It is customary to shop around to get the best possible deal, and you can be commended for your astuteness when you contacted several shipping companies to get your 3 quotes! However, now that you have the said quotes in your hand, you may have found out that you can’t compare like for like as they all list different levels of service, group costs differently, or simply that the language used means little to you.
Unaware of all the fees that shipping entails, customers are more likely than not to be dazzled by the enticing song of the cheaper quote, just to find out half way through that massive costs have been added to their bill, for charges they thought were included or they knew nothing about.
But it won’t be you, because thanks to our guide, you will know exactly what it what and what to look out for in a quote.
From A to B: 2 very important variables
International freight-forwarding is used both to transport commercial goods and private possessions when people relocate, which means it has to cater for many different circumstances. Manufacturers will often have the means to carry their goods from their factory to a port where they will ship from; some goods can be driven directly onto ship decks, while individuals will probably be happier to have an all-inclusive door-to-door service.
Obviously, costs will be very different for each of those situations and if the quote doesn’t make it clear which option it is offering, or if you are not sure, you may well choose a quote which seems very competitive, just to find out when it is too late that you are supposed to drive your car to the port yourself.
In addition, the level of service will also determine who is responsible for your belongings, you or the freight-forwarder, at what point of the journey, and therefore who needs to arrange marine insurance.
The key to understanding which service the shipping company is quoting you for is in little, humble acronyms such as FOB, CFR, CIF, FAS, and another 10 of so more relevant to commercial shipping. Don’t dismiss them. They may be small, but they can get you in a lot of trouble, as each defines a set of responsibilities and duties!
Here are those you are most likely to meet:
FOB / Free on Board: The shipping company will pick up your belongings from your door, get it to the port of shipment and will organise loading. You will not only have to arrange marine insurance but also the Ocean Freight as well as clearance and delivery charges at destination, and transport from the port of arrival. A quote with FOB will be cheaper, but you have to take into account those extra costs, and the inconvenience to have to sort it yourself.
CIF / Cost, Insurance and Freight: This comprehensive option makes the freight-forwarder responsible for your possessions, which is an attractive solution to individuals, although it doesn’t include the clearances and delivery at destination.
Are we there yet?
It is also important for you to ascertain what the transit time will be and how your belongings are being shipped, i.e. whether they will stay on the same vessel from the port of origin to the port of destination or they will be tranships (will change vessels).
A longer transit time may work to your advantage if you need some room to manoeuvre at the other end, as it basically acts as storage. It will also usually be cheaper, but it is because there is a drawback: your cargo will change vessels two or three times to get to its destination, and with each handling comes an additional risk of damage or theft.
What an international shipping quote should contain
You should always beware of lump-sum quotes with too few specifics, as you will only leave yourself open to potential disputes later on.
To be able to compare like for like, you could ask all the shipping companies in your shortlist to structure their quote as follows. The points below should, in any case, be part of any quote.
Origin charges, i.e. the charges incurred in the country where your shipment is leaving from
Export documentation and Customs formalities: Each country has its own rules when it comes to which paperwork is necessary to be allowed to export your possessions abroad. You may need a certificate of insurance, compliance documents, CDP (Carnet de Passage en Douane), etc…Those will usually come with a fee, which can be nominal or more substantial, so it is therefore important that the quote show what is included, and the cost for each.
Inland transport: This is the cost to transport your cargo to the port from which it will be shipped. Obviously, the further away you are from the coast, the higher it is likely to be.
Pack charges: As the name indicates, this is a cost for anything relating to packing.
Port charges: Port charges can affect costs considerably as they are not regulated and are set by port authorities. The Terminal Handling Charges for example, which will also be due at the point of unloading for handling your shipment, can vary immensely, even more so if they are due in a foreign currency and therefore subject to fluctuating exchange rates.
2. Ocean Freight Charges
Actual ocean freight: Perhaps stating the obvious, this is the cost of the sea transport itself.
BAF / Bunker Adjustment Factor: Oil prices are notoriously volatile, and BAF, which you may also see called Bunker Surcharge, is an additional fee charged to the customer by the shipping company to compensate for variations in the price of fuel. They don’t follow set fee structures but are determined by each shipping line.Other surcharges may be applied, dependent on the maritime route used and the time of year, such as the CAF, Currency Adjustment Factor for cargo shipping between the United States and Pacific Rim countries, which is connected to the exchange rate of the US dollar; the PSS, Peak Season Surcharge between Asia and Europe applied to shipments between June 1 and October 31; the Winter Surcharge, relevant to freight going through regions where ice accumulation during winter makes navigation slower and more difficult; or the UK Premium applied to all shipments going to and from UK Ports.
3. Destination Charges:
Port charges: Like at the port of origin, your shipment will be subject to Terminal Handling Charges at the port of destination. If the vessel is late, busy ports may charge late arrival fees, which, however, aren’t your liability.
Customs clearance, taxes and duties: This is, without a doubt, the most complex of all the costs of a quote. The number it will come to will depend on the country you are importing your possessions into; the type of cargo –for example, the rate of duty for private cars is 0% whereas it would attract 10% for campervans and motorhomes, even if they are still privately owned vehicles-; how long you are importing it for, its value, whether you are a national of the country you are importing it into, and whether you are eligible for a wide range of exemptions and concessions.However, those costs are fixed by governments and tax entities, so every quote you receive should show the same figure.
Quarantine fees: some goods are subject to stricter rules when it comes to importing, even if they are your private belongings, if they have the potential to carry diseases into the country of destination. Foodstuff, pets, will obviously be under great scrutiny, but so will vehicles if imported into an island nation, as they could be bringing organic material which, although perfectly innocent in their country of origin, can constitute a biohazard if introduced to another ecosystem. For entry into those countries, you will need to have your car cleaned thoroughly before departure, or you could incur costs and delays on arrival while your car is re-cleaned and re-inspected.
Unloading and unpacking: As mentioned above, there are several levels of service, some of them involving you collecting your shipment from the port. It is important, therefore, that you clarify what the quote is for in this respect, or you may find yourself waiting for your personal possessions for a very long time!Some companies will unpack your possessions for you, so do check whether this is included in your quote or not.If your quotes show all of these items, then you are in good hands. If not, you shouldn’t hesitate to give the shipping company a call and ask them to explain what you are unsure of. This will also give you a chance to gauge their customer service and professionalism, as you should expect them to make as much time as needed to address your questions and be able to clarify anything.International shipping isn’t simple if you don’t work in the industry, and errors can be costly, so unless you have previous experience dealing with freight-forwarding processes, leaving it all to your freight company is the best choice.
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