading, you probably want them to telex your shipment out.
How to Pay Your Forwarder of Freight
At this point, the freight forwarder will also request a small payment from you to cover the cost of ocean freight as well as additional surcharges.
If you shipped LCL and are picking up the goods yourself, make sure you get the freight forwarder to confirm the location of the warehouse holding your goods when you pay them. Additionally, request the Cargo Control Number from them. This serves as your package's unique ID, essentially.
Without it, the warehouse won't be able to locate your items. As you can see below, when the freight forwarder first gets in touch with you to let you know that your goods will arrive soon, they should send you a document that includes the cargo control number and the final location of your goods.
Covering Customs
Customs charges will be the last expense you incur. This isn't quite accurate: if your goods have a 0% tariff, you might not even need to pay for customs; however, you still need to clear customs.
The topic of customs clearance is complicated. In essence, records of all goods entering the nation are required by law.
The majority of goods, particularly those originating from China, are subject to a tariff or duty, typically ranging from 1 to 15%, though many of them are duty-free. You must complete a customs declaration form regardless of the amount of duty that is owed.
All of this can be taken care of by a customs broker for between $150 and $200 plus any applicable duties. Though there are thousands of customs brokers, I work with Pacific Customs Brokers because they can handle both U.S. and/or Canadian clearance. It's possible that your freight forwarder is also a licensed customs broker.
The warehouse containing your goods will receive notification from the local customs authorities that you have cleared customs, along the lines of "Dave Bryant has cleared customs- you can release these goods to him."
After paying the ransom, you can retrieve your belongings!
You can finally retrieve your items after you have paid the three ransoms. You just need to pick up your goods by going to the port (for containers) or the warehouse (for LCL freight).
Bring cash with you just in case. If you are picking up LCL freight, the warehouse may charge you a dock fee of $25–50, which is typically only payable in cash. Keep in mind that your products most likely will be palletized.
If you have a car that you can just throw the pallet onto, like a pickup truck. The ideal configuration is this one. However, you might need to disassemble the pallet and pack your car with boxes if you drive a small vehicle.
Do You Want to Send Products to Amazon?
Are you interested in using ocean freight to transport your products straight from China to Amazon? Fortunately, we have a few articles that will ease your burdens:
- How to ship goods to Amazon FBA from China
- How to ship from China to Amazon FBA directly in FCL and LCL
Although shipping LCL or FCL shipments isn't especially tough, you must be aware of some of their labeling specifications in order to keep your shipment from being refused.
For Your Business, Should You Hire a Third-Party Logistics Company (3PL)?
All you have to do to ship your goods to a Third Party Logistics (3PL) company is simply ship your goods to another company's warehouse (a first-party logistics company would be your own warehouse). For importers, having a relationship with a 3PL is essential, and there are TONS of 3PLs in almost every major city.
You'll probably need the services of a 3PL to store your goods while they are shipped to their destination if your shipment is large and you don't have enough space to store it at your house or in your own warehouse.
You will most likely require the services of a 3PL at some point, even if you are selling on Amazon and intend to ship directly to Amazon, for a number of reasons (storage limits, handling returns, etc).
Here are some more justifications for thinking about employing a 3PL:
- For logistical purposes, you need a backup plan for Amazon (don't let your guard down!).
- Who knows what will happen in a pandemic? It's best to be prepared and to avoid putting all your eggs in one basket!
- Storage restrictions: these will always be a problem for Amazon; regardless of the season, they may arise. However, if you have a 3PL, you can store your packages in their warehouse at a lower cost than Amazon's.
- Achieve lower storage costs: During picks, Amazon Inventory is one of the most costly options; in months like January, you could lose a significant amount of money (we're talking about $200 per pallet). Maybe give this option some thought for a brief while.
- Managing refunds
- Prevent stock-outs by using a 3PL to reduce your inventory and boost your marginal
Conclusion
This should provide you with a decent understanding of how international sea freight operates. When you import something for the first time (or second time), it can be intimidating. However, once you are familiar with the subtleties of maritime freight, it will come easily to you.
