Shipping, Taxes & CustomsWhen Importing from Asia

A Webinar Presented by Chinaimportal.com

Copyright 2017/2018: www.chinaimportal.com I Image Copyright: www.depositphotos.com

Today you will learn the essentials of shipping and customs clearance, when importing from Asia

Presentation OverviewA. Main Presentation

- Part 1: Sea freight- Part 2: Air freight- Part 3: Customs & taxes (US and EU)

B. Learn how we can help you manage your shipments from China

About the presenter: Fredrik Gronkvist● Co-founder of Chinaimportal.com

● Based in Shanghai since 2011

● Expert in product development and sourcing in Asia

● Contributing articles to Global Sources and Alibaba

About ChinaImportal.com● A comprehensive and widely respected online knowledge base for

importers (www.chinaimportal.com/blog)

● 180+ articles, guides and interview with leading industry experts

● We also develop and sell information products for Importers

This Webinar will take about one hour

Got questions?Use the contact form!

(We reply to all questions within 24 hours)

Okay, let’s get started!

Part 1: Sea Freight

Part 1: Sea Freight1. Incoterms

2. FCL and LCL Shipping

3. Shipping Documents

4. Shipping costs

5. Export Packaging

Incoterms1. What is an Incoterm?

2. FOB = Delivery to port of loading (i.e., Shanghai) + export clearance

3. CIF = FOB + Shipping to port of destination (i.e., Los Angeles)

4. DAP = CIF + Local Port Charges + Transportation

5. A price is always quoted according to an Incoterm

6. Example: FOB Shanghai $5.52 per unit

LCL and FCL1. LCL = Less than Container Load

2. FCL = Full Container Load

3. When is LCL the right choice?

4. When is FCL the right choice?

Shipping Documents1. Bill of Lading

2. Commercial Invoice

3. Packing List

4. Country of Origin Certificate

5. Who issues the Shipping Documents?

6. What do I need to do with them?

Shipping Costs1. The total shipping cost depends on the Incoterm

2. Sea freight charge (volume based, LCL or FCL)

3. Port Charges are often more expensive than the freight cost

4. Insurance

5. Local transportation

Export Packaging1. Many suppliers use cheap and substandard packaging

2. Substandard packaging often results in transportation damages

3. Freight forwarders are not responsible for the packaging

4. Always send clear packaging instructions to your supplier (and verify with a quality inspection)

5. What is “good packaging”?

Part 2: Air Freight

Got questions?Use the contact form!

(We reply to all questions within 24 hours)

Part 2: Air Freight1. When is Air freight a suitable option?

2. Air freight costs and volumetric weight

3. Case studies

When is Air freight cost effective?1. Total weight below 250 kgs

2. Total volume below 2 cubic meters (m3)

3. Not suitable for low density cargo (i.e., Apparel and soft toys)

4. Suitable for high density, high value cargo (i.e., Electronics)

5. Delivery time: 7 - 10 days (compared to 20-35 days for Sea freight)

Air freight costs1. Air freight charges are either based on the volume or the weight

2. The cost is based on the volumetric weight (if above threshold)

3. The cost is based on the actual weight (if below threshold)

Case Study A (Actual weight applies)● Dimensions: 0.82 x 1.2 x 0.65 m (Equals: 0.6396 cbm)● Weight 171 kg● Volumetric factor: 200● Volumetric weight: 0.6396 cbm x 200 = 127.92 kg (<171 kgs)● Rate: 4.6 USD / kg

Result: The actual cargo weight is higher than the volumetric weight and thus

the actual weight is applied.

Total price: 4.6 USD x 171 kg = 786.6 USD (equals 4.6 USD per kilogram)

Case Study B (Volumetric weight applies)● Dimensions: 0.82 x 1.2 x 0.65 m (Equals: 0.6396 cbm)● Weight 91 kg● Volumetric factor: 200● Volumetric weight: 0.6396 cbm x 200 = 127.92 kg (>91 kgs)● Rate: 4.8 USD / kg

Result: The actual cargo weight (91 kgs) is lower than the volumetric weight

(127.92 kg) and thus the volumetric weight is applied

Total price: 4.8 USD x 127.92 = 614.016 USD (equals 6.747 USD per kilogram)

Part 3: Customs & Taxes

Got questions?Use the contact form!

(We reply to all questions within 24 hours)

Part 3: Customs & Taxes1. Customs Value

2. Import Duties

3. Taxes and customs procedures in the European Union

4. Taxes and customs procedures in the United States

Customs Value1. What is the Customs value?

2. Import Duty ($) = Customs Value ($) x Duty Rate (%)

3. United States, Canada & Australia: Based on FOB value

4. European Union: Based on CIF value

5. Also includes costs paid for prototypes and other fees paid to the supplier

6. Do NOT try to declare a lower customs value

Import Duties1. HS Code = Specifies duty rates for all products

2. Example: Watches with mechanical display, 91011100, 3.6%

3. Based on the Customs value

4. Normally set at 3 - 6%

5. Anti-Dumping duties

European Union1. Customs value = CIF

2. VAT (Value Added Tax) = XX% x (Customs Value + Import Duty)

3. Total tax: VAT + Import Duty

4. No import duties within the EU

United States1. Customs value = FOB

2. Customs bond required

3. Tax ID required (If customs value > $2500)

4. Merchandise Processing Fees (MPF): 0.3464%

5. Harbor Maintenance Fees (HMF): 0.125%

So, what did we learn here today?✔ Always order shipping according to DAP or DDP terms

✔ Buy from your supplier according to FOB terms

✔ Work with a freight forwarder with an office in your country

✔ Make sure the customs value is correctly declared

✔ Sea freight if above 250 kgs / 2 cbm (Air freight if below)