How to Control International Shipping Costs

International shipping can be a complicated and financially straining, but there are ways to simplify the procedures and keep expenses down. With an understanding of the process, those shipping goods across national boundaries can find the lowest international shipping costs available.

Commercial international shipping
International shipping, especially for commercial users, is centered on container use. They allow goods to be easily transferred between ship and land transportation and save untold amounts in shipping costs. The two most used container sizes are as follows:

20 foot shipping containers
Once the most popular container size, shipping units are now based on their capacity. The twenty-foot equivalent or TEU, can thought of as offering enough space to ship the contents of a roughly a two bedroom house.

40 foot shipping containers
Better suited for maximum efficiency, 40 foot containers have now become the standard.

Full container load
Whenever shipping internationally, it is always best to ship by full container load (FCL) if possible. Those ordering by FCL will see a significant reduction in the unit costs of shipping. Goods will also ship more quickly since they will not have to sit at a container freight station to be combined with other orders to fill a container (most goods are shipped by container regardless). This reduces the chances of shipping damage since the loading can be more properly monitored, and there is no chance the merchandise will be combined with another type cargo that could be potentially damaging. For more fragile goods, shipping by FCL is sometimes the only economically practical option.International Shipping Costs

Shipping quotes
When ordering goods from a factory, there are several types of quotes provided. While every quote will include the costs of production, the quotes vary in how much of the costs of shipping and insurance they include. These are some common terms used when pricing is given:

  • Ex-factory is simply the cost of the goods without any freight or insurance costs included.
  • FOB (Free on Board) includes the costs of the goods with shipping to a specified location, usually on board a ship, but not the costs of international shipping to the country the goods are destined for.
  • CIF (Cost, Insurance, and Freight) covers all costs to include shipping and insurance to a port at which the merchandise will be unloaded for customs and delivery.

While CIF is a common way to quote prices, those with the right experience and connections can often reduce international shipping costs by having the factory quote the FOB price and arranging shipping through their own channels.

Enter freight forwarders
Most people having merchandise shipped from a factory overseas will use freight forwarders. Freight forwarders should have the connections and expertise to arrange international shipment by land, sea and air. Thus, those using freight forwarders must make sure they have the proper global reach both where the merchandise will originate and where it will be shipped to. They also need to have the ability provide all the documentation that is required on their part to clear goods through customs. Some of the documentation required in international shipping include the following:

  • A bill of lading is the single most important document in internationals surface shipping. It is issued by the carrier of the goods and sets the terms between the owner of the goods and the shipper. It will state all the information about the shipment to include where it came from and where it is going.
  • An airway bill is similar to a bill of lading only it is issued by the air carrier and is used for air shipments. It is basically a contract to deliver the goods.
  • A commercial invoice is provided by the seller to the buyer to prove the purchase. Since the applicable customs agency will use this invoice to determine the value of the goods, it is critical that this document be complete and accurate.
  • A packing list is a more detailed description of what the shipment contains. It will include a numbered list of the content and its condition.

While these are the standard documents required for all shipments, there are various others required for different types of products. For example, export licenses are required to ship certain products to some countries. This is why it is so critical to have a knowledgeable freight forwarder and customs broker if one is not experienced in international shipping.

With residential shipments, requirements are much less stringent. Regardless of the type of shipment, acquiring knowledge of international shipping is the first step in controlling its costs. Use an understanding of how it works to find the lowest shipping costs.

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