6 Important International Documents and How They Help You For Faster Shipping

Posted on October 26th, 2020

Congratulations! Your international order is finally ready to be shipped! 

This guide will direct you through the basic international shipping documents requirements needed to import/export internationally. Having the correct information ready will help keep your shipment moving smoothly until it reaches the final destination. 

Sue is thrilled that her international order is ready. She confirms the payment details and instructs her manufacturer to begin the shipping process.
“It’s just a matter of days until the new T-shirts get here.” Energized by the update she starts preparing her local warehouse for the new merchandise. 

What is Sue doing wrong? Sue is assuming that the shipping and delivery of international packages work just like a domestic delivery.

What makes international shipments so complicated?

Shipping internationally means that your package will change hands numerous times.

 At each step in the logistics chain, the new carrier makes sure the condition of the package is as listed on the agreement. Only then, do they accept responsibility for the package.

What this means for you:

One shipping document with all the cargo details will not help! You need contracts at every step of the international shipping process. This is commonly referred to as international trade documents.

Typical scenario: 

  • A trucking company picks up your package from the factory and delivers it to the port. They transfer the responsibility for the cargo to the next party.
  • The package is processed for export and must comply with the exporting country’s laws and requirements.
  • The shipping company (or airline) accepts your package and brings it to the destination port.
  • The importing country processes your package, making sure it’s compliant with the laws and that customs fees are paid. 
  • At the destination port, the cargo needs to be unloaded and accepted by the right party. 
  • A trucking company then brings the merchandise to your designated warehouse. 

To transfer the liability for the cargo from one party to the next, proper shipping documentation and agreements are needed. A freight forwarder often offers the additional service of taking care of these trade documents. 

What types of shipping documents do you need, and how do they help you? 

These documents work as contracts.
1- It makes sure your package keeps moving – it transfers the responsibility of transporting the goods.
2- It makes sure your package is in the proper condition – it transfers liability for the goods.
3- In case of damage, loss, or theft it makes sure that you’re compensated accordingly by the insurance company. 

What happens when you don’t have the correct trade documents?

The natural consequences range from cargo delays, courier fees, and/or lost or missing goods.

Since Sue certainly does not want that to happen to her T-shirts, let’s dig right in, and see which documents Sue must be prepared with. 

The Most Crucial International Trade Documents:

1- Commercial Invoice: 

You probably already have a proforma invoice. But you need to make sure you have an official commercial invoice as well. This is the primary shipping document. It provides information to the buyer, the freight forwarder, U.S. and foreign customs officials, the import broker, the marine insurance company, as well as the seller’s and buyer’s bank.

The commercial invoice includes: 

  • Contact information for the seller, and their Business ID number
  • Contact information for the buyer and their business ID number 
  • Description of the items including the correct tax code, the number of goods, and the price 
  • Shipping and handling fees
  • The terms of sale listed as one of the Incoterms. (For more info on incoterms see here.) 
  • Payment terms

2- Certificate of Origin – CO

Because import/export laws and taxes differ between countries, you are required to confirm where your items are coming from. Customs officials will use this document to verify that the goods can come into the country and to confirm which tax rate to apply. This also helps you get a tax cut if you’re eligible under the trade agreements between the import and export country. 

The generic Certificate of Origin includes:

  • Exporter and importer identify details
  • Country or countries of origin of your goods
  • Commercial invoice number
  • Name, description, and weight of the goods
  • Chamber of commerce certifying the certificate as well as the chamber seal.

3- Bill of Lading

Bill of lading is a document issued by the shipping company or his agent acknowledging the receipt of cargo on board.

Purpose of the BOL:

  • It is a receipt.
    The bill of lading is proof that the carrier has received the merchandise as described in the document.
  • It is a contract.
    It obligates the carrier to transport the cargo for a set fee. 
  • It is a document of title.
    As a document of title, the bill of lading gives ownership of the goods to the bearer. It can be used to obtain payment before the goods are transferred to the next party. 

There are 3 different versions depending on how you are shipping your package.

A- Inland bill of lading: 

The bill of lading identifies the parties on both ends of the shipment, as well as a description of the items and routing instructions. It usually transfers responsibility of the package to a forwarding agent.

 

An inland bill of lading includes:

  • The name and contact information for the exporter, the importer, and the consignee
  • Inland carriers details
  • Freight costs 
  • Shipping instructions for the package
  • A description of the items; quantity, weight, dimensions, identify marks on the packages, and if the goods are hazardous

B- Ocean bill of lading: 

There are two categories of ocean bills of lading. Which one will be used is usually determined based on the payment agreements. 

  • The straight bill of lading is used when the shipment is being transferred directly to the recipient. (Usually, when the payment has already been paid in full.) The recipient can collect the package on arrival by showing a signed original bill of lading to the shipping carrier. 
  • An ocean bill of lading consigned “to order” or “to order of shipper”: The ownership of the goods is given “to order of” the named party. This document is negotiable because the ownership can be transferred to a different party by endorsement. The purpose of an order bill of lading is to protect the interest of the shipper – in getting paid. Once the recipient has the full payment he can provide cash in exchange for the order bill of lading and to receive the ownership of the goods. 

An ocean bill of lading includes:

  • The name and contact information for the exporter, the importer, and any involved agents 
  • Ships ID, booking details, and loading instructions 
  • A description of the items; quantity, weight, dimensions, identifying marks on the packages, and if the goods are hazardous
  • Freight rates and charges

C – Airway Bill: 

This is the same as the Ocean bill of lading, but it’s for air cargo. The airway bill cannot be negotiable. 

The air waybill includes:

  • The name and contact information for the exporter, and the final recipient 
  • Carrier information, departure airport, and routing
  • A description of the items; quantity, weight, and dimensions
  • Freight charges
  • The anti-diversion clause

4- Dangerous goods form

When shipping dangerous goods, it is crucial to conform to international law. The laws vary when shipping by air or by ocean.

A – Shipping by ocean:

This is regulated by IMO ( The International Maritime Organization). The laws are complex and change often. Research the criteria you need here for your specific items.


B – Shipping by air:

This is regulated by IATA (The International Air Transport Association). Some airlines may also have their own list of regulations. These guidelines can be very specific and should be researched here as well as with your airline.

The next two documents are usually not required but worth preparing anyway:

5 – The packing list 

This document can be used by every party in the logistic chain. It will clarify all the details and make sure the carriers, the agents, and the banks all have the correct information. 

Simply put, this document saves you time and headaches!

The packing list includes:

  • All identifying details of the transaction
  • The name and contact information of the exporter and the final recipient
  • Details of the items and where they are packaged
  • Weight and measurements of the packages
  • Any marks and numbers on the packages
  • The total quantity, weight, and measurements of the entire shipment;
  • Special shipping instructions 

6- Shipper’s Letter of Instruction (SLI) 

The SLI gives you a written record of who has the shipping documents, who to contact for questions, who to contact for proof of export, and who issued the export control information that was used to support the decision to export the goods.

This document keeps your cargo moving smoothly!

The SLI includes: 

  • The name and contact information of the freight forwarder, exporter, final recipient, and any involved parties
  • Description of the items; weight, dimensions, how they are packaged, special markings 
  • Any export control information 
  • Who is paying for the freight;
  • Shipping instructions (FCL or LCL)
  • Any insurance details
  • Other included documents
  • Special shipping instructions

These documents are the basic international trade documents you will need to prepare. Preparing them correctly with all the necessary information will ensure a smoother ride for your packages. Note that some of these documents are available electronically, which will save you on courier fees in case of any mixups or confusion.

Forwarding agents like WGroup make sure you have all the documents filled out according to the law so that your goods can move smoothly to your final destination. See the international freight services we can help you with.

How to figure out your international shipping costs for the best profit margins

Posted on October 19th, 2020

This guide will help you understand your shipping costs so you know what you are paying for, and so you know which fees you might be hit with.

You finally decided on what you are manufacturing and you can already feel the smooth new packaging box in your hand. It feels good, despite the fact that the products are still overseas. Though transporting your item is not the fun part of manufacturing it’s crucial for keeping your inventory flowing and your profits increasing. By calculating your shipping costs now, you’re one step ahead in clarifying your profit margins.  Way to go!

Shipping cost calculator

There are many steps in bringing your goods from the place of manufacture to your hands. Moving from truck to port (via sea or air), and then inland, your goods will trade hands numerous times, with more fees charged at every step. It’s important to know how to calculate your shipping costs internationally. 

Knowing the shipping process and which fees are being calculated will help you understand your shipping quote. Check here for more on the process of shipping from China to the US. Understanding the freight calculation may give you ideas for reducing costs and it is crucial in making sure you’ve not been taken in by a scammer.

What’s my international shipping cost?

Your total shipping cost will include numerous fees. This is a general overview of the steps involved, and what should be included in the freight calculation.

International Shipping Overview

ServiceEstimated Price RangePlease note
Moving cargo from point of origin to a port.$50 – $480 (from China)Depending on your incoterm, this may already be included in the product price.
Pricing depends on the distance being traveled and the size/weight of the cargo.
Export Clearance$100 – $400 (from China)Depending on your incoterm, this may already be included in the product price.
This includes the handling fees in getting your cargo approved for export.
Freight transportationNeeds to be quotedDepends on location, volume (LCL / FCL), and the shipping method.
Understand your LCL freight quote. You don’t want to be surprised with kickback rates; large fees where you’re responsible to pay to unload and clear your shipment.
InsuranceYou often have various options available.Usually the insurance cost = 0.2% x 110% of the cargo value
Document Delivery$40 – $100+If a document is missing, inaccurate, or simply needs to be issued.
Customs Bond / Clearance (US Only)$100 – $450This depends if you want a single entry or continuous(yearly) bond, and what you are importing.
Duty and taxn/aDetermined by the tax code, this depends on the value and type of goods being imported.
Local ChargesThis can include handling fees and surcharges for delays, unusual packaging, and dangerous goods.$100 – $450+Depends on location, volume (LCL / FCL), and the freight cost. 
Again, be wary of LCL freight quotes that leave you with hefty kickback rates.
From the local port to the final destination.n/aDepends on the distance being traveled and the size/weight of the cargo.

Know what is included in the rate you were quoted.

When receiving a freight quote, you want to make sure the rate includes ALL charges to bring the product to your door. WGroup provides an all-inclusive quote for door-to-door services.

Got a bargain freight quote?

Note that shippers pass on most fees with only a slight profit margin for the freight costs. If a shipper is giving you a quote that’s much less than the competitor, be wary that they are scammy, and only giving you a freight cost, (or the freight cost with only part of the additional fees involved), and you will still be responsible for all other surcharges. 

International shipping is complex. The above outline is a simplified overview of the process and charges needed to move your cargo. Each category listed above can include numerous additional fees, some expected and some unexpected.

Some freight quotes will seem incomprehensible with a list of abbreviated terms. Most fees fall into one of the above categories. You can ask a company like WGroup to clarify all charges and what you might be able to do to reduce costs.

These are common surcharges you may come across:

  • BAF (Bunker Adjustment Factor): to compensate for fluctuating fuel prices.
  • CAF (Currency Adjustment Factor): to compensate for fluctuating currency changes.
  • EIS (Equipment Imbalance Surcharge): to compensate for a loss with an import/export trade imbalance. 
  • BL Fee/Issuance: simply for processing or issuing the bill of lading.
  • LSS (Low Sulphur Surcharge): to compensate for using cleaner fuels in Emission Control Areas.  
  • PSS (Peak Season Surcharge): applies to goods being transported along certain trade lanes during times with extraordinary volumes.
  • Congestion: for when the shipping vessel has to line up and wait for their turn to load and/or unload.
  • THC (Terminal Handling Charge): for handling your goods at the port.
  • ISPS (International Ship and Port Facility Security): to compensate for security measures taken at the port.
  • Fuel Surcharge: to compensate for fuel used for land transport in connection to loading/unloading.
  • OWS (Overweight Surcharge): for overweight containers
  • Hazardous Surcharge: fee for transporting dangerous goods. Dangerous goods are defined internationally by IATA.
  • ERS -(Equipment Repositioning Surcharge): when there is a need to move empty containers to a specific place for exports.
  • Piracy Surcharge: for costs applied to certain routes where precautions must be taken to avoid piracy.

A Freight forwarder like WGroup will walk you through every situation so you can have the right documents ready and be prepared for any surcharges.

Now that you know some of what’s involved in a freight quote, you are prepared to receive your own custom quote.

What information do I need to get a freight quote?

  • Total dimensional weight (cbm)
  • Total physical weight (kgs)
  • Cargo size (lwh)
  • Point of origin and destination
  • Insurance (Yes / No)
  • Supplier and delivery incoterm (ex: FOB)
  • Shipping date (specifically when importing to the US)

Did you know?

  • The cheapest time to ship from China to the US is usually between March and June.
  • July-October is peak season in preparation for US holiday shopping.
  • China factories shut down for approximately 2 weeks at the end of January / beginning of February in celebration of the Chinese New Year. Because of this, importers rush to stock up on inventory in December/January.

How shipping cost is calculated:

Pricing is calculated depending on the shipping route, the carrier, the size/weight of the cargo and the season it’s being shipped in.

The final ship rate is only confirmed once the products are ready to go, however, you can still get a decent estimate before that. Request a price so you can receive your goods headache free.

Know what is included in the rate you were quoted.

Surprising Benefits Of Covid-19 On The Shipping Industry

Posted on October 3rd, 2020

This logistics reference prepares and informs you of the short term and long term effects of coronavirus and shipping.

Three different areas have been influenced by the impact of Covid-19 on shipping internationally. Firstly, the immediate effects on shipping speed and processes. Secondly, a resulting recession may have a wider impact on global trade, affecting the number of imports/exports. And thirdly, the changes being planned to meet new expectations and realities

01
How Covid-19 messed up the logistics on the ground, in the air, and by sea

Land Freight
Despite Coronavirus, trucking has remained partially available globally. Roads are mainly in operation, except in countries under severe lockdowns. What has changed is the loads they are carrying and the increased request for delivered goods. Food and medical supplies are the main goods being transported, and trucking companies are trying to meet the demand with fewer working employees. On a domestic level, trucking has soared as consumers turn to e-commerce for grocery shopping and other daily essentials.

Ocean Freight
Container shipping has dropped significantly as the COVID-19 pandemic triggered recessions in many countries across the world. Total container volumes handled at Chinese ports dropped by 10.1 percent in the first months of 2020. Other countries with significant exports like India, Brazil, and Mexico, are also feeling the impact.

Air Freight
Global flights which include traveling passengers and air cargo, were down by 74 percent between 5 January and 18 April 2020. However, many airlines are restructuring and setting aside aircraft to transport goods only, instead of goods and passengers. This is a smart way of meeting the current demand and coming out ahead. Nevertheless, airlines are still not able to meet demand. As governments and shippers turn to air freight to transport supplies, the rates for air freight are increasing.   (World Trade Statistical Review 2020). Despite the spreading virus, and the lockdowns, global trade has continued, proving that global trade is here to stay. The biggest block to increased global trade is in the aftermath of the pandemic.

02
A recession will impact the volume and strength of global trade

How great the recession will be because of Coronavirus, is a game of guesses. Many are measuring PMI and studying the strength of a country’s currency. You can see the statistics here. 

W Group will not make an estimate on this, as the data is constantly changing based on the spread of the virus and updated government policies. 

Though global trade is continuing, the logistical nightmares caused by Coronavirus is prompting the industry to adjust to new realities. 

Though the first two results of Covid-19 on global trade are devastating, this third and final point brings long-awaited benefits to the industry.

03
3 crucial ways Coronavirus is forcing change on the industry

A. Safety precautions:
This may lead to more cargo inspections and increased shipping costs.

Understandably, the spread of Covid-19 has led to many questions and concerns. This is leading to increased security measures between different countries to prevent the spread of infectious diseases. 

Currently, Governments have placed export restrictions for sensitive goods like medical supplies, medical devices, and pharmaceutical goods. 

Eventually, shipping costs will increase because of the need for more inspections and tighter controls to help prevent the spread of diseases.

B. Speedy solutions for transport:
To keep the supply chain running smoothly, on-time deliveries are crucial.

Coronavirus has proven to US companies that having most of your suppliers in the East Asia Pacific region can lead to many problems. 

The Apple iPhone uses components from more than 200 suppliers in 43 countries. An uninterrupted supply chain helps Apple competitiveness, economic growth, and job creation. Alternatively, a disrupted supply chain would lead to financial loss.

The issue of disrupted supply chains is causing companies to consider diversifying their suppliers and finding alternate manufacturers onshore or closer to shore. The shortening of supply chains will help the goods reach the market faster.

Additionally, prompt delivery also requires using creativity when transporting goods. When transporting goods with WGroup or logistic companies that provide different freight options, sellers will have a competitive edge in the market. 

One example of how cargo options are being restructured is with air freight. 

The airline industry is jumping in to meet demand. They are allocating entire planes to service air cargo instead of just serving passengers + cargo

Not surprisingly, streamlined logistics can boost competitiveness and stimulate economic growth in new markets. Source: World Bank, LPI, 2018.

C. Transparent shipping:
Logistics is currently undergoing a tech revolution.

Companies with robust digital capabilities like WGroup, that can track cargo, provide you with an advantage.

During the COVID confusion, many customers awaiting their goods were at a loss. No one knew at which point the cargo was stuck when it would be released, what the next shipping block would be, and if the cargo would arrive with any sales opportunity left. 

Tracking shipments is no longer “an extra”. Customers have the right to know where their cargo is at every step in the journey.

When using a logistics company like WGroup, customers no longer need to pace in front of the computer, thumping out emails wondering where their cargo is and when it will be coming. 

The unknown causes chaos, confusion, and a lack of planning. Customers need to know where shipments are, what is detaining them, and how long they will be detained so that proper and responsible alternate arrangements can be made. 

We hope the overall lasting result of Covid-19 on the shipping industry will only be positive; driving technological growth and streamlining supply chains.

For global shipping with flexible options that you can track see World Logistics Group.

See more of our articles for guidance on shipping from China to the US or India to the US for during and after the Coronavirus pandemic.