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

October 19, 2020

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

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

Service Estimated Price Range Please 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 transportation Needs to be quoted Depends 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.
Insurance You 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 – $450 This depends if you want a single entry or continuous(yearly) bond, and what you are importing.
Duty and tax n/a Determined 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/a Depends 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.

Get shipping visibility in your palm with data you can trust.

Choose W Group for your international freight services

MORE FROM THE W GROUP BLOG