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If you have any question about automated export system (AES), you will find the answer right here.

In fact, if you are in export business, then this is a must read guide for you.

Let’s dive right here.

What is Automated Export System?

Automated Export System (AES) is an electronic system set up by the US Census Bureau to collect export and trade data.

Exporters in the US use this system to provide information on whatever they are internationally exporting, whose value exceeds 2,500 USD.

The information you provide as an exporter is referred to as Electronic Export Information (EEI) and is useful to other agencies.

Such agencies include the Food and drugs Administration, the Directorate of Defense Trade Controls, and the Bureau of Industry and Security.

Before the electrical system, you filed your export declaration on a form known as the Shipper’s Export Declaration.

You submit your EEI to the Automated Commercial Environment (ACE), where you get an Internal Transaction Number (ITN) if successful.

Why is AES important?

You find the Automated Export System (AES) useful in several ways:

AES is useful as a Security and Compliance Measure

You provide a host of information related to your shipment intended for export when you file with the AES.

The information you provide is useful in ensuring the identification of any breaches of security protocols and dealt with.

For instance, where the destination of the cargo is blacklisted, the goods are seized before departure.

Furthermore, some goods are illegal in other countries, and the AES system prevents such exports.

Some of the information you provide when filing with the AES include:

• The description of what you are exporting
• Where the goods are from
• The weight parameters of the items
• Who is receiving payment for the shipment
• Intended buyer(s) in case of intermediaries
• Value of the cargo
• Assigned HS Code
• Ports of loading and lading
• Country and city of arrival

AES is a Source of Useful Trade Statistics

When declaring your export goods, the information you provide is beneficial to the Census bureau when compiling trade export data.

The Census Bureau determines what goods are shipped, the quantity, and where they are shipped.

Consequently, you find the AES useful in determining the Gross Domestic Product (GDP) of the US.

Additionally, you use this information to provide forecasts and identify vital indications of the economic outlook.

What is AES Export Filing?

AES filing is the filing of export information electrically in the Automated Export System provided by the US Census Bureau.

When filing your exports electronically, you use the Automated Commercial Environment (ACE) portal on the Customs and Border Protection webpage.

You log in to the ACE portal to access AES Direct pages, which you duly fill with information relevant to your cargo.

You also have the option of using independent software with AES Direct access like Shipping Solutions.

Using independent software allows you to enter the information on your documents more efficiently with reduced errors.

Additionally, you omit unnecessary details while allowing you closer independent monitoring of the process.

Who needs to File AES?

You have to be the US Principal Party of Interest (USPPI), the exporter, to file the AES.

You can also authorize an agent such as a freight forwarder to file on your behalf as the USPPI.

A buyer, the Foreign Principal Party of Interest (FPPI), handling the customs responsibilities, can also file AES.

In this case, the buyer employs a US-based agent such as a freight forwarder.

You need to provide formal authorization to your agent or freight forwarder when they file AES on your behalf.

Such approval can be in the form of a letter, such as one offering limited attorney privilege.

However, when you use agents such as freight forwards to file AES on your behalf, you still bear liability.

Additionally, when reporting your address in the electronic system as a USPPI, it should be that of the goods’ origin.

When do you need to File with the Automated Export System (AES)?

You typically need to file with the AES when you are exporting cargo with a value of 2,500 USD or more.

Nonetheless, the source and destination of your goods influence the decision whether you file AES.

Your cargo is usually assigned a Schedule B number, which determines the categorization of freight.

For instance, say your shipment has two items with individual values lower than 2,500 USD but total values above it.

When both items are from the country or outside, you file with AES.

However, where the items have different origins, they are treated as separate items whose value is not subject to AES filing.

Other instances where filing for AES is mandatory include:

• When exporting merchandise requiring an export license from an issuing authority such as a State department regardless of value and destination.
• When exporting cargo of any value and destination with items requiring ITAR but excluded from licenses.
• When exporting vehicles that are self-propelled of any value and destination.
• You file with AES for rough-cut diamonds of the HS Codes 7102.10, 7102.21, and 7102.31 of any value and/or destination.

Usually, when exporting from the US to Canada, you must not file with AES save for a few exceptions.

Your window for filing is set against an item’s scheduled shipment and depends on the shipping method.

How do you get an AES Number during International Shipping?

You get an AES number for international shipping by logging into the Automated Commercial Environment (ACE) portal.

You can access the ACE system from the Custom and Border Protection web page or via unique software.

Using direct access requires you to fill in all the required information as per your documents manually.

However, using software allows you to easily upload your information to the AESDirect platform with reduced errors.

The following steps are useful in getting an AES number:

• Upon successful login, select the tab for “Submit AESDirect Filings” and then the “Create Export Filing” on the resulting window.
• You then provide information regarding your shipments, such as the parties involved, the nature of commodities, and the method of transportation.
• Upon providing all the data required, submit by selecting the “Submit Filing” tab. Any errors or omissions you made are highlighted by a “Filing Contains Errors” pop up.
• You have a thumbs-up upon successfully submitting EEI from whence you proceed to the “AESDirect Shipment Manager“ window. This window reveals your ITN number alongside your shipment.
• You extract a copy of this number by selecting “Get ITN,” generating pages with the number on required documents. An “Accepted” notification indicates a successful application on the screen.

What is AES Exemption?

An AES exemption allows you not to file with AES.

Consequently, you can send your shipment without attaching an ITN while avoiding the exhaustive checks by customs.

An AES exemption reflects as a code that highlights why you are not obligated to present EEI.

You use this code as you would an ITN on your export documents.

The code identifies the specific section of the Foreign Trade Regulations that contains the exemption preceded with the initials NO EEI.

NO EEI stands for “No Electronic Export Information”.

What are AES Filing Exemptions?

You find several AES filing exemptions guiding general shipments, shipments intended for the US military, government agencies, and personnel.

Common AES filing exemptions include:

NO EEI 30.36

The exemption consists of cargo headed for Canada with no limit on the value save for automobiles.

You can use this exemption where you don’t need a permit or license for export.

However, you cannot use this exemption where the goods are under the scope of International Traffic in Arms Regulations (ITAR).

Additionally, cargo intended only for Canada’s storage purposes before being shipped to another country has no exemption.

NO EEI 30.37(a)

You use this exemption when you have goods whose value is less than 2,500 USD under the Schedule B categorization.

However, there are several instances where you cannot use this exemption.

That is when:

• You require a special permit or export license for your shipment.
• Shipment consists of a self-propelled vehicle.
• Your shipment is under the scope of ITAR.
• Shipment consists of rough diamonds regardless of value.
• Your shipment destination is a blacklisted country such as North Korea, Iran, or Cuba.

NO EEI 30.37(b)

You invoke this exemption when the export cargo consists of trade tools intended for use by an exporting party’s extension.

An item is considered a trade tool when it is employed by company actors while enhancing the company’s value.

A guide for these tools is as follows:

• Tools have to be owned by the company making the shipment.
• Tools are with a representative of the company making the shipment.
• Nature of the tools is for business.
• Tools are not subject to sale.
• Tools are returned to the US within 365 days since their export.
• Shipment of the tools is not on an air waybill or bill of lading.

NO EEI 30.37(f)

With this exemption, you can export software and related technology not accompanied by a license authorizing export.

However, this limitation is inapplicable for software that you mass-market.

NO EEI 30.37(g)

You use this exemption when you ship items such as books, journals, charts, and other related items.

These articles find use in libraries, government-funded establishments, and research institutions.

NO EEI 30.37(h)

The exemption above covers shipments you present as gifts and donations intended for humanitarian purposes.

NO EEI 30.37(i)

When you are shipping diplomatic bags, both the bags and the contents require no filing with AES.

NO EEI 30.37(j)

Transporting of human cargo and related features such as the casket and flowers require no AES filing under this exemption.

NO EEI 30.37(l)

When shipping your pets as cargo, you use this exemption, whether you travel with the pet or not.

The exemption also applies when you leave the US or are a crew member of the ship or airplane.

NO EEI 30.37(s)

Monetary instruments such as legal tender and securities whose financial claim you can provide evidence for have exemptions under this code.

NO EEI 30.37(t)

You can ship documents such as airline tickets and internal revenue stamps out of the US without filing with AES.

You find this possible only if these documents facilitate the execution of international transactions.

Do you need an AES Exemption?

An AES exemption allows you to make a shipment without having to report to the Census Bureau.

You avoid the detailed process of providing a host of information associated with your package saving you time and money.

With an exemption, you can send gifts and donations of any value anywhere.

Moreover, you can contribute to developing ideas and research in various institutions by shipping learning material.

Failure to file AES, late filing, and/or erroneous filing attracts hefty penalties and fines.

With an AES exemption, you avoid getting caught in one of these predicaments, which you pay with time or money.

What is the AES Filing Fee?

Generally, you need to file with the Automated Export System when exporting goods valued at 2,500 USD or more.

The filing process involves filling a form with your shipment’s details electronically referred to as Electronic Export Information (EEI).

You submit your EEI via a web portal referred to as Automated Commercial Environment (ACE).

You can also use compliance software to submit, such as Shipping Solutions.

However, as an exporter, you can employ agents such as freight forwarders who make the AES filing on your behalf.

The agents charge you a fee for the service known as an AES filing fee.

What is EEI?

When filing with AES to the Census Bureau, the data you provide is the Electronic Export Information (EEI).

The data typically entails information regarding your shipment intended for export over the value of 2,500 USD.

Information submitted as the Electronic Export Information includes:

• Details of the exporter such as name, identification, and physical address.
• Details of the shipment such as value, quantity, and weight.
• The country of destination.
• The port of loading and lading.
• The destination country.
• Details of the receiver or buyer.
• The classification of the products and required permits or licenses.

How do EEI and AES compare?

The Automated Export System (AES) is an electronic system set up to collect information on goods intended for export.

Goods filed in the AES system are those whose value exceeds 2,500 USD with an assigned Schedule number.

The Electronic Export Information (EEI) is the actual data on exports you file in the Automated Export System.

Besides, the EEI provides the data used by the Census Bureau to determine existing trade figures.

The CBP uses the AES system to monitor the export of goods, ensuring compliance with prevailing regulations.

Therefore, you find the EEI is the basic unit that makes up the AES.

What are AES Filing Rules andRequirements?

Before the EEI, you had to fill out a Shipper’s Export Declaration (SED) for your exports.

You provide the EEI of your exports in the AES system provided by the Census Bureau.

You find the following rules and requirements necessary when filing with AES:

• You have to file EEI for exports with Schedule numbers whose value exceeds 2,500 USD. Goods whose destination is Canada face exemptions from this rule, save for self-propelled vehicles.
• You have to file EEI for goods of any value with an export license or requiring a permit.
• AES filing is needed when you are shipping rough diamonds of a defined range of HS codes.
• Goods subject to International Traffic in Arms Regulations (ITAR) also require you to file with AES.
• When you export packages containing household items or those of a personal nature valued over 2,500 USD, AES filing is required. An exemption is, however, made for such goods destined for Canada.
• The burden of AES filing typically rests on the US Principal Party in Interest (USPPI). However, the USPPI can engage an agent such as a freight forwarder to make filings on their behalf.
• The shipping methods determine the timelines within which you file your EEI in the AES system. Also crucial in the ultimatums is the type of goods you intend to export.
• Failing to make AES filing or making such filings late in addition to making errors during filing attracts penalties and fines. Your goods can be seized and confiscated in such cases resulting in loos of time and money.
• When filing with AES, you need to have the appropriate Schedule B number for your cargo in your EEI. The Schedule B number is employed for the identification of goods and also with tracking.

How do you File your Shipments with AES?

You use the following steps to file your shipments with AES:

• First, you register an account with the Automated Commercial Environment (ACE) portal, which allows you access to the AES system.
• Upon approval of your account, you use your sign up details to login into the ACE portal. You can log in directly via the CBP webpage or through compliant software.
• Successful login leads you to pages with AESDirect fields requiring you to provide information about your shipment. For direct filing on the CBP website, you need to fill in your shipment details as provided manually.
• When using compliant software for AESDirect filing, the information you provide for your EEI is easily uploaded. Consequently, you save time and effort with a reduced chance of omissions and/or errors.
• When filing on AESDirect, the system will only allow you through until you fill all the required fields. Upon confirmation of your submission, the AESDirect will issue you an Internal Transaction Number (ITN) alongside your shipping details.
• You use the ITN on your export papers, indicating your compliance with the AES filing requirement to the CBP.

Can you make Corrections to an AES Filing?

You can make corrections to an AES filing when you identify them to ensure your Electronic Export Information is accurate.

However, you can make corrections for specific fields without triggering a compliance alert.

The Automated Export System Trade Interface Requirements (AESTIR) provides you with a list of fields you can and cannot correct.

You can make corrections to your AES filing for the following areas without instigating a compliance alert:

• State of origin of the shipment.
• Reference number about transportation.
• Port of export and that of lading.
• Mode of shipment.
• Details of the USPPI such as name and contacts.
• Details regarding the consignee(s) and freight forwarders.
• Value of the commodity if without a license.
• Item details such as quantity, weight, classification number, and export code.

However, making corrections to the following fields will trigger a compliance alert:

• Revision of the departure date to an earlier one.
• Reference number for your shipment.
• Identification number of the USPPI or FPPI.
• Adding or deleting items in the commodity field.
• Value of the item where it has an export license.
• License type and number.

What is a Shipment Reference Number (SRN) in Export Filing?

When filling out your shipment’s reference details, you use a Shipment Reference Number (SRN) to identify your shipment.

You can present the SRN as an alphanumerical combination with many characters numbering up to thirty-five.

You can use an item’s purchase order number, the bill of lading number, and even the customer number as the SRN.

You can generate an SRN by using the information on an item’s bar code to identify the item uniquely.

You find the Shipment Reference Number (SRN) useful in tracking and identifying shipments.

Can you Reuse Shipment Reference Number during AES filing?

Reusing the Shipment Reference Number during an AES filing is not allowed according to the Foreign Trade Regulations.

You have to provide a new and unique SRN every time you file with AES for a new shipment.

When submitting your Electronic Export Information (EEI), the SRN is used to identify your item.

Consequently, using this number for another item results in deleting the previous article in the system.

Furthermore, you will not generate a new ITN with the previously filed item with the SRN number maintained.

Also, the AES can decline your EEI when you reuse the SRN as a unique identifier.

Can you use Multiple Invoices for the Same Customer to Create one Automated Export System (AES) record?

You can create one Automated Export System (AES) record from multiple invoices of a single customer under certain conditions.

• When the invoices provided for the goods you are shipping are from one USPPI.
• When you ship these goods to the same individual in a particular country.
• When you ship these goods on the same day and vessel or plane.

What are the Filing Timeframes for EEI in the Automated Export System (AES)?

You are subject to timeframes when filing AES, dependent on the type of goods involved and the shipping mode.

However, you are exempted from the standard timeframes when shipping to Puerto Rico, where you can present your ITN o arrival.

Some of the typical timeframes are as follows:

• When sending essential consumer goods, you have different timeframes set against the shipment method. When using mail, you need to make your AES filing two hours before export.
• You also need to make your filing two hours before the aircraft’s departure time when using air mode.

When using road transport for your shipment, expect to successfully file with AES an hour before the border crossing.

• Using rail transport dictates you submit EEI for your shipment two hours before the border crossing.

Conversely, when using a boat, you should do the filing at least twenty four hours before the ship is loaded.

• When handling motorized shipments such as vehicles, you need to file with AES 72 hours before departure.

Is there Flexibility with the Current Filing Timeframes for AES filing?

The Federal Trade Regulations set the current timeframes for filing with AES, and they cannot be adjusted.

The timeframe provided for your shipment is subject to the item type and the method of transportation.

However, you are exempt from the timeframes provided for filing with AES when the country of destination is Puerto Rico.

You only have to show up with the ITN at the unlading port on your shipment arrival.

Who is a Principal Party in Interest (PPII) in an AES filling?

The Federal Trade Regulations provide the Principal Party in Interest (PPII) definition in an AES filling.

The PPII is the individual or enterprise that is the primary beneficiary of the award derived from an export process.

The PPII can be US based or foreign-based, and you refer to them as USPPI and FPPI, respectively. The USPPI could be a broker, manufacturer, order party, or seller located in the US.

The FPPI was a foreign entity when the goods were obtained or purchased for export was in the US.

You use the Employer Identification Number (EIN) as the USPPI’s identification number in the AES.

For an FPPI, you can use various personal numbers as identification in the AES, such as:

• Passport number
• Border crossing number
• DUNS number
• Any number provided by the CBP

Can you List a Customs Broker or Freight Forwarder as a Principal Party in Interest in an AES filing?

When making a filing in AES, you can list a customs broker or freight forwarder as a Principal Party in Interest.

You can record a customs broker as a PPI under the following conditions:

• When you have a broker as the importer when goods brought into the US are for storage or immediate use. When you import the goods without any alterations.
• When the US based customs broker brings in goods from outside as an agent of a foreigner listed as the importer.

When you ship these goods without any alterations.

You can have a freight forwarder as your PPI when making AES filing under the two conditions.

You can have the forwarder assume the role of order party in the US.

Alternatively, the forwarder acts as a customs broker described as the lead importer in the following scenarios where:

• Overseas goods are brought into the country for storage or immediate use and later sees them exported without alterations.
• Overseas importation and later the unchanged export on behalf of a foreign capacity.

What are the Ultimate Consignee Types in AES?

You are required to select a single consignee from the four ultimate consignee types available.

When making your selection, you base your choice on the most applied function of the business.

Where you have more than a single option for an often applied business function, you have to choose the most often.

The following are the four types of ultimate consignees:

1. Direct Consumer

You find this ultimate consignee encompasses non-governmental entities such as institutions or companies.

These entities utilize the exported items internally as a production factor with no plans of resale or redistribution.

2. Government Entity

A government entity is an institution, organization, or enterprise controlled by the government.

3. Reseller

A reseller is not affiliated with the government and can be a wholesaler, retailer, or distributor.

Other/Unknown

You find this ultimate consignee defined as neither being a direct consumer, or reseller, or known government entity.

How do you Determine which Ultimate Consignee Type of Reporting in the Automated Export System (AES)?

When determining which ultimate consignee you should report to in the AES, you evaluate the business function.

You select an ultimate consignee, keeping in mind which has the most applied business function.

You can have situations where two ultimate consignees suffice concerning your business function.

In such a scenario, you go with the ultimate consignee with most applications.

Can you list an NVOCC as a carrier in AES?

NVOCC is an abbreviation of Non-Vessel Operating Common Carrier.

NVOCCs make it easier for their customers to make exports and/or imports by handling all the necessary arrangements on their behalf.

As their name suggests, NVOCCs do not own maritime vessels, and neither do they operate them.

NVOCCs enter into agreements with vessel operators for customized Bill of lading called House Bill of lading.

You can list an NVOCC as a carrier when filing AES for shipments intended for sea freight.

You should, however, identify in the AES the Standard Carrier Alpha Code belonging to the NVOCC.

Is the Carrier Subject to AES Fines and Penalties?

Any party involved in an export transaction can be penalized and fined for several reasons.

As a carrier, you can be penalized or fined for failing to honor your responsibilities, falsifying EEI, or misusing the AES.

The penalties imposed on a carrier can be criminal or civil, depending on the offense’s severity.

Some of the violations that can result in criminal and civil penalties include:

• Failure by the carrier to file with AES or presenting false information.
• The conduction of illegal goings-on by carriers.
• Failure to pay imposed fines and penalties.
• Where a carrier makes filing violations and fails to report them.
• Making filings later than the timelines allow.

Do you need to File Shipments of Empty Containers if the Value Exceeds $2500?

Containers are the basic unit you use to transport and deliver cargo in sea freight.

There are many container types that you can use, with each specially built to transport a specific type of shipment.

The filing of AES is for export goods, where there’s a USPPI getting some benefit from the sale and a consignee.

You do not need to file for an empty container not offered for sale or purchase by any part.

Who is Responsible for AES Filing?

Providing EEI during AES is a mandatory process for goods with export licenses and those with values exceeding 2,500 USD.

Goods heading to Canada save for self-propelled vehicles face exemptions from filing with AES.

You find filing with AES is a responsibility performed by three possible parties including:

• The US Principal Party in Interest (USPPI) is the exporter based in the US.
• An agent

I know you’d like to learn more about automated manifest system.

That’s why this guide will answer all questions you have been asking about automated manifest system (AMS).

Let’s dive right in.

What is an Automated Manifest System?

An automated manifest system is part of the USA customs clearance process manned by the customs and border protection department.

If you are importing to the USA, you have to fill in your details on the AMS.

Information that you should fill in the AMS includes details of your cargo, including the contents.

How does AMS Work?

The process of filing AMS is a must for any shipment passing through or entering the USA.

It involves submitting details of your cargo through an online platform to the customs and border protection unit.

You must submit the details before your cargo reaches your entry point in the US.

Either you or your supplier is responsible for paying the necessary fee for AMS depending on your contract.

Who should File AMS?

Three main parties can file AMS before your goods arrive in the USA.

You can have your supplier file for you if the contact you have with them allows for that.

Your freight forwarder can file your cargo detail on the AMS depending on the contract.

Alternatively, you can fie the information by yourself.

However, regardless of who files cargo details on AMS, you counter to check on the information before submitting the details.

This prevents the customs authorities from charging you a penalty for wrong information.

You also have to ensure you submit your AMS at least 24hours before your shipping vessel departs from a country of origin.

What is AMS Code?

An AMS code is a code that distinguishes your cargo when filing it on the system.

The code depends on the type and nature of your goods, their quantity, and country of origin.

What is the Difference Between Automated Manifest System and Importer Security Filing?

The automated manifest system allows you as an importer to report the details of your cargo to the US customs before sailing from a country of origin.

Importer Security Filling allows a third party to register your cargo details to the customs system before you load them to a carrier.

What is the Importance of AMS?

AS plays a crucial factor in facilitating the customs clearance of your goods. Its importance includes:

Faster Processing

AMS is an online platform that lets you upload the details of our cargo entering the USA.

This is relatively easy and faster compared to filling paperwork.

Faster processing saves you the time you can translate into profit by focusing on other aspects of your business.

Future Reference

Since the process is automated and online, the customs authorities store the information securely for future references.

This allows them to view your shipping history, which can facilitate other aspects of importation.

Easy Identification

Proper filling of an AMS helps the customs authorities to identify your goods easily and handle them accordingly.

For instance, they can handle hazardous and other restricted goods careful since they know what to expect.

It also helps in identifying potential threats in the imports and separate before they become dangerous.

Improves Accuracy Filing

You, as an importer, is responsible for filing the necessary information on the AMS portal.

As such, there is minimal chance of filing errors since you know your cargo.

Paying the penalty on the wrong information you submit also ensures you only have the right information on the portal.

What is AMS Filing Fee?

An AMS filing fee is the amount you pay for filing your cargo on the AMS.

The purpose of this fee is to facilitate processing your shipment into the USA.

This fee depends on the bill of lading or airway bill for your cargo.

It is your responsibility or that of your supplier to pay for the AMS fee.

Which Modes of Transports are Applicable for AMS Filing?

Common modes of transport that require AMS filing are ocean and air freight.

This is because most people use these modes to import goods to the USA.

However, custom and border department require AMS filing for other modes of transport such as road and rail.

What is the Advantage of AMS Freight Tracking System?

The main advantages of using AMS freight tracking system including:

• Faster process which reduces the need for filing paperwork
• Facilitates future referencing since all the documents are in soft copy
• It gives the customs and border control department an easy time of identifying potential shipment into the USA.
• Facilitates access of cargo information by other government agencies such as port authorities and freight lading professionals
• Freight tracking system eliminates bureaucracy and reduces diplomatic tension between countries due to trade. This is by ensuring there is a faster and easy customs clearance of your goods.

What is Ocean AMS Filing Requirements?

The requirements for ocean AMS filing include:

• Your details and that of your freight forwarder including name and address.
• Container details including the seal number
• Hazardous goods code
• Description of your goods including the buying price and quantity
• Last foreign port of departure or the port of origin
• Details of your carrier, including country of ownership and necessary documents. You should also indicate the voyage number and SCAC.
• The expected date of arriving in a given port of entry in the USA.

What are the Time Limits for Submitting Documents in AMS?

You should file documents in AMS at least 24hrs before the scheduled departure time for your cargo from the country of origin.

It is important to consider if your cargo is passing through another country before it arrives in the US.

In such a situation, you need to file your documents in AMS 24hrs before your goods depart from the last foreign port.

How is AMS Filing Done?

There are two ways in which you can file your AMS. That is, cargo reporting and conveyance report.

Cargo reporting takes place at least 24hrs prior to loading your goods to a carrier from your port of origin.

If your goods are already on the way, you should fill an import security filling data element.

You should attach the ISF plus two documents when cargo reporting.

Conveyance report is one that you submit before your goods arrive in the USA.

Your forwarder is the one who usually submits this report.

A freight forwarder uses the bill of lading and commercial invoice to derive information needed on the conveyance report.

What are the AMS Customs Requirements and Checklist?

An appropriate AMS has the following customs requirements and checklist:

• Your name and address and that of your forwarder.
• Container seal number.
• The definitive description of the carrier. It includes country of documentation, voyage number, and SCAC (Standard Carrier Alpha Code).
• Hazardous material code if you are shipping such goods.
• Container number
• A definitive description of your cargo. This includes the quantity and its weight.
• Port and country of origin
• The last port to dock before departing for the USA
• First foreign point of entry where your carrier takes procession of the cargo
• Expected arrival date to the first point of entry in the USA

The information you provide must be correct and verifiable.

Failure to do this may lead to various consequences by the customs authorities.

What is the Consequence of Not Submitting the Correct Details to AMS?

There are various consequences of not filling the right information on AMS.

They include:

• Paying a monetary fine depending on the type of information you have left out
• The customs authorities may opt to seize your goods and carry out further inspection for potential threats. This is common if they suspect that you are importing illegal goods.
• There is a delay in receiving your goods into the USA. This is to allow the customs authorities to inspect your goods and submit the correct information.
• A delay in receiving your goods due to customs holding it can end up costing you financially. This is because it denies you the chance of selling your goods to the final consumer.
• Holding goods can bring about diplomatic tensions between the US and the country of origin, especially if it is a persistent issue. This is because it denies trade opportunities for the two countries.

How does AMS Save Time?

There are several ways through which AMS saves time.

For example, using AMS removes the need to physically present your documents for customs clearance by the customs and border protection department.

AMS allows for faster clearance of your cargo by the customs authorities.

This is by submitting the correct information on the AMS.

The customs authorities take less time verifying and cross-referencing on your shipping history.

This is because they can easily retrieve your details online compared to searching through documents.

It also allows the customs authorities to focus on suspicious goods before they arrive in the USA.

Such goods include prohibited and restricted and those whose owners have failed to file AMS.

What Happens if you don’t Comply with AMS?

There are various consequences of not complying with AMS.

For instance, customs and border protection department may hold your goods for further investigation.

In certain instance, the customs may not allow the entry of your goods into the USA.

This may force you to ship back your cargo to another destination or the country of origin.

Another consequence of not complying with AMS is that you may have to pay a fine for your goods to enter the US.

Therefore, you must ensure you comply with all the AMS requirements before shipping goods into the USA.

This includes filing the right information about your cargo.

What Parties are Required to Participate in AMS?

The carrier of your goods is the one required to provide the necessary information on AMS.

Such information includes the expected date of arrival for your cargo and its contents.

However, other parties may participate voluntarily in AMS to facilitate the shipping process.

These parties include:

• An automated broker interface filer. This can either be a customs broker or you as the importer.
• Container freight station
• Express consignment carrier facility

Since their participation is voluntary, the information they provide is direct to the customs and border protection department.

If a Freight Forwarding Company does not Fall into One of the Categories of Eligible Participants, may it Participate in AMS?

No. It is impossible for a freight forwarding company not on the qualified categories to participate in AMS.

If that is the case, such a forwarder should submit the information to your goods’ carrier.

They can alternatively submit it to one of the other parties that are eligible to participate in AMS.

What Methods may be used to Transmit Information through AMS?

The three methods you can use to transmit information through AMS are:

• Developing a software interface. When using this method, you have to adhere to your customs automated manifest interface specifications.
• Providing the necessary data to a centre that offers AMS services.
• Purchasing communication and software that is commercially available.

What is a Split Shipment?

Split shipment is a situation where a shipment of your order takes place through more than one carrier though it only uses one airway bill.

It is common in air freight.

There are different reasons why you can have a split shipment.

For instance, your cargo may bulky for a single carrier to ship it.

Split shipment can also be due to storing your goods in different locations.

Rather than wait for consolidating your cargo before shipping, you can opt to have them separately.

You don’t pay extra during split shipment.

Instead, your carrier quickly arranges how to ship your cargo using the next available carrier.

When a Carrier Splits a Consolidated Shipment, is it Required to Send any Information for Lading’s Associated Bills?

Yes. Your entire goods usually use one bill of lading which the first carrier usually carries and submits to the AMS.

The subsequent carriers won’t have to provide a separate bill of lading.

For Consolidated Shipments, Do you need Separate BOL Record for Each Shipper/Consignee Relationship?

Yes, you have to provide separate BOL record for each shipper/consignee relationship.

This facilitates proper documentation of the different consolidated cargoes.

It also becomes easier to inspect and clear the different goods by the customs authorities.

Is an AMS Carrier Required to Request a Permit to Transfer Electronically through AMS?

Yes. An AMS carrier has to request a permit to transfer electronically through AMS.

Such a permit is to allow the carrier to submit the right information on the AMS.

It also allows the carrier to share the information with all the parties involved in shipping your cargo.

To What Party does AMS Send the Electronic Local Transfer Authorization Message?

AMS sends an electronic local transfer authorization message to either you as the importer or your freight forwarder.

This allows for easy submission of the relevant information on the AMS.

Now, that’s everything you need to know about automated manifest system (AMS).

However, in case you have any questions, feel free to contact us right away.

Australia is among the top ten largest customers for Chinese exports.

More than 25% of Australia’s imports come from China, a clear indication of a booming trade between these two nations.

This guide should be of interest if you’re seeking an easier way to import goods from China to Australia.

It captures all the fundamental aspects regarding shipping commodities from China to Australia.

Let’s get straight away and discuss all the relevant details herein;

Things You Need to Know Before Shipping from China to Australia

When shipping to Australia from China, you ought to know a number of elements, which act as guiding principles.

The importance is to facilitate movement and enhance convenience when transporting products between these nations.

Some of the things you need to know to include the following;

• There are goods, which are either restricted or prohibited by the Australian authorities from entering her borders.

Ideally, Australia has a self-contained eco-system, which it is strict to protect.

Therefore, you must determine the types of goods permitted into this country.

• If you are importing commodities from China or any other overseas country to Australia, you can never use P.O Boxes or lockers.
• Always ensure you have all the necessary and accurate shipping documents.

Failure to produce the right documents often leads to unprecedented delays or denial of entry.

Moreover, make sure the value package description matches the details in commercial invoice.

• Ensure you use a courier service provider that is fully aware of rules and regulations stipulated by the customs authority.

In Australia, it is prohibited to ship some commodities through countries such as Egypt and Bangladesh.

• Should your cargo fail to clear after 30 days, the Australian Customs is at liberty to destroy it. Therefore, always act swiftly in case you have issues that could delay the clearance process.
• Always consider the type of packaging materials you use on your products. Some specific packaging materials are never allowed into the country.
• All imported goods with a value of less than AU$1,000 apply to Goods and Services Tax (GST).
• GST is charged at the point of sale by the vendor and not necessarily at the border.

Main Products Imported from China to Australia

You can always import a myriad of products from China to Australia.

However, you ought to understand that Australia has stringent safety standards.

Therefore, all the products imported from China must pass through strict standards before permitted to the Australian market.

Here are some of the major products often imported to Australia from China;

• Footwear
• Furniture
• Construction Machinery
• Electronics
• Apparel
• Games
• Toys
• Sports equipment
• Medical equipment
• Machine spare parts
• Iron and steel
• Automobiles
• Paper products
• Organic chemicals
• Shoes
• Handbags
• Copper

Technically, there are plenty of other products you can always ship from China to Australia.

However, you must ensure they meet the recommended quality standards.

Shipping Duration from China to Australia

Delivery timescales when shipping from China to Australia often vary depending on a wide variety of elements.

Of course, the choice of an ideal shipping method between ocean and air freight is largely determined by the actual duration.

The precise duration is also dependent on the exact ocean port or airport of origin to that of destination.

For instance, shipping from Guangzhou to Melbourne takes approximately 24 days LCL.

Ningbo to Brisbane takes about 12 days LCL

Tianjin to Sydney takes 21 days LCL

Nansha to Melbourne takes 25 days LCL

Huangpu to Sydney takes 24 days FCL and 27 days LCL

Huangpu to Adelaide is approximately 62 days LCL

Wuhan to Sydney can take about 36 days FCL

Shenzhen to Sydney is 21 days LCL

Shanghai to Sydney takes 27 days FCL and 19 days LCL

Xiamen to Sydney is 36 days LCL

Nonetheless, the duration is between 12-62 days based on the type of container and port-port distance.

Similarly, when using airfreight, the duration is also dependent on the airport of origin and that of destination.

The specific route your preferred courier uses may determine the duration of shipping goods from China to Australia.

But the average duration ranges from 2-8 days based on the mentioned factors.

For instance, from Shanghai Pudong to Adelaide, it takes roughly two days.

On the other hand, it takes about eight days to ship from Beijing to Sydney.

Nevertheless, you need to ensure you inquire from your preferred courier service provider to determine the approximate transit time.

Means of Shipping from China to Australia

Of course, there are only two major ways you can use to ship goods from China to Australia.

However, each mode of shipping, in this case, has its advantages and disadvantages.

It is thus vital to know the most suitable one for your needs before making an ultimate choice.

Ocean Freight from China to Australia

This refers to using container-loaded ocean vessels to transport the goods from one port of origin to another destination port.

Ocean freight takes an average of 2-3 weeks and, in some instances, up to four weeks.

Your consignments are moved between preferred port of origin and arrival by a particular ocean carrier aboard a container ship.

Usually, ocean freight utilizes two types of containers, which include the following;

• Full Container Load (FCL) – This type of shipping service allows you to transport your shipment without sharing container space with other commodities.

It is an ideal and most cost-effective option to consider for relatively large consignments.

• Less than Container Load (LCL) – With LCL shipping, your cargo shares container space with goods from other companies.

This is a suitable option for businesses with comparatively smaller shipments to ship from China to Australia.

Here are some of the basis you may use to consider the ideal alternative between FCL and LCL for your shipments.

FCL Consideration

FCL shipping from China to Australia can be an ideal consideration on the following grounds;

1. Your consignment must be in Australia within a specified date
2. The seller can load and seal a container, and the recipient can unload it
3. Your shipment is not suited to share a container with other products
4. Shipping a freight big enough to fill at least half the capacity of a 20ft container

LCL Consideration

LCL would be a suitable choice for you based on the following aspects;

1. The cargo is not bigger than six standard pallets
2. If you hardly have access to facilities to load and seal a container in China
3. Your cargo can safely be transported on a shared container
4. The commodities are not needed urgently by the recipient in Australia

Irrespective of the type of shipping container you might consider, it remains a longer process for transporting containers from China to Australia.

The freight forwarder you work with helps you to select the right type of container for your consignment between LCL and FCL.

Airfreight from China to Australia

Airfreight is by far the fastest way to transport your consignment from China to Australia.

This method allows you to complete some shipments in about two days.

If speedy delivery of your shipment is a priority compared to cost, then it is an ideal option to consider.

Moreover, airfreight remains a suitable alternative if your consignment contains perishable products that will benefit from a short transit time.

Also, you may consider it when shipping a small shipment, at most three pallets and if the goods are of high value, thus require stringent safety levels.

Nonetheless, it is relatively expensive compared to ocean freight.

Shipping Lines from China to Australia

It is imperative to always find a high-quality shipping service when shipping to Australia.

A reputable shipping company guarantees your cargo safety and timely delivery.

Several companies offer excellent shipping services based on your port of origin and destination.

The common shipping companies you may choose for the services include the following;

• Century Cruises
• COSCO
• MISC
• CMA/CGM
• Marfret
• OWL
• Line MSC
• Hamburg Sud
• Canmar
• Hapag Lloyd
• OWL
• China Merchants Group
• COSCO Shipping Development
• Wallenius Wilhelmsen
• APL
• NYK Line
• Chipolbrok
• China Merchants Energy
• China Changjiang National Corporation
• China Shipping Group

The Best Courier Companies from China to Australia

You may consider the following Courier services companies when sending a parcel or relatively lightweight consignment from China to Australia;

• DPEX- Express
• Hong Kong Post E-Express
• Quantium-General Cargo
• Aramex
• Omniparcel
• UPS Saver
• DHL

When choosing any of these courier companies, you must figure out other implications such as cost and expected delivery time.

Cost of Shipping from China to Australia

Many factors determine the cost of shipping goods from China to Australia.

For instance, location, mode of shipping, and size of the consignment are the main determinants of the actual shipping costs.

Moreover, the type of container you are using, whether parcel, LCL, or FCL, also influences the overall shipping costs.

Technically, your shipping quote from China to Australia will take into account the following aspects;

• Type of products you are shipping
• Volume, weight, and dimensions of the consignment
• Preferred delivery method, i.e., door to door, port to port, port to door or door to port, etc.
• Choice of ocean or airfreight

Here’s a breakdown of the cost of shipping from China to Australia based on the mode of shipping

Cost of Sea Freight from China to Australia

Sea freight is arguably the cheapest means of transporting goods from China to Australia.

It is also cost-effective since you can always use it to ship different reasonably bulky consignments.

The actual shipping rates vary from one company to another.

Also, the specific port of origin and port of destination determines the actual shipping rates between these two nations.

In most cases, you can always use a shipping calculator provided by the shipping company to determine the actual cost based on several aspects.

On average, though, the cost of shipping a 20ft container is approximately $1700.

A 40ft container, on the other hand, would cost roughly $2,200.

According to Australia Trade, the cost of renting a container is between AU$ 150-250 per cubic meter or 1,000 kilograms, whichever is greater.

However, the table below shows average shipping rates for door to door shipments from selected ports for a load of 200kg/1 cbm.

Cost of Air Freight from China to Australia

Shipping goods from China to Australia via cargo planes is relatively expensive compared to sea freight.

Often, kilogram is the unit calculation for air freight.

Most airlines have a standard for determining the actual and dimensional weight depending on the largest value.

You can calculate the weight of air freight in two major ways;

• Charging according to the cargo weight
• Charging based on the dimensional weight

The volume of the cargo is then divided by 6000 to determine its weight.

For instance; dimensional weight for a consignment covering 100cm by 100cm by 100cm weighing 20kgs would be;

(100 x 100 x 100) cm/6000 = 167 kg.

In essence, the dimensional weight of the shipment is heavier than actual weight.

Therefore, the airline will charge you for 167kgs.

However, the actual cost per kilogram is dependent on the specific international transport and Logistics Company of your choice.

Different freight carriers such as DHL, FedEx, UPS, and USPS among others, offer varied rates for shipping consignments.

In most instances, the carriers always charge airfreight costs based on a greater number between actual and dimensional weight.

The trick is always to pack your consignment skillfully and minimizing the volume to save a considerable amount of money.

Moreover, you also need to work with an experienced freight forwarder such as Tj chinafreight.

It allows you to come up with better solutions for shipping from China to Australia at cost-effective rates.

Cost of Express Shipping from China to Australia

Being the fastest and easiest mode of transporting goods from China to Australia makes it the most expensive than sea and airfreight.

Unlike air freight, express shipping cost is calculated by dividing the volume of the consignment by 5000.

For instance, a cargo with package measuring 50cm by 50cm by 50cm and actual weight of 10kg; the dimensional weight shall be;

(50 x 50 x 50) cm / 5000 = 25kgs.

The service providers will always work with the greater weight between actual and dimensional weight.

Also, express shipping rates from China to Australia vary depending on particular courier service providers.

Factors Affecting Shipping Cost from China to Australia

Cost of shipping is a fundamental aspect when transporting goods from China to Australia.

As a reseller, it is always important to figure out the cost and determine the best ways of finding cost-effective shipping techniques.

Numerous factors affect the actual cost of shipping goods between these two countries.

However, the most notable ones include the following;

The Cost of Buying the Product.

Product cost is a vital element, which affects shipping costs directly.

In Australia, if you’re importing goods worth at least AUD$ 1000, you will have to take care of import duty and GST on them.

Additionally, insurance charges for high-value products is normally costly.

Eventually, you’ll have to incur extra charges, which may end up eating into your profits.

Therefore, you need to determine all these factors to enable you to negotiate with your respective manufacturer accordingly.

Shipping, Logistics, and Distribution Costs

International shipping is quite broad; hence factors in a number of logistics and distribution costs.

For instance, you must always consider the inland transportation costs for transporting the manufacturer’s consignment to the port of origin.

Similarly, the cost of transporting the goods from port of destination to your warehouse, office, or residence is a factor to consider.

In some cases, warehousing charges also come to play, especially where you store the consignment for a certain period due to varied reasons.

Importantly, you also need to factor in the costs surrounding distribution of the products to retailers.

Technically, all these costs affect the overall shipping cost when importing goods from China to Australia.

Therefore, it would be ideal to consider a suitable incoterm guaranteeing cost-effectiveness in the entire process.

Tariffs and Duties due to China on Export and Australia on Import

Ideally, different products are categorized into various tariffs.

It thus means you’ll pay different rates depending on the specific tariff a particular product falls into.

Importantly, you need to find other aspects of the products such as free trade agreements, excise duty, etc.

Also, you may want to know whether the goods are exempted from duties.

Ultimately, it may affect the overall cost you’ll incur when shipping the consignment between these two nations.

Taxes and tariffs on your Imported Goods

Australian customs authority is strict as far as payable taxes and duties for imported products are concerned.

Calculation of customs import duty is often as a percentage of price you pay for the products.

The rate may range from 0-10%, but in most instances, 5% is the common rate for several goods.

Additionally, the customs will charge you about AUD 200 as import entry costs and processing charges.

Goods and Service Tax (GST) is also charged based on the following aspects;

• Goods valuation
• Amount of customs import duty
• Insurance and transportation of the goods

Typically, GST is charged at a rate of 10% of the final amount.

Cost of Container when Importing from China to Australia

The cost of shipping container varies majorly based on the size.

Shipping containers come in two sizes; 20ft and 40ft.

Cost of a 20ft container is approximately AUD 2,200.

For a 40ft container, you’ll pay about AUD 2,900.

However, there is also an option of renting the container, which is a more cost-effective approach, especially for frequent buyers.

Essentially, the cost of renting a 20ft container is about AUD 150 per cubic meter or 1,000 kilograms.

On the other hand, the cost of renting a 40ft container is approximately AUD 250 per cubic meter or 1,000 kilograms.

These are mere approximates, which tend to change often depending on prevailing factors such as demand.

How to Pay for Shipping Costs when Dealing with China-based Freight Forwarder

When dealing with a Chinese-based freight forwarder, you can always use several options to pay for the shipping costs.

Importantly, you need to choose a suitable option, which fits your needs accordingly.

The essential freight payment methods you can use are as follows;

Cash against Goods

This refers to a check describing a specific transaction and what’s need to be paid.

Like any other forms of payment, cash against goods is also governed by a bill of exchange.

In this case, the freight forwarder relinquishes all control over goods whenever they’re shipped.

To protect the freight-forwarder, your bank guarantees shipment by accepting to pay for products outlined by bill of exchange.

Technically, your bank becomes liable to the freight forwarder upon receipt of the consignment.

Cash Against Documents

Virtually identical to the cash against goods, this method also hinges on the bill of exchange.

In this mode of payment, the freight forwarder gives your bank’s control.

Essentially, your bank is allowed to release the consignment and related documents only after receiving payment.

In other words, the freight forwarder ships the consignment to you in Australia.

You then pay your bank then the bank pays the freight forwarder.

Cash in Advance

It is arguably the simplest transaction method you can use to pay a Chinese-based freight forwarder for shipping goods to Australia.

Technically, you pay the freight forwarder in advance, way before the shipment is transported to your destination.

However, this type of arrangement is dependent on your relationship with the Chinese-based freight forwarder.

Letter of Credit

This method allows your bank to guarantee payment of freight costs on your behalf.

The bank only releases the payment once you receive the consignment facilitated by your freight forwarder.

However, letters of credit are usually detailed and largely depend on a bill of lading.

How to Select Cheapest and Fastest Way of Shipping from China to Australia

When shipping goods from China to Australia, vital factors to consider include, cost, convenience, safety, and transit time.

Therefore, you must base your choice on such factors to ensure you find the most appropriate one for your needs.

Some of the options you may want to go for include the following;

FCL Ocean Freight from China to Australia

FCL ocean freight is an ideal option when you’re shipping goods large enough to fit at least one container.

As such, calculation of the freight is based on FCL.

It is a relatively fast, convenient, and safe ocean freight method when shipping from China to Australia.

In FCL, the supplier loads and seals the consignment and is shipped to your final destination.

Notably, when FCL shipment arrives at your preferred port in Australia, it can only be delivered by truck since it is large.

LCL Ocean Freight from China to Australia

LCL ocean freight is a suitable choice if you’re shipping goods of a small volume of less than 15CBM.

Essentially, it entails combining your cargo with other shipping consignments for the same direction.

It is an ideal freight option to consider if you are shipping smaller cargo, which cannot necessarily make FCL a viable option.

Since LCL cargo is relatively small in volume, they are always delivered to your destination using trucks or express companies.

In LCL, a cubic meter (CBM) is used as the measurement unit for calculating freight cost.

Express Shipping from China to Australia

It is the fastest, easiest, safest, and most convenient shipping method for shipping goods from China to Australia.

Choosing this option means you won’t worry about customs clearance and duty payment.

Additionally, you’ll track your consignment easily at any time hence planning appropriately.

However, the unit price for this option is usually high compared to LCL and FCL ocean freight.

Therefore, it would be a suitable choice if your consignment contains fragile goods.

You can also consider it if you are shipping perishable products or when in urgent need of the goods.

Cheapest Time for Shipping from China to Australia

Freight rates, especially FCL sea freight and air freight rates, are affected by seasonal factors.

When shipping from China to Australia, remember to consider peak seasons in both China and Australia.

Some of the major peak seasons between these two countries include the following;

Chinese New Year

It is arguably the most celebrated season in a typical Chinese calendar.

Commonly known as CNY, it entails celebrating beginning of New Year on Chinese calendar.

This festive season often runs for at least 15 days, thus making many importers to rush and ship their consignments before the holiday begins.

At this time, the shipping cost is comparatively high due to the rush hence would be best to avoid it when interested in cutting shipping costs.

Chinese New Year often begins in the second week of February every year.

Golden Week

In China, Golden week refers to a collection of three national holidays celebrated jointly within 7-8 days.

It is always important to calendarize this event since most operations are usually halted to allow the celebrations.

Therefore, most importers tend to rush to beat the deadline before the holiday begins hence inflating the shipping rates.

Dragon Boat Festival

This is a traditional holiday normally celebrated on the 5^th day of the traditional 5^th Chinese month.

Essentially, this holiday serves as a commemoration of the life and death of a famous Chinese scholar known as Qu Yuan.

As such, it would affect shipping operations and somewhat raise the freight cost in a bid to beat the date.

Therefore, you can always plan early to ensure you ship your cargo earlier than the actual day to avoid incurring additional costs.

Holiday Shopping Season

For the longest time, China has been an ideal holiday shopping destination for many international customers.

Christmas, Singles day, Double Twelve, and 618 shopping festivals are among the popular holiday shopping seasons in China.

Ideally, it means the traffic is usually high, thus creating more demand for shippers.

Often, this increases freight cost, which can be disadvantageous, especially if you’re shipping large volume consignment.

Generally, to obtain the best freight rates when shipping from China to Australia, always ensure you observe all the major holidays.

It will enable you to plan accordingly to avoid the inevitable rush and get cost-effective rates.

How Incoterms Affect Shipping Prices from China to Australia

Essentially, incoterms refer to “how far” the supplier shall ship the consignment.

It translates to the amount you give the supplier for shipping.

The specific incoterm you choose determines how far you’d wish the Chinese supplier to ship your cargo.

Ordinarily, any Chinese supplier will quote a price based on the incoterm.

Without incoterm, you wouldn’t compare prices between different suppliers.

In a nutshell, determining the overall pricing for shipping cargo from China to Australia is largely dependent on the selected incoterm.

The Best Incoterm When Shipping from China to Australia

Choosing the best incoterm when shipping from China to Australia is dependent on a wide range of factors.

Ideally, the best incoterm would always be one that takes the shipment as far as possible.

However, for natural reasons, Delivered at Place (DAP) would be the ideal incoterm, especially for an inexperienced importer.

Under DAP terms, your supplier is responsible for delivering the goods from factory floor to your specified location.

DAP also includes inland freight to a specified address, be it your home, warehouse, or office.

The best would be to order from your supplier according to FOB terms and DAP shipment from your freight forwarder.

It simplifies the process, and at the same time enhancing maximum cost control and transparency.

For an experienced importer, EXW would be the best incoterm, particularly if you have a broad network in the industry.

EXW only gives you the quote for purchasing the commodities at the factory price.

You will arrange for picking, inland transport, sea freight charges, port discharge charges, and export clearance.

And this is vital since you can easily negotiate the shipping costs through your freight forwarder and getting a better deal.

Taxes and Customs Duties When Importing from China to Australia

Taxes and Customs duties are imperative components in international shipping.

When you are importing from China, your goods are never subjected to any export tax.

You only need to ensure that all aspects and paperwork surrounding the goods are in place to facilitate a faster export clearance process.

However, when the goods arrive in Australia, they are subjected to

If you’re wondering what bulk and break bulk cargo is, you will find all information right here.

This guide covers everything, from definition, classification, to shipping, among other vital aspects.

So, if you want to learn more, read this guide.

What is Bulk Cargo?

In shipping, a bulk cargo is any good shipped unpackaged, not inside pallets or boxes, and in large quantities.

The commodities can either be in liquid, granular, or solid form. Examples of bulk cargo include wheat, fertilizer, coal, natural gas, and oil.

Generally, bulk cargo comprises of the goods we need for our day to day use.

What are the Major Bulk Cargoes in International Shipping?

There are two major categories of bulk goods: liquid and solid bulk goods

Solid Bulk Cargo

There is a variety of Solid or dry bulk cargo ranging from produce to raw materials.

Importantly, all goods falling in this category are homogenous and are unpacked.

Mostly, they are stowed in ships using silos, cranes, conveyor belts or hopers.

These type of goods usually need to be kept dry during the whole transportation period.

Examples of solid bulk cargo include sugar, cocoa, coffee, iron ore, fertilizer, cement, coal, soy, and wheat.

Notably most agricultural product used in the global food industry falls under this category.

During transportation of Solid bulk cargo, the ‘Dangerous Good’ label is often applied.

This is to ensure careful loading and transportation of the goods.

Poor loading may lead to the shifting of the commodities to one side of the ship causing instability and eventual accidents.

Solid Bulk Cargo are transported in Bulk Carriers which ensure that all the advisable transportation standards are met.

Liquid Bulk Cargo

Liquid Bulk Cargo, comprises of any free-flowing commodity loaded and unloaded from the ship using pumping stations or pipelines.

This type of cargo is normally classified into four groups:

• Hazardous liquids – Liquefied Natural Gas (LNG) and Liquefied Petroleum Gas (LPG). These liquids are generally harmful to organisms and the environment.
• Non-Hazardous Liquid – Such as cooking oils, vegetable oils, juices, milk, and any other liquid that does not pose any harm to an organism and the environment.
• Edible Liquids – These are non-hazardous liquids that can be consumed without causing substantial harm. Examples include edible oil, wine, juices, milk, etc.
• Non-edible liquids – These liquids fall under both the Hazardous (LPG and LNG), and non-hazardous category (such as aqueous dyes and glycerin).

Liquid Bulk Cargo are transported in specialized vessels with tankers to hold the commodities.

What does Break Bulk mean in Shipping?

Contrary to bulk cargo, break bulk cargo is unitized mostly in form of drums, crates, pallets or bags.

Also, break bulk can be non-unitized, for example steel or vehicles. Generally, break bulk cargo is used when to refer to cargos that can be quantified.

Break bulk can be used to refer to goods which cannot fit in the largest container. Consequently, they are subdivided into smaller units and shipped collectively.

What is the History of Break Bulk Shipping?

Prior to the advent of containerization, before the 19^th century, shipping was quite tedious and involving.

The process of shipping involved organizing commodities to fit in the vessel’s storage space.

The term break-bulk was coined to mean breaking bulk cargo in to smaller quantities.

Notably, before the container era, all commodities were shipped as break bulk.

Specialization

After the world war, the narrative changed. Specialization erupted with various commodities having customized vessels for their transportation.

During this time, goods were packed in bales, which were loaded and unloaded by human labor.

This was expensive considering a large workforce required.

Also, all the cargo operations including sorting, loading, clearing, and loading were time consuming.

This era is termed as the ‘man load era.’

Shift to Unit Load

In ‘50s there was a shift from ‘man load’ to ‘unit load’.

This era was characterized by increased specialization of vessels and the use of machines to load and unload commodities.

Such machines include stackers, grab cranes, bulldozers, and conveyor belts.

Containerization

In 1956, Malcom Mclean, an American transport entrepreneur, pioneered the usage of intermodal shipping container.

However, the use of containers picked up at a slow rate with the first use of container for international shipping occurring 10 year later (1960).

Since then, the use of containers for shipping has developed rapidly. In the 21^st Century, about 90 percent of non-bulk commodities are transported in containers.

Containerization on Break Bulk Shipping

Although it may appear that containerization has negatively affected break bulk shipping, there is more to it.

Containerization has only led to the evolution, if not modernization, of break bulk shipping. Currently, break bulk shipping is used to transport bulk goods.

Bulk goods are the goods that cannot fit in the largest container size (40ft) and weigh over 35,000 Kg.

Why is Breaking Bulk Important?

Not all commodities are non-bulk and can be shipped in containers.

Consequently, there is a need for an alternative means to ship such commodities since they are essential.

Breaking bulk provides the required alternative.

You can break the bulk cargo into sizeable units that can then be shipped collectively.

What is the Procedure for Breaking Bulk Cargo?

There are different types of breaking bulk cargo.

First, let us look at the procedure of breaking bulk for commodities such as cocoa:

i. Packing the commodity in sacks, commonly 68 Kg sacks

ii. Transporting the sacks to the airport

iii. Loading the sacks into slings (these are pallets with lifting slings). A sling can accommodate 30 to 35 sacks

iv. Arranging and grouping the slings next to each other depending on the capacity of the onboard crane.

v. As the ship’s lifts one sling aboard, more slings are replaced into the vacated space until when ship’s hold is full.

Note: The groupings of the slings will remain intact during the entire transportation. This is to ensure easy offloading when the cargo reaches its port of destination.

Also, it reduces the risk of damage to the commodity.

For other break bulk commodities, the below procedure is applicable:

i. Manual assembling and classification of a cargo at a warehouse, such a cartage broker’s or manufacturer’s warehouse.

ii. Transferring of the cargo to surface transport vehicles.

iii. The vehicles transport the cargo to a transit shed found in the dock area. Transit shed has storage facilities to hold the cargo.

iv. The cargo is then moved from the transit shed to the dockside.

v. From the dockside the cargo is placed into the ship’s hold.

vi. Upon arrival at the port of destination, a reverse procedure is applied.

Note: All of these cargo handling procedures involve use of manual labor. This in turn makes the break bulk shipping quite costly.

To counter the uneconomical backlash of break bulk, countries such as the US have done away with the transit shed. This implies that the goods move directly from the warehouse to the ship.

How is Break Bulk Cargo Calculated?

Measurement of a break bulk cargo is in terms of the greatest length, width and height of the whole shipment.

For weight, the break bulk cargo is weighed per freight ton which is an equivalent of 1 cubic meter or metric ton.

Importantly, freight charges are calculated in terms of the measure and not the weight. Take this for example:

A break bulk cargo has a gross mass of 2 metric tons, with the length, width, and height measuring 2.5 meters, 1 meter, and 2 meters respectively.

The shipping line charges a tariff of USD 110. The freight amount will be:

• 5 x 1x 2=5meters
• 5 x 110 = USD 550

Note:  We did not use the metric tons for calculation but instead used the product of the measurement (Length x Width x Height)

What is Liquid Bulk Cargo in Shipping Terms?

Liquid bulk cargo is a shipment in free flowing form that is not packaged or in non-unitary state and is transported in special vessels known as tankers.

This type of cargo ranges from consumable commodities such as cooking oil and juices, to non-consumable products like gasoline and crude oil.

What is Break Bulk Fee?

Break bulk fee can be defined as the amount charged for converting a bulk cargo into unitary state or measurable quantities.

The bulk cargo can be packaged, drummed, or palletized so as to fall in the break-bulk cargo category.

What is Unpacked Bulk Cargo?

Unpacked bulk cargo is simply the opposite of the break bulk cargo.

This type of cargo is loaded un-unitized in the ship’s hold.

What are the Two Types of Unpacked Bulk Cargo?

Unpacked bulk cargo are subdivided into two main categories: solid/dry bulk and liquid bulk.

Solid/Dry Bulk Cargo

These can either be in granular form or any other solid state.

Examples of solid/ dry bulk include grain, coal, minerals, iron ore, and metals.

Liquid Bulk Cargo

These are bulk cargoes in their free flowing or liquid state.

Liquid bulk comprises of commodities such as crude oil, gasoline, chemicals, LNG, and petroleum

What Types of Goods can be Transported on Break Bulk Cargo?

As the name suggests, any good that can break easily can be transported on break bulk cargo.

The good should be able to be packaged in crates, pallets, drums or racks.

Examples of such goods include: wood, paper, bags of cocoa, machinery parts, steel rolls etc.

How can you Transport Bulk Cargo?

Since bulk cargo exceeds the container limit, the use of containers to ship such cargo is ruled out.

If the bulk cargo can be subdivided and unitized or packaged, then you can transport them as break bulk shipment.

However, if the former is not possible, you will have to transport is a bulk cargo.

This will involve loading the entire unpackaged bulk cargo into a specialized vessel referred to as a Bulker.

The Bulker has specialized compartments on its hold to accommodate the bulk cargo.

What is a Dry Bulk Terminal?

Dry bulk terminal can simply be described as the loading and unloading platform during the shipping process of dry bulk cargo.

Importantly, the efficiency of a dry bulk terminal is greatly dependent on the technology employed.

The more sophisticated the technology, the faster the loading and unloading of the dry bulk cargo.

What is Project Cargo?

Sometimes referred to as project logistics or project forwarding; project cargo is the transportation of time-bound commodities that are either high value, large, complex or require heavy lifting.

Such commodities may include break-bulk cargo but not bulk cargo.

What is the Difference Between Project Cargo and Break Bulk Cargo?

Below are the major differences between a project cargo and a break bulk cargo:

• Unlike break bulk cargo which is mostly transported by sea, project cargo can be transported by sea, water, and land.
• Also, project cargo is time-bound with stipulated delivery dateswhich is not the case with break bulk cargo.

What is Meant by Solid Bulk Cargo?

Solid bulk cargo is any unpacked commodity that is not in liquid or gaseous form and is loaded directly to a vessel (Bulker) in large quantities.

The cargo can be in form of granules, particles or any other material. Notably, solid bulk cargo are normally uniform in composition.

Examples include: minerals, iron ore, grain, coal, etc.

Who is Responsible for Breaking Bulk Cargo?

Depending on the agreement with the freight forwarder you can either break the bulk cargo yourself or leave the freight forwarder to handle it.

In some cases, the seller or exporter breaks the bulk cargo by him/herself for easy distribution to various individual consignees.

What is Handymax Bulk Carrier?

Handymax is a bulk carrier with a general deadweight capacity of between 35,000 – 50,000 DWT.

However, modern handymax have a size ranging from 52,000 to 58,000 DWT.

Mostly, these bulkers are used to carry solid/dry bulk commodities such as coal, iron ore, cement, grains, and fertilizer.

However, they can also be small-sized oil tankers.

Importantly, handymax vessel is among the smallest bulk carriers with a typical length of 490 – 650ft (150 to 200m).

Additionally, it has 4 cranes with a lifting capacity of 30 metric tons and 5 cargo holds.

The on-deck cranes make them ideal for transportation of bulk commodities to less sophisticated ports.

How is Bulk Cargo Loaded into Shipping Vessels?

The loading of a bulk cargo is dependent on the type of the bulk cargo.

Discussed below is how both the liquid and solid bulk cargo are loaded.

Liquid Bulk Cargo

Most modern tankers load liquid cargo using discharge/ articulated arm loading systems which are usually found in the off and onshore loading and off-loading facilities.

The articulated arm usually connects to the tanker’s manifold (usually at the center of the ship), to load and offload the liquid bulk cargo.

Also, most tankers load oil at the sea oilfields using a system known as a Submerged Turret Loading System.

Using this system, the vessel is loaded from the bottom using sophisticated technology.

Dry/Solid Bulk Cargo

Majorly, solid bulk cargo are usually loaded to the Bulk carrier using grabbers.

There are two major types of grabbers: Grab for iron ore, and Belt Conveyor.

Loose bulk cargoes are loaded from a stock pile in the loading dock into a hopper in the ship’s hold.

Notably, when loading dry bulk cargo, it is important to ensure the commodity is evenly distributed.

Uneven distribution may lead to one side of the ship having more weight resulting to instability.

What is the Difference Between Handymax and Supramax Bulk Carrier?

Generally, both handymax and supramax are considered the smallest bulk carriers with a capacity of below 60,000 DWT.

The major difference between the two is that a handymax vessel has a capacity of between 35,000 to 50,000 DWT, while a supramax vessel has a capacity of between 50,000 to 60,000 DWT.

Conclusively, the supramax is a bit larger than the handymax, and almost the size of the panamax.

Also the close size proximity of supramax to panamax, makes it more desirable over handymax  as it is able to hold more cargo

What are the Hazards of Solid Bulk Cargo?

The major hazards of solid bulk cargo are:

• Ship instability when the solid bulk cargo is unevenly distributed. In the worst case scenario, this may lead to the ship capsizing.
• Risk of fire or explosion when transporting flammable solid bulk cargo
• Damages to parts of the bulk carrier if the solid bulk cargo is not appropriately loaded
• Cargo liquefaction

What is Bulk Cargo Liquefaction?

Bulk cargo liquefaction is the abrupt change of a solid bulk cargo to an almost liquid or fluid state.

Most bulk cargo that are at risk of undergoing liquefaction are minerals such as pyrites, fluorspar, nickel ore, etc.

At first the solid cargo may look dry during the loading. However, they might be harboring moisture within their particles.

During the transportation by sea, ship’s motions, wave impacts and engine vibrations may result to agitation.

Consequently, the commodity becomes compact forcing the transition from a solid state to a somehow fluid state.

What are the Effects of Bulk Cargo Liquefaction?

The liquefaction of a bulk cargo will result to the shifting of the cargo.

Consequently, this will result to the ship instability, damage of the ship structures, and eventually the capsizing of a ship.

Ultimately, bulk cargo liquefaction may lead to major losses and even death of the crew members on board.

Does Moisture Affect Bulk Cargo during Shipping?

Yes, moisture mostly affects dry bulk cargo during shipping. Notably, it is important to ensure that a dry bulk cargo remains dry throughout the shipping process.

A phenomenon that can occur during the shipping of a bulk cargo is the moisture migration.

This simply means that moisture moves from the warmer part of the cargo to a cooler part.

This happens when a part of the cargo is adjacent to a heat generating part of the ship.

Consequently, the part being heated becomes warmer forcing the moisture to migrate.

When this happens, the cooler part becomes more soggy leading to damage of the commodity.

How much does a Bulk Carrier Cost?

Estimating the cost of a bulk carrier is an uphill task unless you get a direct quotation from a supplier.

However, some recent sales, 2017 there about, in Singapore can give you a rough estimate cost.

A 16- year old 75,100 dead weight ton was sold for around $4.4 million.

Also, a 15-year old DWT Panama was price-tagged at $4.65 million.

What is Break BulkCargo Handling Procedure?

The loading, safe handling, and discharge of a cargo is ensured by the Chief Officer.

He/she can only ensure this after being provided with a cargo manifest which defines the cargo as either hazardous, heavy lift or valuable.

Below are some duties the Chief Officer has to ensure safe handling after receiving the cargo manifest:

• Come up with a suitable loading plan of the ship
• Carry out a stability assessment of the ship
• Give out orders to make the ship conducive. This include instructing the ship compartments be cleaned, and the interior including ventilations, ceilings, and floor be up to standard.
• Document on specific cargoes, such as livestock, valuables and hazardous commodities.
• Note any damaged cargo in the bill of lading.
• Dispatch all the relevant documentation including the loading plan to the relevant parties before the despatcher of the ship.

Note: All these duties of a Chief Officer during shipping of a break bulk cargo are aimed at ensuring the proper and safe handling of the cargo.

What are the Standard BreakBulk Cargo Rates?

As at 2015 heavy lift rates had fallen to $90 per ton, a significant difference from the $150 per ton in 2013.

A mismatch between the demand and shipping capacity has resulted to a downward pressure in the rates overtime.

Simply put, the increase in the amount of tonnage to be shipped as break bulk cargo has lowered the break bulk cargo rates.

What are the Disadvantages of Break Bulk Cargo?

The major drawbacks of break bulk cargo are:

• It requires extensive labor owing to the activities involved in shipping. Such activities include warehousing, packaging, loading, and offloading.
• Shipping break bulk cargo is also more expensive as it uses up more space.
• Moreover, the loading of break bulk cargo needs specialized and sophisticated equipment for efficiency.
• Security and safety is also a concern. During the bundling or packaging, some goods can cause bodily harm if handled inappropriately. Also, there is a risk of the goods being damaged or stolen.
• Unlike containerization, break bulk cargo does not offer special facilities such as refrigeration for perishable commodities.

What are the Packaging Methods for Break Bulk cargo?

There exists various packaging methods for break bulk cargo. Below are the major packaging methods:

Bags

This is commonly used for commodities such as grains, fertilizers, sugar, coconut, dried fruit, seeds, coffee, flour, raisins, salts, dried milk, dried blood, meal (copra, fish, seed, etc.), shells, etc.

The bags are only used to hold the contents together but do not guarantee protection from external damages.

Carton and Fiberboard boxes

Cartons and fiberboard boxes are economic and efficient making them the most preferred mode of packaging.

They provide some level of security from theft and loss.

Also, they can withstand typical shipping hazards.

Cartons can be directly put inside a container; or securely strapped on pallets if the cargo will have to be moved around.

· Wooden Cases

The use of wooden cases for packaging has been around for a while.

They are more expensive than cartons but ensure more protection to the enclosed content.

The most commonly used wooden cases are made from plywood.

·nWooden Crates

Unlike the wooden cases, wooden crates are not completely covered.

They are mainly used to facilitate storage and handling.

In some cases, carton and fiberboard boxes are placed inside wooden crates for reinforcement.

· Barrels

Barrels are majorly used in shipping liquids such as molasses, whisky, paints, etc.

Also some solids such as cement, scrap metals, cement, etc. can be enclosed within barrels.

· Lift Vans

These are specialized packaging material made of wood, containing metallic roofing, and lined on the inside with waterproof material.

They are mainly used to transport household goods such a cupboards, chairs, brassware, glassware, etc.

There are to be handled using forklifts.

· Pallets

When using pallets for a break bulk cargo, the commodities are strapped on the pallet.

What Documentation do you need to Transport Bulk or Break Bulk Cargo?

The important documentation you will need are:

• Bill of manifestation – which will outline the nature of the commodity being transported. Whether hazardous, valuable or heavy lift
• Bill of lading – which will give detailed information pertaining the shipment

Also, you will require relevant certification and clearances before you can freely transport your bulk or break bulk cargo.

Are Courier Services involved in Transporting Bulk and Break Bulk Cargo?

Both courier services and freight forwarders are actively involved in the transportation of bulk and break bulk cargo.

Since these types of cargo are part and parcel of shipping, almost all companies involved in shipping do transport them.

What is Break Bulk Warehouse?

Break bulk warehouse is where the bulk commodity is received and broken into smaller units for packaging.
What is the Difference Between Break-bulk vs Container?

Break bulk are individual units of a commodity transported in a ship while the container is a storage unit for materials being shipped.

Mostly, break bulk cargo are packaged and stand alone.

However, they can also be loaded inside a container.

That’s it – all information you need to know about bulk and break bulk cargo.

At Tj chinafreight we help you ship all type of cargo from China to any region globally.

Contact us today for your bulk and break bulk cargo shipping needs.

This guide has all information you’re looking for about bunker adjustment factor.

So, if you want to learn more about bunker adjustment factor, read this guide.

What is Bunker Adjustment Factor (BAF)?

As you know, oil prices are very volatile.

This fluctuation in oil prices can lead to losses for carriers.

Due to this volatility, ship owners and operators are unable to calculate the consistent operating cost for ships.

To cover them, ocean carriers charge Bunker Adjustment Factor commonly known as BAF.

Fuel Adjustment Factor and Bunker Surcharge are other names that are used to refer to this BAF.

BAF is an additional surcharge. It is charged per Twenty-foot Equivalent Unit (TEU) to the ship operators.

BAF represents some of the sea freight charges that are meant to address the volatile nature of fuel prices.

Early before, the Transpacific Stabilization Agreement (TSA) was responsible for the standardization of BAF.

TSA would not only set prices and but was also responsible for coordinating the behaviour of shipping lines.

Brent crude oil was being used as the basis.

However, after the resignation of Maersk Line back in 2018 who was a key member, TSA got disbanded.

As a result, shipping operators opted to set their own bunker surcharge independently.

This was under the close monitoring of the European Commission to make sure there was no collusion happening.

When IMO (International Maritime Organization) 2020 was introduced, this no longer happens.

The BAF cost calculation has changed to a more accurate and predictable one using the introduced formulas.

These new formulas contain components with the fuel price and its consumption.

What does Bunker Mean in Shipping

A bunker is best understood from the historical events that gave birth to the name.

Steam was originally the source of power in industries, both for locomotives on land and steamships in sea transport.

The steam power was generated when coal was fed into the furnaces.

The containers used to store this coal were called BUNKER.

Now that coal was common was used to fuel steamships, the name bunker became common with fuel.

To date bunker, is used to refer to fuel used in shipping operations.

Bunkering is the process of supplying ships with bunkers.

Their bunkers come in different types and there are other classifications for the different bunker types.

A few of them are Heavy fuel oil (HFO), Marine diesel oil (MDO), (Marine fuel oil (MFO), Marine gas oil (MGO), Intermediate fuel oil (IFO) just to mention but a few.

Why is Bunker Adjustment Factor Charged?

BAF are surcharges meant at safeguarding the carriers against the volatility of fuel oil.

These extra charges are enacted by carriers on the shipping rates for purpose of counteracting fuel price increase.

Whenever there is an increase in oil prices, the carriers will be required to evaluate and do calculations for any extra costs which we are calling BAF.

This helps in offsetting any of the significant fluctuations on the operational costs brought about by the increase in fuel prices.

It is worth noting that carriers are not allowed to come up with common agreements with regard to BAF surcharges all over the shipping industry.

The European Commission back in May 2019 made it clear that any attempt in doing this would be considered a violation of antitrust laws.

Therefore, surcharges may appear the same across all carriers. But the decisions are ultimately decided by each carrier internally.

How do you Calculate the Bunker Adjustment Factor?

For you to calculate BAF, you will need to take into account the trade factor as well as the fuel price.

Fuel price is taken as the average price of fuel in major bunkering ports across the world.

Trade factor is a reflection of the average fuel consumption in a given trade taken as a result of existing variables.

The standard formula for BAF calculation is simply put as:

Trade factor is the average fuel consumed on any given trade.

This may vary according to the following:

• The direction of the vessel
• Trade route
• The weight of the load
• The time of transit
• Distance of trade
• The container size
• The efficiency of the fuel
• How the ship is built etc.

At the moment there are no standard rates for calculation of BAF.

It appears like every ship operator has chosen to approach the new regulation their own way.

Some carriers are adding BAF on top of their ocean charges.

What is the Difference between CAF and Bunker Adjustment Factor?

Currency Adjustment Factor (CAF) is charged by carriers to enable the offset of any currency fluctuations that may affect freight rates.

This is due to fluctuations in the exchange rate that may often occur.

It serves to control or minimize gains or losses arising from exchange rate tariff fluctuation.

CAF is used to partially cover any costs incurred by a freight forwarder.

This helps the freight forwarder to be able to settle accounts with other transport entities while using different currencies.

Although each carrier independently does calculate CAF surcharges differently, the CAF amounts are usually the same.

On the contrary, BAF is meant to deal with any fluctuations in oil prices.

Both of these surcharges affect freight rates but they are not the same.

The only similarity between them is that they are meant to offer rate adjustments arising from fluctuations.

It is worth noting that the currency adjustment factor increases as a result of the United States dollar declining in value.

Can I Avoid Bunker Adjustment Factor Surcharges?

Usually avoiding BAF surcharges is not possible.

But there can be some tips on how to offset the surcharges.

If your gate in a shipment before CAF surcharges get enacted, you can be able to avoid them.

Other than this, you can only negotiate the other costs with your carrier.

This is possible because in ocean freight the room to negotiate is always there.

The power to negotiate will be heavily dependent on how much you are shipping and how big your organization is.

If your organization is small and the volume of your shipment is neither medium nor large, negotiating contracts for reduction of the total cost may not be possible.

However, it is important to note that the BAF charges cannot change.

Who Issues the Bunker Adjustment Factor?

The Bunker adjustment factor is issued and controlled by the ocean carrier.

This is because the change in oil prices directly affect them.

As a result, they issue these surcharges to control the losses and gains that may affect their expenses.

Your freight forwarder only charges you what was quoted to them by the carrier.

They are just a messenger passing on the message they received.

The operators choose to pass the variable fuel costs downwards the logistics chain.

The shippers who are the ones booking container line’s ships find themselves on the receiving end.

Normally they are not always in agreement especially when it requires them to pay more.

Are Bunker Adjustment Factor Charges negotiable?

Bunker adjustment factor surcharges are not negotiable.

They are non-negotiable pass-through surcharges.

They are near-universal since almost all ocean carriers depend on the same suppliers for their oil.

Working with one ocean carrier as compared to the other in a bid to avoid BAF cannot work.

It is something you have to plan for every time.

The dollar amount for BAF surcharges is however a typically small fraction on the total cost of the shipping dollars.

Should BAF be Included in the Freight Rate?

BAF can be charged either separately or it can also be put as inclusive in the freight charge.

This will depend on the trade route and the agreement between the shipper and the carrier.

As it is BAF depends on the behaviour of oil prices and there is no straight forward formula to its success.

Taking BAF as a concept, other than a charge, there is scope available for customers to be able to customize the concept suitable for their business.

BAF can be Fixed, Locked in or Floating.

Fixed BAF is the quantum BAF charged by carriers which are fixed and do not vary according to the market forces or even fuel price fluctuations.

This is the best option for customers who may want to know the much cost they will be charged for their shipment.

Floating BAF is the exact opposite of Fixed BAF to mean that the quantum of BAF does fluctuate based on the price of fuel.

This is an advantaged to the shipping line since they do not lose their money as the fuel price fluctuates since the surcharge is directly linked to the fuel price.

This may however be disadvantageous to customers as significant differences may mean increasing the prices of their products.

This them unfair competition in their respective market.

Shipper of large volumes of containers may prefer the Lock-In option.

With Lock In, BAF quantum is locked in with the carrier for a given period of time and this is fixed.

This happens in order to monitor the market.

They can choose to adjust their agreed terms if they prefer and agree.

This is favourable for both parties since they all stand to gain if the bunker prices rise or fall during the contract period.

What is the Rationale behind Bunker Adjustment Factor?

The Bunker Adjustment Factor (BAF) is a system that was first introduced as a result of the oil shocks that happened back in the 1970s.

The underlying reason behind this system was led by the shipping lines that were operating in freight conferences.

They could not be able to adjust their fuel prices immediately enough to make it possible to counteract the devastating impact of an increase in bunker prices.

More than forty years since it was imposed, BAF has always been a bone of contention between shippers and carriers.

The ocean carriers believe that BAF is a necessary evil that is aimed at reducing their risk to the volatility of the bunker price.

Shippers on the other side argue saying that the risk should be taken as a normal business venture.

If not so, they suggest that it be dealt with in a much better transparent manner.

In 2003 when the bunker surcharges were beginning to rise, these BAF disputes became a major obstacle to the dialogue between shippers and carriers.

The European Commission (EC) had to intervene in a bid to solve the matter.

What are the Effects of Bunker Adjustment Factor in Shipping?

Since the introduction of the new regulation in January 2020, a lot of changes have taken place.

The change was aimed at reducing air pollution coming from ships worldwide.

Earlier, ships were using use fuel containing up to3.5% sulphur content outside the Emission Control Areas.

Now, the sulphur content CAP has been placed at 0.5% by the International Maritime Organization (IMO) an agency under the United Nations.

This will see the reduction in sulphur pollution by more than 80%.

To comply with this new regulation, the carriers had to increase the shipping costs.

There are also expectations on the volatility of fuel costs for the ships to increase.

To try and harmonize all these changes, some of the leading companies like Maersk have introduced a simple and predictable BAF.

This allows the clients to predict, plan and the changes in the prices of fuel as well as how it will impact their total shipping freight rate.

This cost will be charged differently from the normal ocean freight as the fuel cost is very important and is the most volatile part of the costs of shipping.

What is the Advantage of Bunker Adjustment Factor to Shippers?

Shippers can be able to exploit the carrier variations for low-sulphur BAF mechanisms.

They can shift the booked cargo in between the different container lines in a bid to reduce the exposure to the surcharge.

To carriers, this may be a tactic they won’t appreciate.

The first priority to carriers is to recover the costs from their customers.

Analysts say that a shipper can hold a contract with two carriers.

One contract with a higher BAF and another one with a lower BAF.

They will then greatly leverage in hedging against fuel volatility.

If the prices of fuel increase, they shift a larger proportion of their volumes onto a carrier with low price variability.

Therefore, minimizing the BAF increases in price as a result of bunker fuel change.

If there is a decline in fuel price, they can move higher volumes to the carrier with higher BAF change.

This maximizes their ability to reduce prices for goods as a result of bunker fuel change.

How does Bunker Adjustment Factor Benefit Carriers?

The introduction of BAF was welcomed as a cushion that could offer a safe business environment in the Shipping Industry.

It gave them a chance to minimize the possibilities of making losses that they may not have control over.

Bunker price is very volatile.

This could mean that although at some point they could gain, the risk of losses that may come in could be extreme.

Through BAF, the formula is transparent at least for many carriers like Maersk, and the BAF surcharges are becoming predictable.

This has covered carriers by allowing them to pass over any costs associated with fuel price fluctuations down the logistics chain.

In the end, the customers who rent container space are the one who pays for the fuel price fluctuations.

What is the Effect of Bunker Adjustment Factor on Shipping Costs?

With the ongoing push for the usage of cleaner fuel, the adoption also means higher fuel prices.

The priority of BAF is to recover additional costs associated with price fluctuations on fuel.

Whatever changes are proposed, carriers will not be responsible for the price increment.

They will push them down the logistics chain and the freight forwarder will charge the customer accordingly.

These costs can be high for especially for the high-volume ships and those ships that use longer routes.

This means that more investment will be required for shipping operations.

The shipping rates are expected to rise from time to time as a result of higher bunker surcharges.

Carriers are wondering why the Bunker Adjustment Factor charges are based purely on 100% low-sulphur fuels.

This is even as more and more vessels are being equipped scrubbers.

In overall, changes in shipping costs will continue being experienced until the calculation of BAF is more transparent and easy for everyone to understand.

What is the Relationship between Bunker Adjustment Factor and Bunker Price?

There exist many fluctuations that cause serious effects on the fuel price for the shipping vessels.

The bunker is simply a type of oil. You may be tempted to think that the fluctuations in oil prices do have a direct effect on the bunker price.

However, there are no correlations between crude oil prices and bunker oil.

Although all fuel and petrol oils originate from one source, the manner in which they get priced and handled is completely different.

Many other factors may create distortions in pricing thus affecting the bunker oil prices.

These factors include:

• Speculation of prices in the crude market
• Refining priorities and the capacity constraints
• Inherent challenges for vessel operators when storing or hedging fuel

Today the common practice is that carriers will determine BAF charges and the shippers will then add the surcharge on their own base freight rates.

Is Bunker Adjustment Factor the same for Normal and Reefer Containers?

No, the BAF for reefer cargo will not be the same.

To get the BAF for reefer cargo, you will have to calculate the BAF for standard containers (dry) first.

Thereafter, you will multiply the answer with a factor of 1.5.

This is meant to take care of the electricity consumption on the reefer containers.

This is taken as an average.

As is the case, reefer containers are special containers with special customizations much of which consume electricity.

The factor of 1.5 is introduced to take care of this special nature of the reefer containers.

How much Bunker Fuel does a Ship Use?

The amount of fuel that a ship can use will be determined by two factors. They are:

• Size of the ship
• Engine capacity

The two are determined by the trading route in which the ship operates as well as the speed of the engine.

For example, the largest container ship can accommodate approximately 4.5 million gallons of fuel oil.

It is known as the CMA CGM Benjamin Franklin. This is then converted into volumes.

By our example, we have approximately 16,000 cubic metres.

The CMA CGM Benjamin Franklin can carry an equivalent of 18,000 TEUs in containers.

These kinds of ships are mainly used to move goods between Europe and Asia.

The amount of fuel used being dependent on the speed of the ship.

Majority of the ship engines are designed for highest speeds ranging from 20 knots to 25 knots per hour.

This is between 23 and 28 miles per hour. At this speed, 63,000 gallons of fuel can sustain a Panamax container ship daily.

As speed sharply drops, fuel also drops.

If a ship drops the speed by 10%, a container ship can reduce fuel usage by one-third.

Following the 208-2009 recession, the majority of the carries had to reduce their speeds up to 19mph by low steaming.

How can you Mitigate Bunker Adjustment Factor Costs?

To mitigate the BAF surcharges, you should make queries about the all-inclusive charges from port to port.

The charges are calculated as per port to port basis.

You should get all the necessary information from your forwarder.

This is in order for them to give you all-inclusive fees that can be helpful in mitigating the effects of these surcharges.

Who Regulates Bunker Adjustment Factor?

BAF is regulated by the International Maritime Organization (IMO) which is the agency under the United Nations.

 It is bestowed with the responsibility of ensuring safety and security is observed by shippers.

 It also helps in ensuring that there is no marine and atmospheric pollution by ships.

 This ensures that the UN sustainable development goals are supported.

IMO sets standards globally for security, safety, and environmental performance of international shipping.

It ensures that a fair and effective regulatory framework is universally adopted and implemented.

Simply put, the role of IMO is to create a level playing field.

This should be in a manner that shippers don’t improve their financial positions by compromising on safety, security, and environmental performance.

This also promotes innovation and efficiency.

The measures drafted by IMO cover the whole aspect of international shipping.

This includes the design of the ship, manning, equipment, operation, construction, and disposal.

Through this we are able to achieve a secure, energy sufficient, and environmentally sound shipping sector is realized.

What is locked-in Bunker Adjustment Factor?

Locked-in Bunker Adjustment Factor is one of the three types of BAF.

This is where both parties decide to agree on a locked-in bunker price up to a given period of time.

It is a compromise between floating BAF and fixed BAF models.

It makes the locked-in option get the characteristics of a forward deal.

Any of the parties can either be advantaged or disadvantaged depending on which direction the price development may take.

The shippers can gain a surplus if the price of fuel reduces at the period of the then locked-in BAF contract.

The buyers will get a surplus for themselves in case the prices of the fuel go up.

How Often does the Bunker Adjustment Factor Price Change?

Usually, the BAF changes on a monthly or quarterly basis.

The changes are determined by the changes in fuel prices amongst other factors highlighted here.

The BAF was previously revised every quarter by the Transpacific Stabilization Agreement (TSA).

But since TSA was closed, the determination of BAF was left in the hands of the carriers

According to Maersk, their BAF tariffs change monthly if the change in fuel price is more than $50 per ton compared against the latest adjustment.

Once the carriers find it necessary to change the BAF whether monthly or quarterly, it trickles down the chain of logistics.

The carriers’ decision on when to review their BAF is dependent on the factors below:

• Fluctuations in the prices of oil
• Vessels at the various bunkering ports
• Whether their clients are looking for long or short–term rates

Based on these, the carriers can choose whether they need to review the BAF prices on a daily, weekly, monthly, quarterly, or annual basis.

Whether the liner updates their BAF fee on a basis will depend on the fluctuations of oil prices.

The vessels deployed on the various corridors and whether their customers are looking to secure short or long-term rates.

Who Charges the Bunker Adjustment Factor Fees?

The bunker adjustment factor surcharges are determined by shipowners under strict guide and monitoring of the European Union.

This is because they are the ones who are directly affected by the volatility of the prices of fuel oil.

The charges are set based on the losses and gains arising from the fuel price fluctuations.

It ensures that all standards are met as well as preventing collusion.

Once the BAF is set, the fees are charged based on TEU on the freight forwarders who then charge their individual customers.

The fees trickle down as originally set and are universal across all carriers and cannot be negotiated.

Is Bunker Adjustment Factor Surcharge the Same for all Carriers?

This is very true.

Bunker adjustment factor remains the same across all carriers.

This is because the formula for calculation of BAF is the same.

With reference to the formula, Fuel price is taken as the average price of fuel in major bunkering ports across the world.

That is to mean, all carriers are considered and the average price they paid for fuel is taken.

When the BAF is calculated, it will be the same for all calculations done under the same trade factor.

Let us take distance for example as a trade factor.

All carriers covering that distance will arrive at the same BAF.

What is the Benefit of Understanding BAF and its Functionality?

Understanding BAF and its functionality can help importers and exporters be in a better position to get better future analysis of what is related to their freight.

In doing so, they will arrive at the cost of their supply chain better and even more accurately.

What is EBS (Emergency Bunker Surcharge)?

Emergency bunker surcharges represent the extra measures taken by carriers.

They are implemented in a bid to cover themselves from the costs associated with the rise in prices of fuel.

Like already mentioned before, fuel is consumed is determined by the speed of the ship.

Therefore, the logistics industry is dependent on people and fuel as the forces behind its operation.

Sadly, though, the volatility of fuel is a major thing in the shipping industry.

The prices of oil change overnight and sometimes so drastically.

This is a game-changer and it affects everybody involved.

For carriers to protect themselves from any such unexpected increases in the cost of fuel, they charge the EBS.

Without this most carriers can make huge losses as the cost will directly affect their cost calculations, the margins and even increase the losses.

Many carriers have followed this path of introducing the emergency bunker surcharge.

As it is in the shipping industry, such costs trickle down to the shipper and this can be frustrating.

There is always a backlash from some shippers, wondering why liners cannot accept the cost as a normal cost of running their business.

They expect them to take responsibility for the changes in costs.

The emergency surcharge has now become an independent charge as a result more and more carriers improving their rates of transparency.

What is the Difference Between BAF and EBS?

TheEmergency Bunker Surcharge (EBS) differs from the Bunker Adjustment Factor in two elements.

The Bunker Adjustment Factor will cover a freight shipment from the fluctuating costs of fuel. This is mostly made in advance.

On the other hand, the Emergency Bunker Fee is an emergency fee charged to cover for any unanticipated upward change in bunker prices.

This is normally introduced at the last minute.

EBS prices may vary according to an increment in fuel rates.

Also to consider in EBS is the type of container and the trade lanes through which the freight will be moving in.

The EBS may be different since the carriers can decide to have it implemented only on specific routes or on certain types of containers.

The EBS is based on a last minute decision when the earlier predicted change in fuel prices become lower than the actual.

As a matter of urgency, the shippers then introduce the Emergency Bunker Surcharge to cover those differences in operation costs.

Who Should pay Emergency Bunker Surcharge (EBS)?

There has been an ongoing debate over who should bear financial obligations on the linear costs of operation, like the bunker fuel prices.

Should it be the carriers or the shippers?

This has led to the need for a more transparent and a long-term solution on the Emergency Bunker Surcharge.

Shippers are suggesting that liners take much of the responsibility for the cost increases.

They have gone ahead and criticized the information, suggesting that they exist to cover carrier losses other than fuel.

Even with the frustrating unexpected Emergency Bunker Surcharge, ocean carriers lack any influence or control on the cost of fuel.

It is only fair for ocean carriers to pass part of the burdening operational cost to their clients.

This means that with all the occurring changes, the customers bear the cost.

Why do Carriers Announce EBS?

There are several reasons why carriers are announcing EBS. They include:

• High prices of fuel
• New emissions standards
• Reduced spot rates

i. High Prices of Fuel

The fuel prices are rising all across the world supply chain.

This has even led to demonstrations and even strikes in some of the sectors.

ii. Newly introduced Low Sulphur Emissions Standards

According to IMO, the main goal for this regulation is to significantly bring down the amount of sulphur oxide produced by ships.

This should have major environmental and health benefits globally.

Especially to those who reside in the coastal areas and the ports.

iii. The Decline in Spot Rates and Financial Losses

There is a rise in the bunker and the vessel charter costs together with weaker freight rates.

There is also a continuous side pressure coming from the shipment of new containerships and all these on the margins of the carrier.

At Tj chinafreight, we offer cost effective freight forwarding solution when importing from China.

Contact us today for all your freight forwarding needs.

In this you will learn everything about custom shipping container.

Keep reading to learn more.

Types of Shipping Container

A shipping container is a metal container made of industrial-grade steel and originally manufactured to import and export goods.

The types of shipping containers vary to the intended purpose of use.

The following are some of the most widely used types of shipping containers.

General Purpose Container

It is also known as a dry container and is the most widely used type of shipping container.

Dry container is available in ISO standardized sizes and is ideal for transporting dry goods.

Flat Rack Containers

This type of container possesses collapsible sides that can fold to make a flat rack.

They are ideal for transporting oversized and bulky goods since they also have very stable end walls that will safely secure your goods.

Open Top Containers

The containers have a removable or convertible top that you can completely remove to ship over-height cargo that won’t load through the container’s door.

Double Door Containers

It is also known as tunnel containers and ideal for faster loading and offloading of goods in the container.

High-cube Containers

These containers resemble general purpose containers though taller by at least one foot.

It is ideal for use when you want to transport a slightly higher volume of cargo.

Open Side Container

This kind of container also resembles a general-purpose container, but the doors can be completely open on their sides.

It offers more room to access the container for speedy loading and offloading of goods.

You can also easily fit goods that are too big to get in through the regular door.

ISO Reefer Containers

You can use an ISO container to ship goods that require controlled temperature, such as perishable agricultural produce, meat, etc.

Insulated Containers

Similarly, this type of container also has a temperature control setup that can withstand higher temperatures.

It uses the ‘thermos’ technology and has a mechanical compressor to heat or cool the air inside to achieve the desired effect.

Half-height Containers

As the name suggests, the container’s height is half that of a regular container.

It is ideal for bulky, heavy, and dense cargo transportation because it has a lower center of gravity.

Tank Containers

This container type is ideal for shipping liquid products.

The tank comprises anti-corrosive steel in addition to other anti-corrosive material.

Swap-Body Container

This type of container is ideal for rail and road transportation because they are exchangeable.

You can only use swap-body containers for land-based transportation because they lack the upper corner fittings and are not stackable.

Other types of shipping containers include:

• Drum containers
• Car carrier containers
• Special purpose containers

Grades and Condition of Shipping Container

A container’s grades reflect its current condition and thus its suitability for use.

There is no universally standardized container grading system.

Currently, the grading systems in use depend on the structural and aesthetic value of the shipping container.

These two grading systems are independent of each other, and you have to consider them so.

The following are the available grades of containers:

One-trip

It is a near new container sold to the buyer as soon as it arrives at the destination point.

A one-trip container has been used only once to avoid empty shipping containers at higher transport costs.

One trip containers have minor flaws that arise from a single time use.

F-Food Grade Containers

The container is of high standards and used in the shipment of food products.

It must meet the following conditions.

• Structural conditions must meet IICL 5 requirements.
• Must have a valid CSC plate
• Has never transported or come into contact with any hazardous or toxic chemical
• Waterproof
• No visible daylight from the inside when the doors are closed
• High hygienic and cleanliness standards
• The depth of scratches must be less than 2 mm.

Grade A

Grade A containers must meet the following conditions:

• The container can be new, used, or refurbished.
• Must meet the requirements of wind and watertight (WWT)
• Must have a valid CSC plate, and the structural condition is IICL 5 compliant.
• Rusts and dents are very few.
• The interiors should be at least 80% mark free.
• It also has minimal surface rust.

Grade B

The grade classifies containers with the following qualities.

• Must be cargo worthy, that is, ideal for cargo transportation as per the guidelines of CSC.
• Possess valid CSC plate
• Should either be IICL 5 or WWT compliant
• The scratches and marks on the interior surface must be less than 50%.
• The floor usually has minor delamination and will be stained or marked.
• The outer surface usually has extensive dents and corrosion.
• It may have undergone some minimal repairs.

Grade C

• Grade C containers are cargo worthy 2, WWT, and must meet all the set initial specifications.
• Has more extended scratches, markings, and corrosion
• Has undergone extensive repairs
• The floor has moderate delamination and markings.
• Cheaper and also widely available
• Has extensive wear and tear on the outer surface with numerous, visible dents and corrosion.
• You can use it to ship goods provided it has a valid CSC plate.

Grade D

These containers are too damaged to be used in the shipping industry and may also be unworthy to store goods.

• D grade container s also referred to as “As Is Standard.”
• It has no valid CSC plate.
• The container’s floor is extensively delaminated and stained.
• Both the exterior and interior are extensively corroded and may also have holes.
• Walls and roofs may be leaking, difficult to open doors, and worn out seals.

Feature You Can Modify in a Shipping Container

You can modify almost every aspect of your shipping container to meet your particular needs.

When it comes to modification, you can either purchase already modified containers from specialist suppliers, or contract a specialist to modify them for you on-site.

You can also custom it yourself if you have the relevant skills and experience.

Some of the features you can custom to your liking include:

• Height, Width, and Length (Size).
• Shelving
• Paint color
• Locking technique
• Doors and Windows
• Flooring and Roofing
• Interior and exterior finishing-out
• Insulations
• Partitions
• AC/Heating and Turbine vents
• Ramps
• Plumbing and Claddings,
• electricity connections
• Water connections, etc.

Factors to Consider When Selecting a Shipping Container to customize

You should consider the following factors when selecting a shipping container to modify for a specific application.

Size and Type of Shipping Container

You should select a container that is large enough to provide the desired space requirement for your application.

If you want more spacious containers, you can consider high-cube containers.

Similarly, you can select a general-purpose container, tunnel containers, or any other type of container that will suit your application as desired.

Container Condition

Select a high-grade container that is still in good condition.

Lower grades containers may be cheaper but can limit your modification needs and will also be less efficient.

You should personally inspect the container to ensure that it is in good shape and meets your structural and aesthetic requirements.

Supplier Reputation

It is wise to consider buying your containers from suppliers who have a positive reputation and have been in the business for some time.

Though they might charge a little higher prices, they are highly likely to deliver the best quality containers.

Repainting

You should cautiously select a freshly repainted container.

In most cases, repainting might hide rust spots that might not have been treated with a rust converter.

Rust itself is not a problem, but it will bleed through the paint sooner and demand additional treatment and repaint cost if not properly managed.

Purpose for Purchase

The application you want to use your modified container for will determine the grade of the container you select.

For instance, if you’re going to start a catering service, you must choose a nearly new or food-grade container still in great shape.

Other applications may not require stringent conditions and can be okay with grades C or D.

Installation Space

You have to select a container that suitably fits in your installation space without strain.

Ensure that you won’t be obstructed by the available ground space or obstacle heights.

Delivery Cost

Inquire who will incur the delivery cost and how much it will cost if you have to pay for it.

Select a supplier who has branches near your location to minimize the cost of delivery.

Design Limitation

Ensure that the container you select will be capable of accommodating your design requirements.

Anything short will inconvenience you and the efficiency of your application.

Determining the Condition of a Used Shipping Container

You can determine the condition of a used container by considering the following factors.

• The age of the container
• The grade of the used container
• Mileage traveled by the shipping container.
• Handling and maintenance history of the shipping container
• The operational conditions the shipping container has experienced.
• Shipped containers door quality
• History of cargo spills on the used container.

The Difference Between New and Used Shipping Container

New Containers

A new container in most parts of the world is known as single-trip containers.

Single-trip containers move from the point of manufacture to the destinations where they are sold off while loaded with cargo.

The cargo is offloaded, and the containers are sold off as new containers.

Usually, a new container has less than 5% markings and very little use evidence.

New containers also have the best aesthetic appearance and usually come in a single solid color.

They are free of shipping logos and can serve you sufficiently for up to 30 years with good maintenance.

Used Containers

A used shipping container is one that has been used for multiple cargo shipments over the years.

They are usually wind and watertight and ideal for specific purposes.

Unlike new containers, used shipping containers have rusts and dents and carry logos of various shipping companies or other brandings.

A used container can serve you for up to 20 years when you handle them carefully with sufficient maintenance.

You can always refurbish used containers through repairs and paintings.

Available Sizes of Shipping Container to Select From

Shipping containers come in a wide range of sizes.

However, a standard ISO container is either 8.5 feet high by 8 feet wide by 20 feet or 40 feet long.

High-cube containers are bigger and measure 9.5 feet high by 8 feet wide and either 20 feet or 40 feet long.

There are other diverse sizes of shipping containers that may vary between manufacturers and industry of use.

Ensure to consult your supplier if you need any custom sized container.

Applications Suitable for Custom Made Shipping Containers

You can use modified containers for almost any application that requires temporary storage or shelter.

Different applications require different types of container modification.

Below are some of the common areas and the corresponding applications that suit the use of modified containers.

Conversion for Catering Needs

You can use modified ISO containers to build restaurants, coffee outlets, pop-ups, mobile catering units, mobile event bars, etc.

Modified containers suit the needs of erecting mobile or semi-mobile catering units to serve in different occasional events.

Conversion for Retail Business

Modification for retail conversion depends on a range of factors.

Key among the elements is the size of your business, required internal space, and size desired.

You will pay cheaper rent and taxes for modified retail outlets compared to concrete houses.

Some of the most retail applications include:

• Barbershops
• Event merchandise stalls
• Household goods stores
• Motor vehicles spare part retail shops.
• Mobile and pop-up retail shops

Conversion for Office Use

You can use modified office containers in almost any industry.

Consequently, you can use office containers in the following fields.

• Trade show and exhibition offices
• Construction site offices
• Sales offices

Conversion for Industrial Use

Modifying shipping containers for industrial use is ideal in the manufacturing, engineering, and construction environments.

You can easily convert these containers and use them in a diverse range of applications listed below.

• Generator store
• Workshop containers
• Biomass containers
• Control rooms
• Chemical store

Conversions for Self-storage

You can custom make the standard shipping container and transform it into a dynamic self-storage facility.

The following applications will come in handy:

• Chemical store
• Self-storage office
• Pharmaceutical stores
• Container multistore
• Mains electrical storage units
• Dual function storage/office
• Other uses of modified shipping containers can also include:
  • Educational purposes: Storing books, records, documents, and athletic equipment
  • Agricultural purposes: Storage for farm equipment, supplies, products, and machinery.
  • Government services: Temporary shelters, military supplies, security and custom offices
  • Residential use.
  • Medical: Mobile clinics and laboratories.

Advantages of a Customized Shipping Container

Conversion of shipping containers into diverse structures with multiple uses harbor with it numerous benefits.

The following are but the selected few in the list.

Very Spacious

There are different sizes of shipping containers to select from.

Usually, these containers are always too spacious and have plenty of room to store as many goods as you can.

Maximum Security

Modified shipping containers are manufactured using steel, which is very secure and difficult to break into.

In addition to the standard locking mechanism, you can customize the locking systems to give you the peace of mind of safe goods.

Highly Durable

Steel is known to highly durable metal that can withstand the harshest of environmental conditions.

You can use your modified shipping containers for up to 20 or 30 years, provided you take great care of them through regular maintenance schedules.

Easy to Transport

When your business or work is mobile, then using a custom made container is the best way to go.

You can either put your products in a shipping container, load them up in a truck for transporting them to another point or use a container with fixed wheels.

Faster Construction

You will construct your desired infrastructure faster in comparison to the conventional brick construction methods.

You can perform some of the less crucial modification in your production site before transporting it to the final destination.

Cost-effective

Modifying shipping containers are also cheaper compared to traditional brick construction methods.

Though an empty container may be cheap, complex modifications may skyrocket the costs significantly.

Siting Your Custom Shipping Container

Siting your custom shipping container properly goes a long way to ensure its longevity, safety, and efficiency.

Place the container on a dry, flat and level surface, either tarmac, concrete, or paving, to enable the doors to open correctly.

Avoid placing containers on soft, uneven, and dump surfaces.

Though it will survive under such conditions for several years before wearing off, wear and tear will significantly reduce its life cycle.

Place timber and paving under the corners of shipping containers to act as spacers and balance them even under extremely uneven surfaces.

Designing the Plan for Customized Shipping Container

You can manually design your container by brainstorming for ideas, presenting them as sketches, and then combining them as a design drawing into a final product.

You can also use a variety of container design software to design your modified container as desired.

Basic Materials for Customizing Shipping Containers

Shipping containers are versatile, strong, and heavy structures that require some specialized and ordinary equipment and machinery to modify.

Some of the basic machinery and equipment that you must have include:

• Forklifts and Hysters
• Welding Machine
• Propane heaters
• Spray foam insulation kits
• Cutting discs and Grinders
• Assembly materials
• Safety equipment

Step by Step Customization of a Shipping Container

The following are necessary steps that you can consider for customizing a shipping container for any application.

You can seek professional help from a specialist for more complex modifications or carry on yourself if you have some artisan skills.

• Design and sketch your desired structure.
• Workout all the arithmetic and architectural competence of your project to see if it fits well with available shipping containers.
• Consult an engineer for the structural safety of the structure you intend to construct, especially if it involves removing any parts.
• Incorporate the expert’s opinion in your design and finalize it.
• Prepare the site where you will lay your modified container. Involve an expert when making the concrete stands, slabs, leveling, etc.
• Select and purchase a shipping container of a higher grade. Ensure you factor in the delivery time to avoid unnecessary inconveniences.
• Receive and connect your containers appropriately if you are using more than one container. Add all other structural inclusions correctly.
• Cut the openings and install the add-ons as desired. Seal the gaps created during cuttings.
• Remove the floor or add a subfloor as appropriate, given that the original floor might have chemical residues.
• Add frames, sheath, insulation, and floor as desired.
• Install electricity and water system as appropriate.
• Conduct final plumbing and furnishing to complete your structure.

Insulating a customized Shipping Container

You have to insulate your modified shipping container to protect you from the surrounding outdoor environment’s temperature extremities.

There are diverse options that you can choose from when insulating your modified shipping container.

The choice of a particular method will depend on your application and the desired structural properties.

You can use either of the following types of insulation t broadly classified into five major groups:

Blanket Insulation

These are open-celled, fluffy, blanket-like materials fabricated by fitting long fiber meshes in smaller spaces.

Blanket insulation is commercially available as insulation batts and rolls.

They include fiberglass, Rockwool, mineral wool, slag wool, sheep wool, denim, and cotton.

Blanket insulator offers cheaper insulation options.

Unconventional Insulation

The materials used are cheap and unconventional though more environmentally friendly.

They have a low R-value, thus also lower insulation properties.

You can use them in environments without extreme temperature fluctuations.

They include materials such as straw bales and hempcrete.

Loose-fill Insulation

You can also construct wall cavity containment chambers then apply pieces of macroscopic insulating materials.

However, loose fills are highly permeable to vapor and may cause problems with moisture retention.

Some of the materials you can use are loose-fills of cellulose, fiberglass, perlite, vermiculite, etc.

Spray Insulation

You can use spray insulation, a mixture of several liquefied materials that harden when sprayed.

Spray insulation expands to seal the cracks, nooks, and crannies and ideal for conserving heat in the shipping container.

Types of spray insulations that you can use include:

• Open- and Closed Spray Polyurethane Foam
• Cementitious Foam
• Damp-Spray Cellulose

Expanded Foam Insulation

These are self-supporting insulation panels, and boards fabricated off-site and pre-sized to tailor fit a standard wall height.

These forms have a higher R-value and can offer sufficient insulation in extremely demanding climatic conditions.

They include material such as:

• Open and Closed Cell Polyurethane Foam
• Polyisocyanurate
• Expanded Polystyrene Foam
• Extruded Polystyrene Foam

Preventing Condensation in Your Shipping Container

Condensation is typical of any metal surface.

Container condensation occurs when the container wall’s temperature drops below the dew point temperature of air occupying the container.

Changes in the internal container temperature can re changes in external weather and other external factors.

When the internal temperature falls below the dew point of content moisture, the air inside the container will no longer be capable of holding moisture.

This leads to condensation.

Condensate can collect into large drops of water and drip down, causing damage to your goods and corrosion on the shipping container’s interior.

You can manage condensation in a modified shipping container using different methods as dictated by your application.

These methods include:

The use of Desiccants

These are vitals when using your modified shipping containers for product storage.

They absorb excess water from the air and reduce the dew point.

Install Ventilators

A sound ventilation system eliminates the air temperature differences between the outside and inside of the container by sucking in cold air and expelling warm, moist air.

However, ventilation may fall short of meeting your needs in humid and wet conditions because it will suck in cold air.

Improve Insulation

Installing insulators in your container walls will significantly lower condensation by maintaining higher internal temperatures above the dew point.

Use Dehumidifiers

Dehumidifiers are fundamental in applications that use a modified container for the storage of moisture-sensitive goods.

They suck off excess moisture from the air as the dew point falls.

Other useful practices that will also minimize condensation in modified shipping containers include:

• Avoid placing your containers on cold and dumpy surfaces like exposed soil.
• Use containers with corrugated roofs.
• The roof can be slightly bowed in an arc form to prevent the collection of external water.
• Store your products in the container using pallets

Installing Doors and Windows in Your Custom Shipping Containers

You can install doors and windows anywhere on the container for your convenience and ease of access.

Follow the steps below when installing doors and windows.

• Measure and mark the location where you want to install the door or window.
• It should be inclusive of space for steel tubing.
• Use an angle grinder to cut the opening, then let it settle and cool.
• Grind the sharp edges using angle grinders.
• Construct the door frame using three tubing pieces, that is, for the top and both sides. In the case of a window, you will use four tunings.
• Square the frame, then clamp it into position. Weld the corners
• Fix your frame into the opening created earlier and level the header to square it. Secure the frame into position by tack welding its top and sides.
• Remove any sharp corners using an angle grinder.
• Seal all openings between the door frame and container shell by applying silicon. Remove the excess silicon and prepare a smooth finish.
• Install your window and door as per the instructions provided by the manufacturer.
• You can tack weld a rebar piece across the open or bottom end of your frame to ensure that your frame remains square.

Adding Wheels to Your Shipping Container

You can use either removable or permanently fixed container wheels to move it around.

The choice of container wheels to use depends on how often you move it around.

Your wheels should be strong enough to handle the weight of a modified shipping container and big enough to roll over uneven surfaces.

Use adjustable wheels that you can winch to square them up with the truck or trailer you use to pull them.

You can also use a permanent container caster to move your modified container around.

Each of these container movement methods has its benefits and drawbacks, which you must consider thoroughly before settling for a given option.

Safety Concerns of Customized Shipping Containers

Security Concerns

The original shipping container is usually airtight and impenetrable, making them some of the most secure storage facilities available.

However, modification and add-ons such as windows may lessen the security levels, and therefore you should install more security enhancers.

Health Safety Concerns

The primary health safety concern is floor contamination with potentially harmful chemicals and hazardous materials in the coated paint.

If you have ordered brand new shipping containers from the original manufacturer, you can instruct them not to treat the floor with hazardous chemicals.

However, if you are using an already used container, there are high chances that the wooden floor was treated with chemicals to protect it against pests and mold.

If you are not sure of the chemical content, it will be wise to either completely remove the wooden floor or place a carpeted floor above it.

You can insert a non-breathable polythene bag before carpeting with a new floor system.

Similarly, some cargo transporters paint their containers with potentially harmful paint coating for protection against saltwater.

Such paints can be dangerous when they come into contact with human skin.

You can mitigate the risks of toxic chemicals by either encapsulating the harmful coat with non-toxic paint or insulating with spray forming insulator.

Alternatively, you can eradicate the coating.

Enhancing The Security of Your Custom Shipping Container

You can consider either of the following measures to enhance the security of your modified shipping container.

• Installing a perimeter wall
• You can install an alarm system.
• Using crossbar locks
• Installing inner bolts
• Welding or bolting container lockboxes
• Using heavy-duty padlocks
• Installing keypad entries
• Using latch guards
• Using burglar bar windows
• Install security lights

Inspecting a Shipping Container

Shipping container inspection starts at the design stages and continues through the entire service life of the container.

The International Convention of Safe Container (CSC) has outlined specifications on the requirements for safe and secure containers.

If you can physically visit your suppliers’ yard, you should conduct a pre-purchase inspection and a post-purchase inspection at the delivery time.

Inspecting a container intended for modification or on-site storage is usually not as stringent as inspection for sea, rail, or truck transit.

The process is entirely visual and does not require any special equipment.

You should inspect the following areas.

• Underside
• Structural frame
• Walls
• Roof
• End doors
• Interior
• Floor
• CSC plate
• Database

Cost of a Shipping Container

The cost of a shipping container significantly varies to the container’s grade and condition at the purchase time.

Other factors that also influence a container’s cost include; location, supplier, age, availability, delivery fee, size, and features.

Among all these factors, the container’s condition is the most important when bargaining for prices.

Second-hand containers can

Before you import food from China, read this guide.

It has all information that will help you choose the best food products from China.

Whether you want to learn about safety, FDA approval, quality standards, or shipping container – you will find all information right here.

Keep reading to learn to learn more.

Why should you Import Food from China?

Chinese cuisine is a popular meal all over the world.

Each year, millions of customers stream into restaurants offering this option to have an experience.

If you’re opening a Chinese restaurant or food store, you could opt to buy food from China directly and get culinary variety, low price points, and unique flavors.

Chinese food is the oldest cuisine in the world and thus very complex.

Majority of the existing Chinese restaurants serve the same dishes since non-Chinese patrons are likely to have heard or tasted them before.

Importing food products from China allows you to preserve this authenticity as not many people can hack it.

What are some Food Products you can Import from China?

It isyour responsibility to ensure whether imported food from China is subject to any regulations, restrictions or permit by your country.

Some of the foods you can import from China are:

Meat and Dairy Products

Rabbit, frog legs

Fish

Crab, shrimp, cod, prawns, tilapia, shellfish, and other types of fish

Food Preparations and Ingredients

Cocoa butter, vegetable saps and extracts, soy sauce, malt extracts, starch and wheat gluten and other food preparations

Nut Products, Vegetable, Fruits, Vegetable, and Juice

Canned mandarins and dried mushrooms, canned beans, frozen vegetables, garlic, pear, and apple juice

Spices and Tea

Chili paste/powder, ginger, tea Leaves

Animal Feed and Pet Food

Pet food and snacks

Beverages

Vinegar, beer, ethyl alcohol, sweetened water

Oilseeds and Grains

Soybeans, rice

Others include honey, candy, and other confectionery amongst other food products/

What do you need in Order to Start Importing Food from China?

Before import food from China, you’ll need to identify if you have importation rights especially if you’re purchasing for commercial purposes.

If you are importing into United States, for example, your company’s Internal Revenue Service Number (IRS EIN) or Social Security Number (SSN) can be used.

Check with your government for specific requirements.

What is the Basic Importing Process for Food from China?

1. Confirm your import rights.
2. Identify the food you want to import. This will be your main consideration.

You should conduct a market search prior and identify if there is a niche for the specific food you intend to import.

3. Ensure that your exports comply with your government’s specific rules and regulations.
4. Make an estimate of your landed costs. Get the food price from your supplier; add shipping charges and charges from custom clearance to get the landed costs.
5. Find your supplier in China and make an order.
6. Arrange your cargo transport. Your options vary between sea freight, air freight, and courier service
7. Track your cargo and prepare for arrival
8. Receive your shipment.

What are the Safety and Quality Standards for Food you Import from China?

Most safety risks related to imported food from China come up in the handling and manufacturing of the food.

Poor storage and handling introduce viruses, fungi, bacteria, pests, parasites, and other toxins.

Before purchasing, conduct a background check of your supplier to ensure they comply with international Food Safety Laws that make them liable for food safety violations.

Not that some food products are imported fresh and may require refrigeration or during transport.

Do you need FDA Approval to Import Food from China?

Yes. All facilities that handle food to be consumed in the United States; including food imported from China must register with FDA.

Importers are responsible for compliance with labeling, sanitary, and safety regulations

What are the FDA Requirements for Food you Import from China?

Other than meeting the set requirements in food regulation including registration of your food facility, you must adhere to import procedure and stipulation of Prior Notice.

Different food products have varied requirements when imported from China.

Take note of the specific requirements of your food items and check for compliance.

The following are available on the FDA’s website for specific requirements:

• ATPCP (Accredited Third Party Certification Program)
• ISSP (Imported Seafood Safety Program)
• VQIP (Voluntary Qualified Importer Program)
• FSVP (Foreign Supplier Verification Programs) for importation of human and animal feed
• MCP (Manual of Compliance Policy )
• HACCP (Hazard Analysis Critical Control Point)
• Prior Notice of imported food

Any foods processed through the food additives regulations should be marked “Approved by FDA.”

What Food Products don’t need FDA Approval to Import from China?

As long as Prior Notice of food shipment is given and your facility is FDA registered, you can import food from China without prior sanction.

Can you Import Food from China that is not FDA Approved?

No. all imported food commodities should meet the FDA regulations.

What are the Categories of Food Hazards from China?

Imported food from China may be contaminated during shipping or handling and be deemed unsuitable for consumption.

These are the food hazards you should look out for

Biological Hazards

These are viruses, bacteria or parasites in food.

Chemical Hazards

These are things that introduce unwanted chemicals into the food for example cleaning chemicals, improper use of food additives and unintentional contact with food allergens.

Physical Hazards

Sometimes unintentional objects like jewelry, bone chips, shells or other dangerous material end up in food and contaminate it.

How do you Identify Food Hazards when Importing from China?

Here are some of the ways to identify food hazards:

Biological Hazards

Watch out for staff with poor hygiene, bacteria commonly found in food, spoilt ingredients and Preparation and storage of food at temperatures that allow bacteria to grow.

Chemical Hazards

Watch out for unintentional contact with common food allergens, cleaning chemicals, and improper use of food additives.

Physical Hazards

Watch out for personal objects and other material that do not belong in food.

How do you Prevent Food Safety Hazards when Importing from China?

Here are some of the key aspects you need to consider:

Biological Hazards

• Storage and preparation of food at appropriate temperatures
• Rotating stock
• Practicing good hygiene in all facilities

Chemical Hazards

• Use correct cleaning and preparation procedures
• Label and store chemicals separately from food

Physical Hazards

• Follow appropriate procedures in your facilities
• Conduct regular visual inspection

What are the Main Documents Required to Import Food from China?

Prior notice

An electronic submission that allows FDA and CBP officials to prioritize inspection for upcoming food imports.

FDA Facility Registration

All foreign manufacturers, suppliers and distributers of food intended for the U.S market must register their facility with FDA.

Bill of lading

This document acts as receipt, title and contract and gives tracking information of the goods.

Commercial invoice

It contains all the details of goods such as country of origin, dates, prices, and HTC Code.

Packing list

Also contains the details of the shipment including description, size, weight, dimensions, and invoice numbers.

Customs bond

This acts as a financial guarantee that all import duties and fees will be paid to CBP.

Entry summary

Officially recognized as CBP Form 7501 and is a combination of all information found in the other documents.

Is Food from China Safe?

Concerns have been raised over the safety of food from China after several ingredients were found to be tainted with the chemical melamine.

They included products from brands like Cadbury, Heinz, and Mars and sickened thousands of infants in China.

Conduct a proper market research before purchasing from your supplier.

What are Some Foods you can’t Import from China?

While all permitted foods can be imported from China, there are restrictions put in place to control the importation of certain food items.

Products from animals must consent with specific health conditions such as pre-shipment checks for unlawful veterinary drugs nitro furans and chloramphenicol and related metabolites.

Fishery products with traces of crystal violet, malachite green, and related metabolites also cannot be imported.

What are High Risk Foods?

High risk foods are foods containing contaminants like salmonella or pesticides, aflatoxins, and mycotoxins.

What are the China Food Export Regulations?

As an importer, ensure all food products meet all required China export regulations.

These include rules set in place by the FDA, USDA, CBP and FWS.

For food products such as honey, milk, honey and meat there are additional regulations that govern their exportation.

How do you Ensure the Quality of Food you Import from China?

All imported food products should comply with FDA regulations.

The agency is incharge of overseeing importing of regulated products like food and animal feed, vaccines, vet and human medicine, and other biologic goods, medical devices, and cosmetics.

What are the Labeling Requirements when Importing Food from China?

FDA is very strict when it comes to product labeling of imported food commodity.

At minimum, the following information should be included

• Product name and address of the company distributing the food product
• Net quantity
• Nutrition
• Ingredients list
• Name and place of manufacturer/ importer
• Country and origin
• Brand logo or names of companies must be used with permission in terms of copyright laws

You must verify the label template created by the supplier is fully compliant with the requirements.

Any information in foreign language should be translated to English.

What are the Packaging Regulations for Food you Import from China?

The packaging you choose for your food products should include proper information for handling of goods hygienically and safely.

The packaging of food has three layers:

Export or TransportPackaging – This is the outermost layer that protecting the goods in shipping.

Outer Packaging – This is an intermediate layer such as a wrap with several pouches of the food product.

Sales Packaging – This is the inner most layer of packaging of the food product.

Food contact material regulations apply to all materials in contact with human food products.

A packaging sample(E.g. plastic bag) should be sent to the lab to ascertain compliance.

Aluminum is safe material in contact with food though not appropriate for very acidic foodstuffs like tomatoes.

Materials like plastics are limited to a packaging of 10mg per kilogram of imported food.

The ultimate rule is that all materials of packaging should not let their constituents to contaminate food.

That is in amounts that will affect quality of the food or harm human health.

How can you Ship Food Products from China?

Food products should be properly packaged during shipping to preserve freshness.

Some of these packaging include: shipping containers with foam insulating like Styrofoam, card boxes with insulating box liners and dry ice boxes to maintain low temperatures.

You can ship with:

• Sea Freight
• Air Freight
• Express shipping

Do you need a Customs Broker when Importing Foods from China?

The process of importing food products from China is highly involving and prone to mistakes that lead to major issues.

Many importers, especially first time importers, opt to work with a Licensed Customs Broker.

Dealing with strict custom regulations and requirements is part of their daily responsibilities.

They take the worry and hustle out of importing to let you focus on other aspects of the business.

What are the Incoterms for Importing Food from China?

When importing food from China, various incoterms state the obligations of the exporter and importer at various points in the food shipping process.

Incoterms for all modes of transportation are:

• Ex Works (EXW)

The seller avails goods to be picked up at its premises with no obligation to load.

• Free Carrier (FCA)

Seller makes goods available and is responsible for loading to buyers transport.

• Carriage Paid To (CPT)

Seller delivers products to the carrier or a specified shipment point.

• Carriage and Insurance Paid To (CIP)

Exporter is responsible for transportation costs.

• Delivery At Place (DAP)

Exporter makes delivery to destination without unloading.

• Delivered At Place Unloaded (DPU)

Exporter makes delivery and unloads at terminal.

• Delivered Duty Paid (DDP)

Exporter makes delivery to an agreed destination ready to be unloaded and for clearing for importation.

Incoterms for sea transport include:

• Free Alongside Ship (FAS)

Exporter clears shipment and makes delivery after they are placed next to the ship at the port.

• Free On Board (FOB)

Exporter makes delivery as they are on board the vessel at a specified port.

• Cost and Freight (CFR)

Exporter makes delivery as they are on board foots the costs related in shipping to destination port.

• Cost, Insurance, and Freight (CIF)

Exporter bears the cost of freight and insurance all the way to destination port.

What is the Importance of Incoterms when Importing Food from China?

Incoterms provide importers and exporters clear and succinct rules to help each of them understand their obligations and fills in any cracks in the contract.

When an exporter and importer settle on a certain incoterm, they both accept the related responsibilities and obligations defined under that particular incoterm.

Are there Special Requirements for Importing Seafood from China?

FDA ensures all seafood imports are safe for American consumers. Imported China seafood safety requirements include:

• Sampling of imported food products
• Inspection of sea food importers
• Reviewing information from all foreign food import partners
• Inspecting fillers of sea food imports
• Assessing country program assessments
• Inspection of foreign food processing facilities

What are the Factors to Consider when Choosing a Chinese Food Supplier?

You should note hat there are many scammers and fake Chinese food suppliers online.

To avoid getting conned, find a trustworthy supplier by looking at these two aspects:

i. Is the company a legitimate business with a good reputation and does the supplier have the ability to produce the goods?

ii. Here are some effective strategies to answer these questions:

• As you check Chinese wholesale websites online, ensure you go through all their policies, terms and conditions.

Ensure they have a physical address and contact information posted.

Try searching “[company name] + scam” or any other similar variations to find traces of a bad experience by a previous customer.

• Before purchasing from a new supplier, make a call to their company landline and verify the information posted online.

Scammers are more likely to use mobile phone numbers.

You can do a quick check of the physical location of a landline.

• Visit the local Chinese administration government website and verify provided business licenses.

You can even contact the local bureau of industry commerce.

• Verify the supplier’s track record and financial credit worthiness by asking to be provided with their banks reference letters.
• Get a sample of the items you intend to purchase, even if they ask you to pay for it.
• Conduct a factory audit. You could do this by visiting the company physically or asking your local agent to.

You can also have your local agent pick up the goods on your behalf and pay cash on delivery.

Only purchase from a supplier who checks out

Can you Import Food from China to Amazon FBA?

Yes. Import food from China can be sold on Amazon FBA.

To successfully sell China food imports on Amazon FBA, you will be responsible for the following:

Choosing which Products to Sell

When selling imported food from China on amazon FBA, minimize storage fees by choosing products that will sell quickly.

Keep your Inventory in Stock

On the regular, check your inventory levels on amazon and make sure your products stay in stock.

Advertising and Marketing your Products

You may not have to do this if you are selling highly ranked brand name imported food from China.

However for custom products, make sure people can find them by properly advertising.

Is there MOQ for Food Products from China?

When you approach a specified supplier, their quotation will entail all information on the goods including: grade, specifications, packaging, mode of transportation, product capacity and individual policy.

When seeking quotations from multiple sellers, you will notice the variation in each of their minimum order quantity (MOQ).

You will notice that bigger suppliers will have a higher MOQ.

Ordering less has several costs overhead and reduces margin considerably.

This is why suppliers set MOQ

For importation, there is no law that restricts to a minimum order.

However, if you want shipment via sea route with a consolidator, opt for size of one cubic meter.

Small cargo may not have sea option or may be costly.

What are the Steps for Importing Pet Food from China?

Pet food that can be imported from China include processed pet food in sealed containers and packaging.

Others include dog chews, processed pet food from fish material, and animal byproducts for further processing.

To successfully import pet food or any dietary supplements for pets you should know about:

• Your product information, where it’s from and what it contains
• The biosecurity imports health standard (IHS) for your product and how to meet its requirements. If your product does not meet HIS requirements, apply for a permit
• Agricultural compounds and veterinary medicines (ACVM) act requirements
• Packaging and labeling requirements
• Relevant fees andcharges.

If your imported pet food from China does not meet HIS and ACVM requirements, they won’t be cleared at the customs.

Following assessment, an MPI inspector will ask you to reship the product, destroy, treat or ask the product to be held until authorization is confirmed.

The importer is liable of all costs associated with non-compliance.

What is the Cost of Importing Food Products from China?

When importing food products from China, you should understand clearance documents, import duties and custom fees.

Chinese food is a good option for an importer as one can reap huge profits selling online or locally.

The entire international trade process seems complicated as the tariffs depend on the specific food products.

The US customs impose taxes on goods valued at $8 or more.

Values below that are free of tariffs. As of June 3, 2018 the United States increased tax on China’s 50 billion goods by 25%, increasing the cost for American consumers.

Other costs include shipping costs which varies depending on the size of shipment, terminal conditions, transport infrastructure, regulatory and political changes and relevant customs procedures and landing fees.

Depending on your budget you have an option of taking sea freight or air freight.

What are the Requirements for Importing Baby Food Products from China?

While there are no restrictions on the importation of baby formula specifically, the FDA has set up guidelines of labeling for importers to adhere to.

For example, before the formula is imported from China, the label should list all ingredients in the product.

It should also be clearly marked with the country of origin before it’s imported.

FDA requires that imported baby food from China meets the minimum nutritional and safety requirements pediatricians highly recommend infant formulas fortified with iron.

What is the Customs Clearance Process for Food you Import from China?

When food imported from China lands in the US, it goes through numerous processes before it allowed into the local market.

At first, the hold in which food was shipped is assessed to confirm that it meets the set stipulations in regards to the nature of the food items.

The customs clearance department then check the visual appearance of commodity, assessing for possible damage – swelling and also for pest or dirt contamination.

The labels of the products are then checked for concurrence of stipulations under the packaged commodity laws and prevention of food alteration laws.

The labels should not only been in a foreign language but with an English translation with ingredients details in descending the date of manufacture, expiry date, and batch number should be clearly marked.

Other than the general checks mentioned, imported food consignments from China through sea ports, Air Cargo Complexes (ACC), Land Customs Stations (LCS), Container Freight Stations (CFS), and Inland Container Depots (ICD) are referred for testing to the port health officer(PHO).

The customs authorities have a right to destroy the products or re-export them under the relevant rules if they fail the test.

Do you need to Declare Food at the Importing Country’s Customs?

Yes.

A customs declaration form is filled on any special items at the point of exit.

Food commodities in large quantities have to be declared and appropriate levies paid.

Different countries have different regulations governing export of specific food items.

Some items cannot be exported.

What is Quarantine Inspection for Food Imports?

Quarantine inspection is the inspection, regulation and enforcement of regulations at border quarantine stations to prevent entry of agricultural pests and other illegal commodities.

Quarantine inspection of food items is done on imports on entry b ythe quarantine department.

Its main objectives are

• Certification of disease and pest free status, and the standard and quality of quality products.
• Maintaining a local surveillance program in order to intercept commodities of quarantine importance imported illegally.
• Maintenance of ports of entry for a dynamic inspection service that will curb the introduction of diseases and pests through imports and ensure standards of quality is complied with.

Is Quarantine Inspection necessary for Foods you Import from China?

Yes.

A full quarantine and inspection of foods imported from China involves these steps:

• Application acceptance
• Inspection and review
• Quarantine and treatment in quarantine
• General appraisal
• Release of commodity and archiving

For specified food items, further scrutiny or quarantine processes depend on the commodity and its physical nature, certification obtained for the product or the history of compliance of the importer.

A simplified procedure may apply to importers with great compliance records.

Additionally, for commodities that do not require random sampling, an importer may submit a written compliance guarantee and have the goods directly released.

Has the COVID 19 affected Importing Foods from China?

Yes.

After the outbreak of COVID-19, agricultural products from China plunged drastically.

China exports increases by 11% according General Administration of Customs’ data.

The main reason for the dramatic decline can be assessed in two ways:

First, the restrictions of trade imposed of agricultural commodity from China by several importing countries

Two, the sudden disrupting of agricultural exports’ supply chains.

Since workers stayed at home, many export producing firms remained shut.

In addition, transportation control increased fees. 70% of respondent firms on a survey experienced an increase in logistical fees.

Further, the domestic ports efficiency of operation has declined and resulted to reduction in capacity of transportation, with some banning trade ships from other countries from docking.

Furthermore, some countries took advantage of the pandemic and set up measures to bar importation of agricultural commodities from China.

Other than activating a short term chain of supply and logistic interference, China’s agricultural exports will be affected for longer as a result of decreased demand for agricultural imports caused by the global economic recession during the pandemic.

Note that whenCOVID-19 was declared the as a Public Health Emergency of International Concern (PHEIC) by World Health Organization (WHO).

At least 17 countries announced measures restricting importation of agricultural products from China, especially animal products and live animals.

How do you Import Food from many different Suppliers in China?

If you’re purchasing your food imports in wholesale or from different suppliers, here are some tips you can use:

Conduct a Research

Before purchasing from any supplier, you should conduct a market search and identify those with the best products to maximize value for money.

Cheapest imports are not always the best and you should not rush into huge discounts and deals.

Sometimes, a supplier may have access to other suppliers of complimentary goods.

When conducting your research, ask the suppliers about other suppliers.

Find Good Suppliers

Be careful of fraudulent sites and scammers when purchasing online.

Check for feedbacks and reviews of other customers to identify the best possible suppliers.

If the market shows a favorable response when you list a few for sale, it should be safe to increase order quantities.

Place an Order

After identifying your suppliers,

In this guide, you will find all information you’re looking for about letter of credit.

Remember, this is a useful documentary credit you can use when importing from China.

So, before going for letter of credit, read this guide to get everything right.

What is the Meaning of a Letter of Credit?

A letter of credit can be defined as a document resembling a letter that is issued to the seller to guarantee timely and correct payment of goods or services.

The buyer’s bank is responsible for issuing this document.

In case the buyer fails to meet the payment terms, the bank will be responsible for clearing the payment of the goods.

Over the years, a letter of credit has increasingly be accepted by several traders in international trade owing to factors.

This includes; distance, difficulty in knowing the other party, and different laws in every country.

What are the Benefits of Using a Letter of Credit?

To begin with, a letter of credit is preferred due to the safety associated with it.

Unlike other methods of payment, the risks are greatly minimized.

A bank is responsible for making the payment and therefore ascertaining the buyer’s creditworthiness doesn’t pose a major threat.

Besides that, let’s have a look at other reasons why a letter of credit is preferred by most importers and exporters;

• A letter of credit allows the exporters to receive timely payments.
• Finance is an important aspect for any business to thrive.
• Timely payments facilitate proper and smooth planning of business affairs.
• Delivery schedules are well adhered to when using a letter of credit.
• As compared to other payment methods, the seller might keep on re-adjusting the delivery schedule.
• This in turn causes inconveniences on the buyer’s side.
• Letter of credit facilitates the peaceful settling of transaction disputes.
• All necessary documents that are needed in a letter of credit are outlined thus avoiding any confusion.
• Because of a letter of credit, an exporter can easily secure pre-order financing.
• There’s the protection of the buyer in that payment is only made once there’s the fulfillment of the required terms and conditions.
• An Importer is in control of the shipping dates of purchases being made.
• The delivery times are well adhered to by the exporter hence efficient operations and planning of his or her business.
• A letter of credit facilitates the growth of a business.
• Importers can trade with other foreign importers without worrying about trusting new vendors.

What are the Main Features of a Letter of Credit?

There are five main characteristics possessed by a letter of credit as explained below;

• Revocability – A Letter of credit can either be revocable or irrevocable.
• The bak that issues the financial document can decide to revoke a letter of credit anytime without notice.
• Bear in mind that it’s impossible to confirm a revocable L/C. Additionally.
• The revocable document is rarely used other than to provide guidelines for shipment.
• Negotiability –Just as the term implies, letters of credit are negotiable.
• For it to be negotiable, a letter of credit should make an assurance that it will pay on demand or at a specified time.
• Transfer and Assignment- Letters of credit that are domestic and administered by the UCC can be transferred as often as you wish without being ineffective.

On the other hand, international letters of credit can only be transferred once.

Only when a letter of credit states that it can be transferred, the seller has no rights to assign the right to draw.

• Sight and Time Drafts – Letters of credit always require the seller to present the stated documents to receive payment.

A Draft/bill of exchange refers to a written order to a party requesting payment to a third party.

Sight and time are the two types of drafts normally used in letters of credit.

The difference between the two is that a sight draft is payable immediately it’s presented for payment while a time draft is not.

Which Parties are Involved when Using a Letter of Credit

There are 4 main parties namely; the exporter, importer’s bank, an importer, and the exporter’s bank.

Aside from these, other parties that might also be present are not limited to;

• Discounting bank – Just as the name implies, a discounting bank discounts a draft after acceptance by the accepting bank.
• Accepting bank – An accepting bank is responsible for honoring the letter of credit and transferring the requested funds to the client.
• Drawer –In simple terms, the drawer is the party that demands payment. This can either be the exporter or seller of goods.
• Reimbursing bank – With approval from the issuing bank, reimbursing bank reimburses the drawer bank presenting claims under the letter of credit.

Not only does it apply to the drawer bank but also other banks that submit claims.

• Applicant – An applicant is the one responsible for opening a letter of credit.
• In this case, the buyer stands to be the applicant and he or she is required to follow the term and conditions as stated in the purchase order.
• Issuing bank – Not only does an issuing bank release payment after delivery of documents from the supplier but also takes part in the opening of the L/C.
• Paying bank – A paying bank can be described as a branch of the issuing bank.
• Drafts are paid to the paying bank.
• Drawer bank- This refers to the bank in which the drafts are to be drawn.
• Negotiating bank – It is the beneficiary’s bank and its role is to certify that the documents meet the terms and conditions stipulated in the letter of credit.

How Does a Letter of Credit Work?

A buyer’s bank remits a specified amount of money to the seller’s bank once the set terms and conditions are met.

The buyer is required to come up with the terms and conditions under which he would like to purchase the cargo.

This list should contain the following details;

• Goods description
• Quantity of goods
• Documents required
• Technical description if any
• Latest shipment date
• Details of the person who should be notified upon arrival of goods.
• Mode of transport to be used
• Type of port pairs to be used.

A letter of credit is sent to the exporter and his or her bank.

The bank of the importer is the one responsible for issuing this document.

Afterward, the exporter’s bank goes through the document to confirm that the submitted document is valid.

Thereafter, the exporter prepares the goods and documents needed which shall be provided once the shipment is done.

His bank counter checks to make sure that the documents are the right ones as per the L/C specifications.

After that, the bank pays the exporter after it is assured that the documents conform to the requirements as outlined in the L/C.

The seller will be paid according to the money agreed upon between her and the importer.

All the documents are then sent to the bank of the buyer for it to confirm all details against the L/C.

Once satisfied, they repay the receiving bank the money that they paid to the sellers.

How Many Categories of Letters of Credit are There?

There are several kinds of letters of credit.

Here are some of the commonly known;

• Revocable – A revocable L/C can be changed at any time without notifying the beneficiary.
• An issuing bank is the one responsible for performing such duties.
• Irrevocable – Unlike the revocable L/C, an irrevocable one cannot be altered unless the parties involved agree to do so.
• Transferrable –It allows the exporter to carry out credit transfers to another beneficiary either in full or partial.
• Confirmed –It guarantees payment of goods once the seller meets the requirements of the letter of credit.
• Back to Back – Back to back involves two L/Cs which are meant to secure financing for one international transaction.
• Unconfirmed – With an unconfirmed letter of credit, only the issuing bank is responsible for payments and negotiations of the L/C.
• Fixed- A fixed letter of credit not only has a fixed period but also a fixed amount.
• Revolving – A revolving letter of credit allows a customer to make multiple transactions up to a certain limit over a longer period.
• Red clause –A red clause gives an exporter authority to avail the pre-shipment finance.
• It is normally applicable when the supplier is unable to source goods due to lack of enough funds.
• Sight- As soon as the goods are delivered with the required documents, a sight letter of credit confirms the payment.

Do you Need any Documents when Opening a Letter of Credit?

Yes, you do. Some of the required documents fall under the following categories;

• Commercial documents
• Financial documents
• Shipping and transport documents
• Official documents required by the importer’s country
• Insurance documents

Some of these documents are not limited to;

• Certificate of origin
• Consular or Customs invoice
• Air Waybill
• Bill of lading
• Inspection certificate
• Insurance certificate
• Commercial invoice
• Health certificate of Phytosanitary Certification
• Packing list

Is a Letter of Credit a Safe Payment Method when Importing from China?

Quite simply, Yes! Many Chinese suppliers prefer using this payment method as it poses no risks to both parties.

A letter of credit is mostly useful when making bulk purchases.

In as much as a letter of credit is quite safe, it also has limitations.

Therefore it’s important to make a wise choice on reasonable grounds before choosing it.

Who Incurs the Cost of a Letter of Credit?

The beneficiary as well as the applicant is responsible for the payment.

The charges might vary depending on the following main factors;

• The nature of the letter of credit.
• Pre-existing agreement between the importer and exporter.

How Much Does a Letter of Credit Cost?

Generally, it will cost you 1% of the amount stated in the contract.

For instance, if an importer requires L/C worth $100, 000 .

The letter of credit covers 10% of the contract ($10,000) the importer will need to pay $100 for the L/C.

 Are There Formalities for Opening a Letter of Credit?

The importer’s bank takes the responsibility of opening a letter of credit account on behalf of the applicant.

Opening an L/C account is not much of a hassle.

All you need to do is approach your nearest bank and fill the necessary application forms.

Thereafter, the issuing bank will evaluate the application and approve it.

What do L/C 90 Days Mean?

LC 90 days simply means that the amount of money promised in the letter of credit will be due in 90 days.

Just so you should know, a letter of credit can be LC 90 days, 60 days, or LC 30days.

Both the LC 60 and LC30 days have similar meanings to the LC90 days but with different timelines.

Can you Verify a Letter of Credit?

Yes, you can verify a letter of credit by checking the factors below;

• Check the irrevocable structure of the letter of credit and ensure that it’s not stated that the letter of credit is “revocable”.
• Confirm the date of issue, date of expiry, and the latest date of shipment. Check and verify the following;
• Ensure that shipment can be made before the latest date of shipment.
• Confirm if it’s possible to hand over the document before the expiration of the letter of credit.
• Also, check where the letter of credit expires.
• Verify the issuing bank and ensure that it’s a valid bank.
• Ensure that you check the contact and location details of the applicant and beneficiary and confirm that they are correctly stated.
• Look into the letter of credit currency and the amount and ensure that the amount and currency are correct.
• Examine the description of the goods and services and check whether it matches the sales contract.
• Also, ensure that the goods are covered under the commercial invoice.
• Confirm the documents that are requested by the L/C.
• The terms that are outlined in a letter of credit should match the sales contract.

How Does Bank Guarantee Vs Letter of Credit Compare?

These two documents are more or less the same in the following ways;

• Both of them instill confidence in the participating parties.
• Both assure the third party that the financial institution will pay the goods just in case the borrowing party fails to do so.

On the other hand, they differ from each other owing to the following reasons;

While a letter of credit is concerned about the performance of the transactions of the seller’s credit risk.

A bank guarantee only offers compensation once the buyer defaults.

• A letter of credit is meant to fulfill the payment once the exporter ships the goods.
• On the other hand, a bank guarantee is claimed in cases where the buyer fails to accomplish his requirements.
• While a letter of credit has four main parties (importer, exporter, negotiating bank, and advisory bank).
• A bank guarantee involves three parties which include; importer, banks, and exporters.

How Should I write a Letter of Credit?

This should not be much of a hassle.

First, you need to stipulate the terms to be followed by both parties.

In case the exporter agrees but fails to meet the set terms, you might be qualified to get some or all of your money back.

Keep in mind that a letter of credit appears to be like instructions and therefore you will only include the basic details.

Some of the details you should include are not limited to the exporter’s details and their receiving bank together with the amount to be transferred.

Lastly, sign the letter to formalize the commencement of the transaction.

What is an Advising Bank in LC?

Once the advising bank gets approval to open the letter of credit; it has the responsibility of informing the exporter.

Normally, this bank is located in the exporter’s country.

It also creates awareness of the conditions of the credit to the exporter.

Keep in mind this same bank can as well act as a notifying bank and a negotiating bank.

What is the Significance of the Advising Bank in L/C Transactions?

Advising bank has significant roles to play in a letter of credit transaction.

Here are some of them;

• Advises the letter of credit to the exporter.
• The advising bank verifies that the information/ advice contained in a letter of credit is in line with the terms and conditions of the credit.
• The advising bank is responsible for scrutinizing the letter of credit.

What is the LC Expiry Date?

LC expiry date refers to the validity period under which the exported documents need to be submitted with bank to negotiate the documents.

The exporter is required to follow the guidelines in the letter of credit as he submits the documents with bank after export.

What is the Difference Between LC Expiry and Shipment Date Expiry?

A shipment date expiry refers to the last date that the goods need to be shipped as agreed upon in the letter of credit.

Alternatively, the LC expiry refers to a specific date on which the letter of credit is expected to be invalid or expired.

The expiry date should not exceed the date of the final disbursement.

Is Telegraphic Transfers the Same as Letter of Credit?

No. These two payment methods differentiate in a manner that;

• Telegraphic transfer involves the electronic transfer of money from one bank to the other.
• This happens when you are ready to pay for your goods.
• Once the money is received, goods can now be shipped and you can sign closing documents during the sale period.
• A letter of credit is an instruction from the importer to a foreign bank.
• This helps to pay the exporter once all the conditions in the letter of credit are met.

What are the Disadvantages of Using a Letter of Credit as a Payment Method?

A letter of credit has several advantages but also you need to be aware of a couple of drawbacks associated with this payment method.

Some of these cons are not limited to;

• It is expensive – All banks charge for their services and the cost can shoot up depending on the features needed by the parties.
• Both the exporter and importer are required to pay a fee.
• .Time-consuming- A letter of credit takes time and this can lead to delays and other administrative problems.
• Keep in mind that it is a conditional payment and making a complying presentation might also be time-consuming.
• It has sensitive expiration dates.
• The issuing bank is the one that is dependent on when it comes to making the payments.
• Currency risk due to the fluctuations in the market.

Can Documents be Dishonored once Submitted?

 What Should be Done if Documents are Dishonored?

Yes, the documents can be dishonored once the beneficiary presents them.

The truth of the matter is that documents can be dishonored when they are found not to comply with the guidelines of the L/C.

In such a situation, below are some of the actions you can choose to take;

• Correct the document – This is mostly applicable when the shipping company of the beneficiary can correct the discrepancies.
• This can happen within the presentation of the document period.
• If it cannot be corrected, negotiation of the draft can be requested by the beneficiary’s bank with permission from the issuing bank.
• Lastly, the documents can be sent to the issuing bank on “approval “grounds.
• The documents will need to be sent to the importer only when the importer fails to pay or accept.

What is the Length of Credit Period in a Letter of Credit?

On average, 180 days is the accepted length of credit period in regards to most government regulations.

However, the buyer can decide to either choose number of days between 30  to 180 days depending on his or her preferences.

Is Paying Interest Applicable in a Letter of Credit?

No, it’s not. As a customer, you don’t need to pay any interest.

Keep in mind that your bank will also charge some fees for its services.

What is the Meaning of Advice of Credit?

Once a party requests credit, he or she is issued with advice of credit to confirm that the application request has been approved.

This financial document contains content such as information on how one can extend the credit.

The bank informs the other party that a corresponding bank has opened a letter of credit in his or her favor.

Although most Chinese companies accept letter of credit, they also allow for alternative payment solutions.

For any advice or consultations on how to pay Chinese suppliers, contact Tj chinafreight now.

Blind Shipments have become increasingly popular in the international shipping scene.

While the practice is relatively simple, you must understand what Blind Shipment means.

You need to know the benefits of Blind Shipment, associated risks, and how you can enforce blind shipping in your business.

Here is a detailed overview of Blind Shipment.

What is a Blind Shipment in International Shipping?

Blind Shipment is a shipping practice where one or more parties to a shipment are ‘blind.’

In this case, the parties are unaware of who is the shipper, consignee, or both.

This information is omitted to deliberately conceal the identity of the shipper to the customer or vice versa.

To understand Blind Shipment better, let’s look at an example.

Suppose, as a customer, you order jewellery from distributor x.

But distributor X doesn’t have a physical inventory of the product you ordered.

In this case, he/she decides to ship the jewelry from China through a 3^rd party vendor but doesn’t want you to know this.

To conceal this information, distributor x will provide your shipping address and instruct the vendor in China to ship the product/s directly to you.

In addition to this, x will also instruct the shipper to omit their details.

In this case, the jewelry will be delivered to you as if it has been shipped directly from distributor x.

Why use Blind Shipping

Distributors use blind shipping for various reasons.

Mainly, it is for the benefit of saving time and cost.

By shipping blind, your goods will have fewer distribution channels to go through.

This is because the goods will go directly from the supplier to the customer under your name (the distributor).

Secondly, blind shipping helps you to conceal the supplier’s details.

In Blind Shipment, the supplier’s information is not included.

Instead, only the distributor’s details are shown, so the customer can’t know the origin of the Shipment.

Generally, blind shipping allows you to keep the suppliers, importers, and other aspects of your supply chain confidential.

Typically, this type of shipping is done through a 3^rd party (shipping agent) who books and controls freight movement.

This also hinders the supplier from attempting to do business directly with your customers, or vice versa.

In a nutshell, blind shipping helps you control competition as it put a limit to who has access to your suppliers or customers.

Difference between Blind shipping and Double-Blind shipping

Blind shipping may be inexpensive for your business, but it is somewhat unreliable.

While struggling to hide the vendor’s information from the customer, the vendor may still access your customer.

With this, the vendor can quickly contact the customer and ask to do business with them directly.

Double-blind shipping enables you to maintain the anonymity of both your supplier and customer.

This way, the vendor cannot contact your customer and vice versa.

Who can use Blind shipping

Generally, blind shipping is for anyone who wishes to conceal shipment information from one or more parties in their supply chain.

Distributors, importers, drop shippers, manufacturers, sourcing agents are all legible to use blind shipping.

Benefits of Blind shipping

Blind shipping comes in handy and has several benefits.

Maintain a Competitive Advantage

By default, dropshipping is applicable where a distributor lacks the physical goods to meet the customer’s order.

Typically when you dropship goods to the customer, your supplier will deliver essential details about the price and contact information.

Your competitors can use these details to rival you in the market.

But you want to keep this information hidden so that no one gets a hint of where you’re sourcing your products.

Blind shipping helps put everyone in the dark about your operations and, as such, guarantees you safety in the market.

Protect your Supplier

It is common for suppliers not to want their information, such as contact details and address in public.

This could be for many reasons, such as exclusivity deals they’ve signed, among other things.

In this case, blind shipping is proper.

It allows you to protect your supplier’s privacy by keeping details about their location and operations confidential.

Business Technique

You already know that you don’t have to have a physical store of goods to fulfil your customers’ orders.

This is especially if you’re into the consumer products business.

As a business, you can embrace blind shipping as a strategy to reduce risk exposure.

You can do this by shipping only when a customer has placed an order.

This reduces the chances of deadstock, among other losses and inconveniences that accompany keeping a physical inventory.

Higher Profit Margin

Of course, with blind shipping, a business will not have any inventories and many employees.

Your team needs only to take customers’ orders and direct them to the vendor to do the shipping.

In the long run, if your reputation and services are high, you will command a large customer base.

As a result, this will drive sales leading to good returns.

Ability to Retain Clients

The only reason that makes customers loyal to a single brand is the high level of satisfaction and convenience.

Therefore, with proper blind shipping plans, a distributor can hang on to vendors’ hard work and claim exemplary results.

Blind Shipment in E-commerce

In addition to distributors, suppliers, and importers, many online stores and sellers like Aliexpress use Blind Shipment.

These sellers use Blind Shipments to protect their supplier sources.

This helps to prevent customers from jumping ship to do business directly with the suppliers in the future.

Blind Shipment allows e-commerce sellers to reach more customers while avoiding the expense of maintaining a physical stock.

This type of Shipment from e-commerce stores come with only the store’s details.

Nothing about the supplier or person that fulfilled the order is included in the order.

Blind shipping is advantageous for e-commerce stores acting as intermediaries with the need to hide their product sources.

How Blind Shipments Work

As already mentioned businesses use blind shipping to simplify the shipping process and also mitigate related costs.

The consignee in a Blind Shipment will essentially buy goods and have them shipped directly to their customer.

Here is a real-time scenario to help you understand the blind shipping process better.

So we have three parties here;

• Distributor (you)
• Vendor
• Retailer or customer

In this example, let’s assume that you run a business in Manila, Philippines, and wants to ship furniture to a customer in Cebu.

You buy the furniture from a supplier in China to resell to the customer at a marked up price, which is slightly higher than the wholesale price.

To fulfill this order cost-effectively, you decide to request the furniture to be shipped directly from China to Cebu.

You also decide to blind the Shipment so that Z thinks that the furniture arrived from Manila, rather than from the Y in China.

Note that Blind Shipments usually have two bills of lading documents: one with the correct details and another, a dummy used to fulfil the order to the customer.

In this case, you will find a shipping agent who will then file two BOLs.

The real bill of lading will have the correct shipping details- pick up in China and delivery in Cebu.

You will get the real BOL and pass it along to your contact in Cebu where the furniture is being picked up.

The shipping agent will contact the shipping company to set up the pickup from China and delivery in Cebu.

The carrier will then make the pickup in China as per the demand.

Once the furniture shipment is confirmed as picked up and in transit, the shipping agent will contact the carrier.

Your agent then supplies them with the dummy BOL, which is to be used at the time of delivery.

In this second bill of lading, the shipper’s address will read to your address in Manila.

The carrier will then confirm that they will use the dummy BOL at the time of delivery in Cebu.

After this, your agent will only track the Shipment until it arrives at the customer’s address in Cebu.

At the time of delivery, the BOL will read that the furniture was shipped from Manila.

But in reality, the goods will have come from China.

Disadvantages of Blind shipping

Despite being a perfect solution for startup shippers, Blind Shipment has several problems associated with it.

As a shipper, you have little control of the products shipped to your customers.

In the case of damaged or faulty products, the blame is directed to you.

When customers complain about faulty products, you risk losing your reputation, and your customers can lose trust in you.

Also, you risk having issuing refunds in cases where customers demand it.

Information is freedom for customers. Removing sensitive information about the product may paint a bad image of the distributor’s products to the customers.

With many blind shippers across the globe, you are not alone, and the only hope rests in having good marketing skills.

Unless you are already established, you will spend a lot of returns on marketing.

Finally, blind shipping may prove expensive to your customers, depending on the season.

You rely on suppliers and the shipping company to meet your customers’ needs.

If they increase their prices and rates, you are also forced to increase.

How to prepare a Blind Shipment

Preparing Blind Shipment is not as easy as it may sound.

You need to be careful to be able to handle everything without making mistakes.

If you think your business can benefit from Blind Shipment, here is a quick procedure for preparing your customers’ next Blind Shipment.

Hire a Freight forwarder

The first step in making your shipment blind is to find a capable freight forwarding company or shipping agent.

A good freight forwarder should be knowledgeable in Blind Shipments.

He/she should also have the risk experience and connections to help manage your Blind Shipment tactfully.

Luckily, many freight forwarding companies and agents are offering these services at affordable rates.

You should find one that matches your needs and budget.

Create two separate Bills Of Lading

With a capable freight forwarder in hand, proceed to prepare the Shipment.

Firstly, the forwarder, through his connections, will help find a suitable carrier for your goods.

Remember we said that Blind Shipments require more than BOL.

As such, the forwarder will request two separate bills of lading.

Note that a bill of lading (BOL) document provides relevant details about the Shipment, such as the shipper’s name, the consignee, and the shipped quantity.

So when dealing with Blind Shipment, there is two bills of lading involved.

The first bill of lading, as you know, is the original bill of lading that shows the consignment’s actual information.

This bill of lading is hidden from the blinded customer.

The second bill of lading is the dummy/falls bill.

This bill is faked, and some details about the supplier omitted.

On delivering the goods to your customer, the carrier will switch the bills of lading and issue the customer with a fake bill of lading.

Let your Shipper Handle the Rest

After doing all that is necessary and providing the customer’s address, your work is done; the remaining part is for your shipping agent to handle.

Blind Shipping vs. Dropshipping; How do they Compare/

Blind shipping and drop shipping are somewhat interrelated.

When discussing the concept of blind shipping, it is usually within the context of drop shipping.

Therefore, understanding the dropshipping process can help you figure out the puzzle that is blind shipping.

Remember that the conventional business model is such that a business has physical inventory from which customer’s orders are delivered.

In contrast, the drop-shipping model eliminates physical inventory.

Instead, it allows businesses to keep virtual stock.

Although there is no physical inventory in dropshipping, businesses can still deliver customers’ orders without much trouble.

Please note that the drop-shipping model has a clear cut working system.

In this, the virtual store only functions as a marketplace for suppliers’ goods.

And since branding and customization costs tend to add up too quickly, many drop shippers often opt for blind shipping.

No doubt, dropshipping is convenient and saves costs.

However, it is riskier as you can quickly lose clientele if you do it straightforwardly.

Openly indicating the shipper’s and customer’s information makes it easy for them to contact each other and negotiate to work directly in the future.

Worse still, your competitors can order from your store in a bid to find out your supplier source.

Blind shipping provides a solution to this by allowing drop shippers to blind their return addresses.

Understand that blind shipping is not 100% guaranteed as a relatively high cost of shipping usually accompanies it.

Apart from this, there is also an additional link to the supply chain.

This tends to increase the risk of errors and losses during shipping.

Remember that blind shipping requires partnering with a capable shipping agent.

The problem is that finding a trustworthy and reliable agent to manage your Blind Shipment safely is not easy.

Comparing blind shipping and drop shipping, you should note that both require a substantive investment to ensure success.

Shippers in both scenarios need to invest in proper marketing and customer service tools; otherwise, they might not be effective for your business.

The good thing with drop shipping is that it doesn’t have minimum volume requirements like blind shipping.

You can always place orders to suppliers even when the customer needs just one piece of the product.

Likewise, Blind Shipments tend to become unnecessarily costly when delivering small volumes.

This is because of the minimum cost of handling the blind BOL.

Importance of Blind Shipment to drop shippers.

Blind shipping offers several benefits to drop shippers.

Primarily, it provides a low-cost strategy to enter any business niche.

All drop shippers need is strong marketing skills and an online platform where customers place their orders.

The traditional business setup requires setting warehouses and offices, which are expensive to run.

Blind Shipment allows shippers to have goods directly delivered to customers.

Blind Shipment provides shippers security in terms of guaranteed future existence.

By concealing information about suppliers and manufacturers, your customers will continue placing orders, and competitors cannot identify your suppliers.

Under blind shipping, you will retain your customers because the shipments are directly delivered to the customers.

The time between placing orders and deliveries is thus short.

Rules of Blind Shipment

Blind shipping requires keen attention from all parties involved.

One mistake made can allow customers to access critical information about the supplier or customer in the case of double-blind shipping.

The following rules apply to blind shipping:

• Distributors must have valid credit cards for payment
• Carriers can accept shipping of goods under Blind Shipment but are not responsible if the objective of blind shipping is not achieved.
• The third-party (in this case, the distributor) shall request blind shipping before the goods are picked up for shipping. In most cases, carriers reject late requests.
• You must use two bills of lading, both of which attract a payment.
• Charges that relate to the request of blind shipping shall be paid by the distributor before shipping.
• The original bill of lading shows the supplier/manufacturer’s actual details, the units, and the carrier shipping on behalf of the shipper.
• The dummy/falls bill of lading contains the distributor/third-party’s details and the owner of the goods being shipped. It also contains the zip code and address of the customer to receive the goods.
• The final invoice to be used in the shipping process is generated from the dummy/false bill of lading.

Cost of Blind Shipping

The cost of blind shipping is not fixed and depends on several factors, such as the agreement between the supplier and shipper.

Because you purchase goods from your supplier who then delivers to your customers directly, the cost of blind shipping can be the:

• The cost you pay the carrier to deliver the goods to the customer
• Fees you pay the freight forwarders to handle your goods
• Any other fee that you incur from placing an order with your supplier until the order reaches the customer

When calculating the cost of blind shipping, remember to add up all related expenses, so your freight bill is as accurate as possible.

Problems that can Arise during Blind Shipping and How to avoid them

The following are the main problems associated with blind shipping:

Low-profit Margins

For the goods to reach the target customers, a distributor must place an order with their supplier, hire a freight forwarder and have the carrier handle shipping. ‘

Along this supply chain, everybody gets a commission, which usually depends on the season.

During festive seasons, shipping is expensive, and suppliers hike prices, reducing profits for the distributor.

Since the business operates online, many such distributors are established and are willing to offer the goods at lower prices.

To beat them, as a distributor, you lower your prices, which eventually lowers profit margins.

Low Control of Suppliers Stock

You want your customers to have orders shipped to them throughout the year.

However, this is usually not the case because your suppliers run out of stock.

As the distributor, you are solely responsible to your customers; remember they have no connection with the supplier.

It would help if you communicate any possible delays on time or find other suppliers to avoid disappointing customers.

Problems in Setting the Right Prices

As a distributor, your profit margin depends on the difference between your marked up price and the wholesale price.

Doing market research on wholesale prices helps you set reasonable prices for your customers.

However, problems arise when suppliers offer their products at low wholesale prices but recover the costs by charging hefty shipping costs.

Finding the Right Seller

You can have a vast customer base making orders.

Still, the problem will arise when it comes to finding a reliable seller.

Not all sellers who claim to meet your demands do so.

Therefore, investing in finding the right supplier will prove beneficial in the long run.

Communication Problems

Proper communication is core in any business venture that involves one or two people.

Transparency is paramount in blind shipping between the supplier and the distributor.

When customers place an order, you should tell them how long it would take to deliver the order.

Delivery is a factor determined by the supplier and the shipper.

Sometimes it becomes difficult to fulfil customers’ orders as promised because of a lack of transparency and proper communication from the supplier and carrier.

Blind shipping is complicated and requires proper analysis of every little element of it.

Solving this problem lies in conducting thorough due diligence at the start.

Research your suppliers’ history before settling to use their services.

Also, creating good communication behaviour ensures transparency and trust.

Manage your Blind Shipment with Tj chinafreight

Blind shipping from China can be overwhelming. It would help if you had a reputable business partner who is well versed in dealing with Blind Shipments.

If you are looking for the best partner to handle your Blind Shipment from China, Tj chinafreight is the best choice.

At Tj chinafreight, we value your business potential and are always available to ensure success in every aspect of your business.

Our rates meet your business budgets, and our team of professionals is on standby to answer any questions you raise.

Leave us a message, and we will gladly reach out.

All information you’re looking for about bobtail fee is right here.

So, if you want to learn more about bobtail fee, read this guide.

What is a Bobtail in Shipping Terms?

Let’s first understand what a bobtail is.

It is simply a truck that travels without a trailer.

It is called a bobtail because the tractor drives around without its tail which is usually 24 feet.

Bobtail trucks are considered cargo-free; they don’t generate any income for the owner.

Bobtailing may occur because of the following reasons:

i. When the truck driver moves from the terminal to the warehouse to pick up a loaded trailer.

ii. When he/she travels back to the end-stage after dropping off the trailer containing cargo.

However, truckers don’t like bobtailing for some reasons like:

i. It’s dangerous and prone to accidents. The truck stability and braking level are not equivalent.

ii. They don’t earn cash from it but they have to fuel the trucks.

iii. It’s more or less a seasonal thing because it’s highly affected by the weather such as rain or snow.

What is a Bobtail Fee?

Bobtail Fee is also Referred to as a Drop Fee.

This is a fee charged by a tracker to drop off an FCL (Full Container Load) at a warehouse and pick it up once it has been unloaded.

The driver is contacted to pick up the empty container after unpacking has been done.

This may take up to 48 hours.

The amount charged by the driver reflects on your invoice or Flex port quote as a drop fee.

The chassis fee also appears on the invoice.

Is Bobtail the same as Live Unload?

Not really. They are different however most people interchange the two trucking terms.

As mentioned above, in bobtailing, the driver simply drops the cargo at the warehouse, leaves then come back to pick the container later.

Whereas in live unload, as the term suggests, it’s live.

Meaning there must be actual people during the loading and offloading to witness the process.

The truck driver doesn’t leave the warehouse when unloading is taking place.

Instead, they wait for the workers at the receiving dock to unpack the trailer then he/she leaves with the empty container.

The driver has to book an appointment of the exact time they want live unload to be done.

This process may take 1-2 hours. Usually, drivers consider 1-2 hours’ free wait as they wait for the cargo to be unpacked.

Once the two hours’ elapse, they start charging any additional time in hours.

Some drivers charge $75 per hour.

This wait time reflects on your invoice or Flex port quote as a Trucking wait fee.

The longer they take to unload the goods the more the trucking fee.

Loading a shipment may be done after some time or immediately.

It depends on the situation.

The main difference between these two terms is;

in bobtailing the driver doesn’t wait for the container to be unloaded while in live unload they wait for the container to be unpacked.

When Should You Consider ‘Live Unload’?

Live unload may be a great shipping method.

However, ensure you liaise with your driver early in advance.

Consider live unload:

i. If the goods being unloaded are perishable hence they need to be unpacked before going bad.

ii. If the companies have a lower shipment.

iii. If the cargo you are unloading will take a maximum of two hours.

iv. Bear in mind any time above the two hours is charged a fee.

v. If the goods are palletized (being transported on a pallet) and the warehouse has a forklift. They can help you unload the cargo within the given time frame.

vi. If the goods are fragile and they are not in large quantity.

vii. Therefore, the driver needs to watch as they unload to ensure they handle them with care.

viii. Love unload can be a good option where the parking space is limited.

When should you Consider a Bobtail?

Bobtailing may be a great shipping option:

i. If your cargo cannot be unloaded immediately after arriving at the terminal.

ii. If the goods cannot be unloaded quickly. Meaning if it to be done immediately, it would take more than two hours hence increasing the trucking wait fee.

iii. If the warehouse does not have enough manpower to unload the cargo faster.

iv. If the warehouse is already congested, hence they may need to clear the cargo they have in stock before unloading the ones you have brought.

v. If the cargo contains loose loaded cartons which may take long to unpack.

vi. If the goods are fragile need to be handled with care.

vii. In the process of handling with care, they may take a really long time.

How Much is a Bobtail Fee?

Bobtail fee is charged according to the goods you are shipping.

Usually, the fee is half your shipment.

Meaning you may incur a higher cost if your goods are in large volume and a small amount if the volume is less.

Why Does a Bobtail Fee Occur?

Well, in shipping, containers are mostly delivered either via drop and pick, live unload or drop off.

Drop and pick, the driver drops off the cargo at a warehouse, picks an empty container, and leaves.

Live unload the truck driver gives a specific time for unloading to take place.

If the goods cannot be unloaded immediately or within the given time, the shipper may choose to drop off method.

This way the shipper may save on cost while the trucker saves on time.

It’s a win-win for both of them.

In bobtailing, the trucker drops the cargo, leaves the warehouse then comes back after 48 hours to pick the container.

This may require him/her to make an extra trip to the warehouse hence the rise of drop fee.

How do Trucking Companies Assess Bobtail Fees?

Some of these trucking companies offer shipping and handling services while others have hired their truckers.

If a customer chooses to work with a trucking company, money is paid to the company directly.

The driver is then given an amount they have agreed on.

Knowledge of costs you may incur is fundamental in any business.

Understanding the cost structure helps trucking companies know the cost per mile hence they can charge their shippers.

Trucking helps them know the profit they will eventually make.

They calculate their cost per mile by deducting expenses like fixed cost, variable, and salaries.

Poor bookkeeping can mess up your business.

Does Bobtail Fee Increase with Time?

Every business has a peak and off-peak season.

Equally, in international trade, there are seasons where the goods you are importing or exporting are in high demand and some, where the order is low.

It’s affected by what you are selling and in what season.

Variation in bobtail fee reflects the nature of supply and demand.

Truckers normally take advantage of such seasons.

When the demand for goods is high in some months, they charge a higher fee because they have a lot of work from different customers.

When the season is slow, they charge a lower fee due to the scarcity of jobs.

As a trader, understanding demand peaks can help you in your business.

Is Bobtail Fee Applicable to LCL Shipments?

Bobtail fee doesn’t apply to LCL (Less Container Load).

As the name suggests, this fee is only associated with FCL.

LCL cargo is charged by calculating the volume of the goods.

If you are shipping goods that don’t fill the entire container, instead of transporting partially empty containers, consolidate your goods in one container.

Of course, it depends on the nature of goods.

It will save you time and money.

Who Charges Bobtail Fee?

Bobtail fee is charged by the trucker who you have entrusted to drop off your FCL container at a warehouse and pick it up once it has been unloaded.

Can you Avoid Bobtail Fee? How?

Am sure any route or means you can use to avoid paying fees is music to your ears.

Luckily you can avoid a bobtail fee.

But how?

Here is the catch, once the trucker deposits FCL cargo at a warehouse, then leaves empty, you will be charged a bobtail fee.

To avoid the fee, the truck driver should drop off the trailer, hook up with an empty container, before leaving the warehouse.

This way the trucker may not make several trips to the terminal hence he/she may keep away from the bobtail fee.

In other words, you will go for the drop and pick method instead of bobtailing.

This is very common in drayage shipment.

Is Bobtail Fee Negotiable?

Yes

Negotiation is an in-thing in business; everyone is trying to save their coins.

It has even forced sellers to set a higher price to allow a bargaining window for their customers/clients.

In most businesses, once you come in contact with the service provider, it’s possible to negotiate.

You can settle for a price that is fair to both you and your trucker.

However, they usually have a flat fee they can’t go beyond.

It is easier to bargain if you are shipping volumes of goods regularly using the same trucker.

But if it’s only one offload, it might be hard to negotiate in fact, they may charge you twice the freight rate.

Note prices vary depending on the trucker you are dealing with.

Some may charge a flat fee; others charge doubles your shipment while others don’t charge you an extra fee.

If the terminal is in the delivery location or just a few miles from the port.

Do your research to see who suits you best.

What Happens when Goods get Lost or Damaged in Bobtail?

Truly, we live in an imperfect world. No shipping method will guarantee 100% safety of your cargo.

Especially goods that pass through long routes or need more handling due to liability issues are prone to either loss or damage.

Loss and damage are common in e-commerce and international trade.

In case it happens. Here’s how to go about the process.

i. First thing first, check your luggage thoroughly before signing the Bill of Landing

ii. Report to your carrier immediately; preferably within 3 days either via phone, email, or social media.

iii. Back up your claim with receipts containing the value of lost items. In case the goods are damaged, take a photo and send it as well.

iv. Your claim will be inspected to reveal when exactly the incident happened whether during transit or delivery.

v. Once they confirmed when it happened, they will send you an email if it’s during delivery.

vi. If it was during transit, a claim form will be sent.

vii. The carrier will pursue the claim using your insurance and keep you updated on every step they make.

viii. The process may take 28-30 days.

ix. Once everything is sorted, you will be refunded the amount equivalent to your goods. However, the insurance will deduct 10% (fixed) of the amount for the claim processing fee.

Does Bobtail Fee Cover the Cost of Non-Trucking Liability Insurance?

Bobtail fee doesn’t cover the cost of non-trucking liability insurance.

What is non-trucking liability insurance?

It is a liability that provides coverage when you use a truck for personal activities such as picking kids from school or going for groceries.

Basically, you need it if you are driving the truck for non-business purposes.

Like any other job, truck drivers have off days.

Interestingly, you may find them still moving around with big trucks.

Don’t blame them they got used to them.

Non-trucking liability insurance protects them from liabilities they may incur in the process of doing their businesses.

You may need insurance:

i. If you are driving a truck for non-business purposes

ii. If your motor carrier requires the insurance in a written agreement i.e. lease

iii. If you want to avoid high liability expenses in case of an accident.

Non-trucking liability insurance doesn’t cover goods you are transporting.

It only caters for damage or injury to a third party or business.

It may include the cost of repair of replacement or medical expenses

Some companies are kind enough to offer coverage for trips home after making deliveries.

It is not as wide as other trucking insurance policies hence it’s not costly.

Insurance companies calculate premiums by checking your driving history, no of times you have used the truck for personal use, and limit requests.

What is Bobtail Insurance?

Bobtail insurance is liability insurance that provides protection when you drive a truck without a trailer.

Do I really need bobtail insurance?

You may ask.

Yes, you need it irrespective of the times you drive your truck.

whether you drive under someone else’s trucking authority or if the trucker’s liability insurance that you have protects you while under shipment.

You only need bobtail insurance if the truck you are driving is under someone else’s trucking without a trailer attached to the truck.

For example; a truck driver drops off goods at warehouse A then moves to point B without the trailer.

Bobtail insurance may provide coverage between the two points just in case something like an accident occurs.

Realistically, this bobtail insurance provides a wider coverage as compared to non-trucking liability insurance.

Who Covers Bobtail Insurance during shipping?

The policyholder covers bobtail insurance.

This policy only takes care of liabilities.

It only covers you if involved in an accident while driving a truck bearing another person’s trucking authority with no trailer.

It covers you if you get into an accident while on your way to pick cargo, after dropping a load as you go to pick up more goods, or after you are done with the trips.

Bobtail insurance doesn’t cover driver injuries, damage to your property whether by accident, natural disaster, or even loss of income.

It only covers; Third-party property damage, legal costs, medical bills, and settlement expenses.

The cost of insurance is affected by various factors like;

limits requested, the number of times the truck is used without the trailer, driving history, annual receipts, experience in the industry, number of trucks you own or operate, etc.

The average rates are $35-$60 per month for a million-dollar coverage.

While obtaining insurance, all you need to do is know what you want, collect the information needed, way the options you have then purchase it.

However, the insurance policy may vary from one company to another.

Liaise with cover wallet advisors to help you access companies with the best rates.

Does Bobtail Fee Include Loading/Unloading Costs?

Sadly, it doesn’t.

A bobtail fee only covers for transportation of cargo from the port to the warehouse.

For loading and offloading, you have to pay an extra cost to hire a professional who can assist you in the activity.

Bear in mind the given time is normally 2 hours.

If your team takes longer, you may be charged extra container loading/unloading time.

Choose a team that may save you time and money.

If you want your trucker to unload goods you will pay for the delivery labor fee.

Does the Bobtail Fee Cover Warehousing Costs?

Sure it does.

Once the driver drops cargo and leaves, the appointed team unloads the cargo and provides free time storage for 48 hours.

If the driver takes longer than 48 hours to go for the empty container, you will be charged a demurrage fee.

The demurrage fee is calculated per day; the longer the container stays the more you pay.

Does Shipping Cost Include Fobtail fee?

No, it doesn’t.

The shipping cost only covers for transportation of cargo from the country you are importing from to your county’s port.

You incur other charges depending on the means of transport you will use from the port to the warehouse.

If you choose to use a trailer, you will pay a bobtail fee.

What Happens if you Fail to Pay Bobtail Fees?

Every decision has consequences.

If you don’t pay for your bobtail fee as agreed with your carrier, you may be charged for a per-diem (Latin) or per day fee irrespective of your call date.

You may only be considered if you had prior arrangements.

Per-diem charges maybe $50-$100 per day.

Moreover, it may vary from one port to and carrier to another

Is Bobtail Fee Inclusive of the Cost of Picking up the Empty Container after Unloading?

Yes.

Once you have paid a bobtail fee to the trucker, it’s inclusive of dropping off cargo and picking the empty container.

You don’t have to pay an extra fee.

Is Drop-and-Pick Fee the same as Bobtail fee?

No, they are not the same.

Drop and pick fee occurs when you deposit your goods at the warehouse and hook up with an empty container.

It is therefore less than a bobtail fee.

It has offers sometimes. Belgium for example has a 50% discount on drop and hook done at night or early in the morning.

Bobtail fee on the other hand is a bit costly because the trucker has to visit the warehouse twice.

Which Factors Affect Bobtail Fees?

Bobtail fee is influenced by the following factors;

i. Seasons- there are pick and off-peak seasons.

ii. You will pay a much higher fee if you ship goods during peak seasons as compared to off-peak.

Similarly, drivers charge lesser fees at night and early in the morning because they are not as busy as they are during the day.

iii. Distance- the longer the distance from the port to the warehouse the more the bobtail fee.

iv. The kind of trucker you choose will affect the bobtail fee since the fee varies from one trucker to another.

v. If it’s your first time shipping and you are not familiar with the field, truckers may take advantage and con you.

vii. If you are shipping fewer goods often instead of more goods less times you may pay a more bobtail fee.

How Can you Reduce your Bobtail Fees?

The following ways can help you reduce your bobtail fee:

i. Look for a trucker that suits your budget.

ii. Ensure you have all documentation and logistics needed by the trucking company.

iii. Don’t be too strict to the carriers, allow them to be open-minded with the way they load and offload goods. You may get good rates.

iv. Pre-clear all your cargo and give delivery instructions to your trucker.

v. Send your cargo to the port early in advance to give the trucking company ample time to schedule pick and delivery.

vi. Ensure the loading and offloading team are ready to take action once the container arrives to save on the driver’s time.

vii. If you are dealing with a large volume of goods, hire a logistics company to assist with the fee.

viii. Ship during off-peak seasons and allow at night pick-ups

ix. Develop a good relationship with your trucker.

x. Ship more goods less often.

xi. Look for carriers that are located near your ship point.

What is Chassis Fee?

Chassis fee is charged on ocean containers that are carried by truck.

Meaning if your cargo gets to the seaport then it’s meant to be transported to the warehouse via truck, you will pay for this fee.

Is Chassis Fee the same as Bobtail Fee?

Not really.

They are different however there is a thin line between the two fees.

Both are charged according to the container capacity.

FCL has a fixed rate while LCL is charged according to the volume of the cargo.

Both of them are attached to the trucker.

However, the chassis fee is paid to ocean carriers at the port while a bobtail fee is paid to the trucker.

Chassis fee is meant to encourage the trucker and shipper to use their own chassis for pickup and deliver ocean containers.

Hence it can be avoided just like the bobtail fee.

Can a Reliable Freight Forwarder help you Reduce or Avoid Bobtail Fees?

A freight forwarder can be a great investment in your business.

‘Experience is the best teacher,’ they say.

They have been in this business longer than you.

Hence they know all the tricks, dos, and don’ts.

They can hook you up with carriers who have the best rates.

Similarly, they can show you the best way to avoid paying a bobtail fee other than drop and pick (if any).

What is a Drop-and-Pick in Shipping?

In case you have come across the term drop and hook, don’t get confused.

It’s the same as drop and pick.

Drop and pick means the truck driver drops off the container with cargo at the warehouse.

It is  then picked up a different empty container from the same warehouse, for the next delivery.

They don’t wait.

Trailers are loaded or unloaded before the truck driver gets to the warehouse.

In some companies, trailers being dropped are picked at a different facility.

It’s a fast and effective shipping method; the driver doesn’t have to wait or make several trips to and from the warehouse.

Nonetheless, it can only happen if you have containers coming in the warehouse quite often, or if your company receives a high volume of deliveries.

It’s worth noting that drop and pick doesn’t happen instant; as it may sound.

Sometimes drivers may wait for even 48 hours before receiving an empty container from a company that has unloaded their cargo.

Drivers may receive incorrect trailer numbers; the trailer may be located at the wrong place or sometimes the trailer you need may be behind other trailers .

Therefore, you have to wait for the yard dog to remove the ones in front for you to access yours.

Additionally, the trailers available may not beat the same weight you wanted as a result you may end up issuing an incomplete delivery thus frustrating your customer.

How do you Pay Bobtail Fees?

This may depend on whether you deal with a trucker directly or a trucking company that offers to ship and handling services.

Whichever you decide to use, ensure you work with them hand in hand providing necessary information.

This includes a call date to pick empty container from the warehouse back to the terminal.

Once you agree on the price, terms, and conditions, you can go ahead and pay for the bobtail fee.

That’s it – all information you need to know about bobtail fee.

In case you have any question, feel free to contact Tj chinafreight.