When I was covering the importing aspect and logistics of bringing my private label product into the United States, there were a lot of questions about the minutiae of how this works. I thought that it would be helpful if I shared some of my own experiences importing, at a high level, and lay out some of my best practices and takeaways from personal experience. I realize that there isn’t a lot of good information about shipping and logistics online, and frankly it is an unsexy PITA (pain in the ankles) so I'm not really surprised.
While I love to dig in and explore Amazon sales trends and data, there is no data if you can’t get your product into the Amazon warehouses. Say hello to our little pesky friend, Logistics! Not my favorite cup of tea, but vitally important….so let's get in to this!
A few caveats. First: there is a lot involved, more than I can cover in one post, including your freight option (air, ocean, ground, etc), customs brokerage, tax regulations, and documentation galore. This post won't be fully comprehensive, but perhaps the first of several posts covering this topic. Second, I am writing this from my experience bringing products into the United States from China. The rules and regulations will likely differ if you are importing/exporting from different countries. And third, you will want to do your own research and due diligence beyond what I say, I am just offering my opinions.
Pros
Cons:
Ocean freight is like doing push-ups. Sucks at the time but pays off. #hustleon Click To Tweet
Freight Forwarders are the ones who manage the long haul, moving product internationally from one country to another. They are your agents who will make sure that you play within the byzantine laws of internationally shipping, who are your go-between/middle men between the shipping companies and the importer/exporter. Your freight forwarder will make logistical arrangements with your supplier, nail down the scheduling and shipping company, and ultimately get your product from overseas to a port in your desired country.
Customs Brokers are more specialized to the moment when your cargo lands on US soil, they navigate the process of clearing your shipment at customs borders, which includes aspects of paperwork and documentation, taxes, duties, and other items. This is a challenging and complicated process best left to the pros. Plus, do you think you can be present at shipping ports at the time your cargo arrives? The customs broker gets your shipment through customs on your behalf. I sometimes even think of the customs broker as the “canary in the coalmine”, the trusty guide weaving you through the maze of importing, customs, and endless paperwork.
Many companies offer both services, though housed in different departments. This makes it easier for us as importers to use a one-stop-shop, and presumably the communication is smoother between Customs Broker and Freight Forwarder if it is one company. However, it is by no means a deal-breaker if it is not all one company.
This is a quick aside, but fun to think about. Will Amazon be moving into the logistics and shipping game soon? Perhaps you've seen recent news of Amazon filing to get a license to be a freight forwarder in the US here, here, or many other places on the internet in mid January 2016.
Is Amazon going to compete against UPS, FedEx, and DHL now?! I don’t buy it, and I ain’t scurred of it! From what I’ve read, it seems that it is just about optionality, so Amazon isn’t reliant on third party vendors in times of high demand, like the holiday season. Of course, this could just be the red herring, and they do intend to get into ocean freight. Some may worry that this means that they will now be competing against Chinese suppliers who launch their own private label products. This as well does not concern me, I am quite certain that they make multiples more margin on selling wholesale in bulk rather than one-off products via Amazon. I think that we as sellers will benefit from Amazon being a freight forwarding option, as it would allow for a faster and more stream-lined transport from China to the US, or whichever country you are selling in.
Amazon going into freight forwarding will only benefit us as sellers. This is opportunity! Click To Tweet
And now back to our regularly scheduled program….
Customs Bonds are proof to Uncle Sam that he’s collected all necessary taxes and fees he can with your imported shipment. In short, quoting the US Customs and Border Protection: “If you are importing merchandise into the U.S. for commercial purposes that are valued over $2,500, or a commodity subject to other federal agencies requirements (i.e. firearms or food), you must post a Customs bond to ensure that all duties, taxes and fees owed to the federal government will be paid.” You can read more about Customs Bonds on the official website here.
Personally, I have a “continuous bond” because it saves me a little money over having to purchase a “single entry” bond each time I import goods from overseas. If my memory serves me correctly, single entry bonds are usually $40 unless you're importing goods valued at more than $10k. My continuous bond cost me $450, however is good for all my shipments for a calendar year.
It is unfortunately not uncommon to experience a hold up in clearing customs. I faced that with Jungle Stix, which contributed to the delays and ultimately running out of stock for a few days. It generally takes 2-4 days to clear customs, though it varies. It's my understanding products that come into contact with food usually take longer, as well as anything else that the FDA doesn't like.
If you have your cargo held up and inspected at customs, it can add on another few days (or weeks if you're unlucky) to the importing process, and incur further charges, which you as the importer would be responsible for. I am not certain exactly what the red flags are, but it is generally best practice to complete all forms as meticulously and accurately as possible. Then hope for the best!
Have your paperwork handy: You will generally need to provide the following information just to initiate a quote and move forward:
Gather Quotes: You will want to gather various shipping quotes from different companies to get an idea of costs, the services offered, and who you work well with. If you can gather the information mentioned above (commercial invoice, packing list, supplier and destination info) beforehand and have it readily accessible, it can accelerate the time it takes to gather quotes and compare providers. There is no doubt that the adage is still true, TIME IS MONEY. Save time wherever you can!
Write down your Details: You will need to supply how your product is packed (as in pallets, individual boxes, comingled/mixed inventory, etc), how many boxes, and the size, weight, and quantity of the boxes.
Know About the Importer Security Filing (ISF): As the importer, you are required to file some basic information before the cargo departs overseas and arrives in the US (this is strictly for imports into the US). If you don’t file this, file it inaccurately, or file it late, then you can enter a US Customs merry-go-round of fees, further inspections, seizure, etc. Read more about it here, My freight forwarder has always taken care of this for me but be aware of this ISF Filing and make sure it gets taken care of it because ultimately it is your responsibility.
Have An Importer of Record: Amazon will not be the importer of record for any shipment coming in from overseas. Your shipment will be rejected, incurring time delays, cost, and face palms.
Know The Hidden Costs: There are various costs associated with ocean freight that you may not know about. It is not that your freight forwarder or customs broker is cheating you, but moreso it is incumbent on you as the importer to know the small details.
For example, here are some costs to be aware of:
DO NOT JUST HAVE YOUR SUPPLIER SEND YOUR FINISHED PRODUCT TO AMAZON WITHOUT CONTACTING A FREIGHT FORWADER OR CUSTOMS BROKER FIRST! Amazon will not be your importer of record, and you will need to have a freight forwarder handle your cargo from the vessel, or else you will experience additional fees, fines, inspections, and delays. No Bueno.
Be very clear with your freight forwarder about what type of product your are importing: If it is something that may require an additional clearance, like foodstuffs that need approval by the FDA, then you want all that information known by the people handling your product.
Importing your goods can be intimidating because there are so many acronyms and jargon that pop up and create confusion.
I've laid out a few terms that I think are most important and that you will likely come across:
Bill of Lading (B/L or BoL): The Bill of Lading is a document between the shipper and the carrier that grants the freight carrier an ownership of receipt for the goods and proves that the cargo was received for shipment. It is required for all shipped goods (whether air, ocean, rail, or ground), and must be signed by the shipper, the carrier, and the recipient. The BoL will contain information detailing the type, quantity, and destination of the goods
CIF (Cost Insurance and Freight): CIF means that cargo is delivered to the importing port (in our case, that would be the US). All expenses related to duties, taxes, and delivery would be my responsibility, as the buyer.
DDP (Delivered Duty Paid): DDP means that cargo is delivered all the way to final destination warehouse, in our case the Amazon warehouses. And all duties, taxes, and delivery fees have been already paid.
FOB (Free on Board): FOB means that the supplier would assume all expenses of bringing the cargo to the port (in our Jungle Stix example, Shanghai). From that point, all international shipping and related fees are my responsibility, as the buyer.
LCL (Less Than Container Load): If your cargo does not fill a whole ocean freight container, you will be shipping “LCL”. Your goods will be shipped with other cargo until the transport provider can fill the container. You will generally pay a higher overall rate for this, as the carrier will have to arrange for other LCL shipments to be consolidated and shipped in one full container. LCL is advantageous as you can ship goods at a quantity you are comfortable with (as opposed to filling a whole container you’re your own inventory), and you can ship as soon as your goods are ready.
FCL (Full Container Load): When you ship FCL, you have the exclusive rights to using a full ocean freight container. Of course it depends on the costs you are quoted, but for any 20’ container, if I can fill more than half the volume of the container, it is worthwhile to compare the costs and logistics of LCL vs. FCL.
All of this seems pretty complicated, however, a good freight forwarder/ customers broker should be able to handle 90% of it for you. The first place to start is contact freight forwarders with all your information, get quotes and proceed from there. Personally, I use Flexport because they were the only freight forwarder I found who's website/technology didn't seem stuck in the 1990's. I've heard they're not accepting new customers right now but there are plenty of other (and possibly cheaper) options.
I hope that this was a helpful high-level primer on how to import via Ocean Freight. As I mentioned, there is a lot more that I did not cover, and frankly, a series of blog posts would be necessary to cover the details of how this works in its entirety. But I'd love to know what you think or what other challenges you are facing, hopefully me or someone in the Jungle Scout community can help! Just drop your thoughts in the comments section below, the Facebook group, or @junglescout on Twitter. Wishing you continued success with your importing game!