Top 7 expert tips on shipping from China
By John O' Grady
It is always surprising to learn that many people importing from China don’t understand all the elements involved. For example, the actual shipping from China process. It’s sometimes easy as a buyer not to get involved since it is something we may not have experience with and best left to the professionals. While the second part is true, it doesn’t mean we should happily remain oblivious of the process. When I started out importing from China I was in this boat and made lots of very avoidable mistakes.
So today let’s learn what happens, how and who affects the shipping process and where you fit in. Below I have included a really handy download for a document pack with all the documents you will be using and need to interpret. Don't miss that as you can refer to it repeatedly.
Note: Shipping agent and Freight forwarder are used interchangeably. They are the same company type. For the purpose of the example we are going to use a shipment from China - Australia.
So here are the 7 tips I put together for you to understand the shipping from China process.
1. Get A Quote
Contact your shipping agent options in Australia and give them details about your potential order including supplier location, details on the product such as description/qty/size/kgs/CBM and the estimated time of shipping (this can be 1-2 months into the future). The agent can quote for your goods from door to door. I say shipping agent options above since you might have met with 3 different shipping companies more correctly “freight forwarding companies” that deal with your destination port. It’s safe to say they all deal with the main China ports.
Next week check out the blog on the “Top 5 reasons you must have a shipping agent in China” which should help you more in selecting the right partner. Sorry you will have to wait 1 week for that but you can subscribe on this page to make sure you don't miss it.
2. Confirm the Quote
When you are starting out sourcing from China, you always want to understand the delivered price before making any orders in China. So remember getting and confirming a shipping quote are tasks to be done before buying anything. If you are happy with a quote and the company providing same then confirm it for them and lock in your rate with the freight forwarder in case it would change. If it is a repeat order item, then you should be locking in rates for 3 months if you can. This is especially helpful if you are forward selling to your clients as fluctuations in shipping costs could gnaw away some of your profits.
3. Shipping order on the move
Once you have paid the supplier a deposit to start production then your Australian shipping agent will start moving your order forward with their Chinese counterpart. The Chinese office will be communicating with your supplier to estimate when goods are expected to be completed which will help understand when space on the ship needs to be booked for. Stay in the loop here so you can plan for arrival and supplying goods to your clients Note: you have 2 options on paying your freight prepaid or collect, go for collect which means when the goods arrive to port.
Our document pack will really help you with issues such as that - get your free download here. Includes examples of all the documents you need plus explanations on the key points you need to understand.
4. Collection and Customs
Once completed and with a booking on a vessel already made then the shipping agent collects the goods from the factory (tell your supplier not to do this in the rain - seriously :-) or at least make correct provisions in rainy season in China) and delivers them to the port of loading (POL). Here the goods must pass China customs inspection, your supplier is responsible for providing the correct information. The Chinese office of your shipping agent liaises on your behalf to ensure the paperwork is correct. Your prices should be Free on Board (FOB) and so include the costs associated with customs clearance in China. Another note to remember when sourcing from China that unless you request goods to be palletized (usually some extra cost) then they won’t be.
5. On the High Seas
It can take 2-3 days to load large ships sometimes longer so just because “your goods” are on board the ship won't leave immediately….no they are running to a schedule which is usually accurate but delays can be caused by stormy or foggy weather. Once you do get sailing its time to think about paper work. You will need.
1 x Original Bill of Lading (“Airway bill” for Air shipments)
1 x Packing List
1 x Commercial Invoice
1 x Packing Declaration (Required for Australia)
1 x Certificate of Origin (not always needed).
So 4/5 of these are mandatory for shipping to Australia. The bill of lading is like a shipping receipt and sent from your shipping agent to your supplier. The supplier will release it to you once you pay the balance of the order (based off the most common payment terms). If the documents above seem confusing, then don’t worry since we prepared the example document pack to help you get on top of the subject.
6. Documents – what do I do with them?
To be organized you should be aiming to have all documents with your agent in Australia at least 7 days before the ship is due to land. This way you can get customs processed quickly and take delivery of your goods efficiently. All documents can be emailed to the agent, make a special note about the B/L to always get a telex release so that it can be emailed. Otherwise you need to play around with getting an original expressed from China.
7. Clearing Customs and what’s your part?
The shipping agent will help you here by liaising with customs and can even pay import duty and GST on your behalf. Your obligation at this juncture of the shipping from China process is to pay those invoices to your shipping agent immediately. Failure to do that would result in a delay receiving your goods and even possibly more charges (demurrage) if you are really lax. Not to worry if you are prepared with funds in place it will all run like clockwork.
Once clear of customs your agent (who has priced door – door) service will then try to arrange a suitable time for you to take delivery of your goods. Remember if there is anything special about your own particular location then do let them know so provisions can be made. Also don’t forget if you didn’t order pallets then the 2000 cartons you ordered need to be unloaded by hand. It’s good exercise just don’t be surprised by it.
John O' Grady has been living and working in Shanghai, China since 2004. In all of that time John has worked in sourcing and supply chain management. Currently he is General Manager of Found China, a provider of China Sourcing Services. John enjoys travelling to factories throughout China to find new suppliers, make deals, oversee QC and stay in touch with good friends. Keep up to date with John and Found on their No. 1 China Procurement blog.
Read more Sourcing News & Advice