I hope you are enjoying following along with me on my Amazon FBA journey. If you haven’t been following along, or you just stumbled onto my site, please read my previous posts here:
- Part 1 – Online Business
- Part 2 – Looking into Amazon FBA
- Part 3 – Challenges Checklist
- Part 4 – Finding Products to Sell
- Part 5 – Alibaba
- Part 6 – Samples
- Part 7 – Why I’m Private labeling
- Part 8 – The Importance of Testing
Today i’m getting into the topic of Shipping/freight, which, as an international seller, can all seem like a pretty complex and overly cumbersome task.
When dealing with suppliers and freight companies, you will probably hear a lot of different terms that won’t make a whole lot of sense. Here are the most common ones I have come across and what they mean:
Ex Works (EXW): you are responsible for everything from the factory door. This includes: Pick up from factory to port, export customs clearance, getting goods on the vessel, US arrival costs, US customs clearance, duties, taxes and delivery.
Free on Board (FOB): your supplier is responsible for getting your goods to the port and for the export customs clearance. You are responsible for getting goods on the vessel, US arrival costs , US customs clearance, duties, taxes and delivery.
Cost and Freight (CFR): your supplier is responsible for getting your goods to the port, export customs clearance, and getting your goods to the US. This does not include ocean freight insurance. You are responsible for US arrival costs, US customs clearance, duties, taxes and delivery.
Cost, Insurance and Freight (CIF): your supplier is responsible for getting your goods to the port, export customs clearance, and getting your goods to the US. This does include ocean freight insurance. You are responsible for US arrival costs, US customs clearance, duties, taxes and delivery.
There are so many little details that you need to be aware of when it comes to US customs.
There are 2 types of customs bonds. Individual and Continuous. I’m not going to go into major details here, but the main difference is that one you have to pay each time you ship something to the USA, while the other you just pay a yearly amount (around $600).
From what I worked out, the continuous was significantly more cost effective for me, and will be for most people importing more than about $5,000 of product.
Importer Security Filing (ISF) – Required for Ocean Cargo Only
This one was a bit of a weird one for me, but you have to file an ISF form prior to your goods departing from their origin. The real kicker here is that if the filing is late, misfiled, or not filed at all, then the importer will be penalized a minimum of $5,000 (max $10,000) – ouch! Make sure you work with an agent who will help you through this process, as you don’t want to get stung with those types of fees.
This is only relevant for ocean freight, air doesn’t seem to be impacted.
U.S. Customs laws require that articles produced abroad and imported into the United States are marked with the English name of the country of origin to inform the end user in the United States the country of manufacture or production.
So there you have it, shipping looks confusing, but once you walk through it step by step, it’s not really all that hard, you just have to understand a few things before getting started.
One last thing – when choosing a shipping agent, make sure you find out what the insurance costs are going to be, and if they don’t offer insurance, look elsewhere.