How to Avoid Hidden Costs in Overseas Freight Shipping?
How are shipping costs calculated?
Shipping costs depend on several factors such as the location of the recipient, the type of delivery service provider, and the distance between the sender and the recipient. In addition, the cost of shipping depends on the size of the package, whether the package contains fragile items, and the number of packages being shipped at once.
Components of shipping costs calculation
Origin : Location with address from where the goods will be shipped.
Destination: Address of where the goods need to be dropped off.
Load: If loose cargo then the goods need to be measured in terms of pallets or boxes.
Pallets: Type, size(dimensions in terms of Length x Breath x Height), Weight
Boxes: Size (Dimensions in terms of Length x Breath x Height) and Weight
If goods are to be shipped in containers then the costs are dependent on container type (20 feet, 20 feet High Cube, 40 feet, 40 feet high cube). Containers can be shipped to or from a business address only if there is a loading dock.
Value of Goods: in terms of currency value most of time in USD.
Other factors that need to be taken into consideration for shipping costs are if the goods are hazardous or if they are perishable.
6 hidden freight shipping costs that you need to be aware of.
1. Duties and Taxes:
Duties and taxes depend on the country and classification of goods, most importers and exporters are aware of this but having a customs broker involved will help you with making the correct assessment and having the right paperwork in place before you ship the goods. While importing goods to Canada, you’ll need to pay Goods and Services Tax (GST) regardless of whether the country you’re shipping from has a free trade agreement (FTA) with Canada.
Can you avoid these costs?
These costs cannot be avoided, however If you get it wrong it can result in goods getting held at the ports because of missing payments or paperwork. Having a customs broker manage this piece will help you avoid other costs that might be incurred in case you don’t get is right.
2. Costs of damaged goods
Shipping goods always carries a risk, especially in overseas shipping where the goods are on sea for multiple weeks even months in some cases. Goods can be damaged due to storms, mishandling, theft, fires and other natural causes that are beyond your control.
Can you avoid these costs?
Insurance is the best way to protect your import-export business from incurring costs related to damaged goods during shipping.
3. Storage Fees
Shipping is a complex operation, there are changes where your goods might get stuck at a post, airport or land border from multiple days because of missing, incorrect or incomplete documents, incorrect taxes and duties, if you do not have proper permits or if customs clearance was not completed on time.
Can you avoid these costs?
Make sure you have the right documentation in place, all permits are in order, duties and taxes are paid correctly and customs clearance is sought. In case there’s a need to store goods, it can be cost effective to store goods in a bonded warehouse than storing them at the port.
4. Shipping less than container load (LCL)
Like with everything else there are cost savings when shipping in bulk as compared to shipping in smaller packages. There are two primary methods of shipping via ocean freight: full container load (FCL) and less than container load (LCL). If the good you are shipping will not fill a container then you might end up paying more for freight, that’s because you are using a section of the container, its being shared with other shipment, the goods might take longer to arrive and will also be handled more during the course of shipping.
Can you avoid these costs?
Ship in bulk and try to combine multiple packages or shipments so they fill up a container. This requires planning and it also depends on other factors like the volume and size of the goods, sometimes it is unavoidable and sometimes it’s a matter of urgency and need.
