Guide for Sea Freight Shipping from China

Sea freight shipping is the most popular shipping method for buyers when shipping from China. However, there are complex issues involved in shipping from China such as the freight related issues and the steep learning curve involved.

In this article, you’ll learn:

• The Process of International Logistics

• The most common incoterms used in sea freightshipping

• How to calculate the volume of full container load

• The most import documents you need to know whenshipping from China

• Top shipping ports in China

The Big Players Involved In International Logistics
 

1. Shipping Company

This refers to a company that handles the shipment of goods. The service of shipping companies is usually employed due to the following reasons:

• Convenience

Shipping companies helps to make shipping convenient. They know the best way to package and ship goods. They also help in saving time, energy and money on packaging supplies.

• Better Shipping Experience

Shipping companies help to create a better shopping experience without any disappointment through the creation of an accessible shipping location.

• Ability to Send Packages Anywhere

Shipping companies help you to send packages where you couldn’t send before. Some shipping companies enable you to buy your items, have them shipped to your mailing address and then forward them to you.

2. Custom Broker

Custom brokers prepare and submit documentation to notify or obtain clearance from government agencies. They also arrange local delivery of items through trucking companies. Custom brokers can be located at inland ports so that they can clear merchandise sent “in bond.”  Most custom brokers are located at major airports and harbors that have international traffic.

3. Freight Forwarder

A freight forwarder (also known as non-vessel operating common carrier) refers to a person or company that organizes shipments for individuals or companies to move goods from the manufacturer to a market or final point of distribution.

Freight forwarder can be better to work with than customs brokers depending on your product, how frequent you are shipping goods, and through shipping by sea or air.

They handle inter-country movement of cargo by acting as the middlemen between the shipping lines and the importer or exporter. They are hired to get the product to the customer by a particular date in an undamaged state. They handle tasks such as:

·       Packaging

·       Labeling

·       Documentation
 

Shipping from China:The Process of International Logistics

International logistics involves planning and managing the flow of goods in a company’s supply chain from acquisition to customer purchase. Part of the process involves crossing at least an international border.

The figure below shows the diagrammatic representation of the whole process:

All You Need To Know About Incoterms
 

Shipping incoterms refer to international standard codes that determine when and where a cargo will be transferred between the supplier and the importer. They are trade terms that are being published by the International Chamber of Commerce (ICC). These terms are usually used in international and domestic trade contracts.

The commonest trade terms include:

• FOB Shipping (Free on Board Shipping)
   

FOB means Free On Board. It indicates when liability and ownership is transferred from a seller to a buyer. When FOB shipping is used with an identified physical location, then the designation determines the person that will handle the payment of the freight charges and the point the shipment passes from the seller to the buyer.

Buyer and Seller Liability For FOB Shipping

• CFR Shipping (C&F Shipping)

CFR stands for Cost and Freight. It implies that the seller needs to pay the costs and freight that’s needed to bring the goods to a particular port of destination. In this case, the risk of loss or damage of goods as well as the additional costs (after the goods have been delivered on board the vessel) is transferred from the seller to the buyer.

In CFR shipping, the seller needs to arrange for the carriage of goods by sea to a port of destination and also provide the necessary documents (that will be needed to obtain the goods from the carrier) to the buyer.

• CIF Shipping

CIF (Cost, Insurance and Freight) is a term that requires the seller to arrange for the carriage of goods by sea to a port of destination and also provide the buyer with the documents that are needed to obtain goods from the carrier.

Buyer and Seller's Liability for CIF Shipping

Shipping Containers
 

In case you plan to import full container loads, you can use any of the following four different container volume options:

• FCL 20’GP (Volume: 33.2 cbm)

It has dimension 5.89m x 2.35m x 2.39m and maximum weight 24 tons. The actual cargo gross weight is 18 tons.
 

• FCL 40’GP (Volume: 67.7 cbm)

It has dimension 12.03m x 2.35m x 2.39m and maximum weight 30.48 tons. The normal cargo gross weight is 26 tons.

• FCL 40’HQ (Volume: 76.3 cbm)

It has dimension 12.03m x 2.35m x 2.69m and maximum weight 30.48 tons. The actual cargo gross weight is 26 tons.

Different shipping companies may have different container volume. You can save lots of money on sea freight cost that’s related to the container volume. You can do this by placing orders based on the units that align with a particular container size and not a predetermined quantity.

By doing this, you will be able to avoid situations you pay for empty space or ordering one FCL container and one LCL container.

Since LCL attracts higher port charges and ‘per shipment’ administrative fees than FCL shipping, the latter situation is often more costly.

Less Than Container Load (LCL) Shipping
 

Less than Container Load refers to a shipment that will not fill a container. In LCL shipment, you pay for your load to be shipped in a container with one or more loads from other customers of the freight transport provider. LCL is the most reasonable option to use if you cannot fill a 20-foot container due to the cost and convenience.

There’s no need to worry about returning the container after delivery when you are using LCL shipping. Since you’re sharing the container, the shipping container service company is the one that will worry about the likelihood of having return trips booked for that container. Shippers making use of LCL should only be concerned about the load that is being shipped.

Full Container Load (FCL ) Shipping
 

This is a type of ocean freight. It does not mean you need to have enough cargo that will fill an entire container. The benefit of FCL shipping is that you don’t need to share a container with other shipments. If you are shipping 6 standard pallets in a 20ft container, 12 standard pallets or more in a 40ft container, the cost effective means of shipping such cargo is by making use of FCL shipment and not LCL shipment.

Practical Example when shipping from China
 

As stated earlier, the theoretical loading volume for the 3 different containers are:

• FCL 20’GP (Volume: 33.2 cbm)

• FCL 40’GP(Volume: 67.7 cbm)

• FCL 40’HQ (Volume: 76.3 cbm)

However, in a real world, it can barely load the same volume. Based on my experience in calculating the loading volumes, here are two tips that I have for you; if the packaging volumes are lower than 0.02m³/ctn, then the actual loading volumes are:

• FCL 20’GP(Volume: 28 cbm)

• FCL 40’GP(Volume: 56 cbm)

• FCL 40’HQ (Volume: 68 cbm)

If the packaging volumes are more than 0.04m³/ctn then the actual loading volumes are:

• FCL 20’GP(Volume: 24-25 cbm)

• FCL 40’GP(Volume: 53-54 cbm)

• FCL 40’HQ (Volume: 63-65 cbm)

Note that the accurate loading volumes could be slightly different depending on your situation.

I once had a customer that wanted to buy quadcopter drone toys from China in 40 feet container. The outer packaging had dimension 70mm x 570mm x 505mm with 6 boxes.

In this case, the calculation was carried out as follows:

I added 5mm more for each side. That gives: 0.675m x 0.575m x 0.51m ≈ 0.198m³

Depending on the situation of the packaging, if it has swelled, we can add 1cm-2cm.

0.198m³/ctn > 0.04m³/ctn so we choose these number for 40 feet container

54/0.198 = 272 boxes

In total, we have 272 x 6 = 1636 unit drones

We can slightly load 10-20 more boxes in this case. However, 272 is 100% safe.

Packaging For Sea Freight Shipping
 

When selecting your packing materials, it is important to carefully examine the types of packages that are available. You need to take note of import restrictions such as quarantine requirements of the destination countries.

When you are packaging a product for export purpose, you need to consider factors such as:

• Breakage

• Weight

• Moisture, and

• Pilferage

How a product is packaged depends on the destination and the means of transportation. Your package needs to be designed in such a way that it can handle stress and repeated loading and unloading. When packaging for air shipments, lighter packaging materials must be used. Plain boxes without logos or brand names must be used to avoid theft.

Shipping From China Cost
 

When shipping goods to USA/Canada/Europe/Australia through oceanic routes, lots of factors should be considered to ensure a successful freight. The following factors determine the cost of shipment:

• Size and Wight

Size and weight determine, to a very large extent, the cost of your shipment. The distance covered and the commodity also influences the shipping rates. Thus, you need to consider the accurate measurements and weight of your cargo. You also need to identify the commodity that you are shipping.

• Freight Class

Freight class also impacts your shipping cost. A detailed explanation of what freight classification entails can be provided by your freight specialist. Basic freight classification guidelines to LTL shipping involve:

·       The weight

·       Type of packing

·       Value of the shipment

·       Susceptibility of products to damage

·       Product’s load-ability

·       Handling characteristics.

The freight classification increases with the fragility and value of your products.

• Dimensional Weight

Dimensional weight is an important factor that influences shipping cost but can be confusing. Dimensional weight is a standard formula employed by freight shipping companies and considers the density of a shipment when determining shipping costs. Apart from gross weight, dimensional weight also determines the transportation fees.

Important Documents Used In Sea Freight Shipping

• Bill of Lading

Bill of Lading (B/L) refers to the ticket that outlines the journey of the cargo from its origin to its destination. It’s synonymous to an airline issuing a ticket to a passenger. The bill of lading is issued by a carrier to a shipper and outlines the method and path of a shipment (irrespective of the path). It acts as a contract for the shipment of goods with the terms of the contract outlined on the back of the bill. It also functions as the receipt for the cargo and as a proof of ownership of the goods being shipped.

Bill of lading outlines the key players in the shipment of your goods. The players include:

·       The shipper and consignee of the goods

·       The carrier that issued the Bill of Lading

·       The origin freight forwarder

·       The arrival agent/ destination freight forwarder

·       The freight payer (this indicates the person that is paying for the transportation)

Also, the Bill of Lading shows the goods that are being shipped as well as the specific handling instructions. The information often include:

·       The content of the shipment (such as hanging garments, electronics, food)

·       The type of inner packaging (for instance boxes, crates, drums, sacks or rolls)

·       The type of outer packaging

·       Identifying markings or characteristics

·       Type of transportation used

·       Specific handling instructions

·       Weight and volume of the cargo

Moreover, the Bill of Lading also maps out journey that the shipment will go through to get from the seller to the buyer. The details mapped out include:

·       The origination of the shipment

·       The destination of the shipment

·       The route the shipment will take to move from one place to the other

·       The date the shipment is received for transport

·       The vessels the shipment is planned to move on

• Commercial Invoice and Packing List

A commercial invoice is a list of contents that seller provides to buyer which includes information such as the product name, specification, quantity, unit price, total amount, etc. It helps foreign buyers to confirm the goods that are paid for. It’s also useful for the custom clearance and for paying duty and tax when the goods arrived. Despite the fact that the commercial invoice is not a receipt (like bill of landing) for the goods, it is one of the most important documents in import/export trading process.

A packing list is a list of the details of the package. The packing list is the supplementary document of the invoice, which details the packing method and packing materials, packing quantity, the specification and the quantity of cargo, the weight and so on.  It is used by the importer and the customs to inspect and verify the goods.

The data and content in a Packing List must be consistent with the contents in the bill of lading and other documents as well.

Top Shipping Ports in China

Conclusion

I hope I was able to clear the air as far as sea freight shipping from China is concerned. Feel free to drop your questions in the comment section below and I’ll attend to them as soon as possible.

Transline Logistics is a leading freight forwarder in China. You are welcome to contact us if you need any help on sourcing or shipping.