Exporters step-by-step guide to the logistics of shipping
A recent survey conducted by Export Development Canada (EDC) revealed that over 55% of Canadian exporters are planning to sell to new markets in the next two years. One of the notable export challenges and barriers identified by Companies surveyed relates to Shipping logistics to international markets.
At TradeLink International we appreciate that for many exporters the logistics of getting goods to export markets can be both challenging and complex. We collaborate with our customers to understand their export market objectives, providing consulting and advisory services as well as end-to-end logistics solutions.
If you are selling goods to another country, you will need to consider a number of factors when it comes to international transport and logistics. Here we summarise the main considerations.
Choosing a shipping method may depend on the type of goods, their destination, transport costs, shelf-life and how fast you need to get them to your customer. There are four basic methods of transportation and you may end up using a combination of these:
Sea Freight: An economical option for shipping large items, bulk commodities and goods to offshore markets that do not require fast delivery. Sea Freight options include:
- FCL (Full Container Load) – where one customer books one or more full shipping containers
- LCL (Less Container Load) – a service provided by freight forwarders, enabling customers to book a part of the container
- Breakbulk – heavy-lift and oversized equipment that may also require special permits, intricate route planning via Ro/Ro and Lo/Lo and special escort for over the road movement.
Air: shipping by air is more expensive than surface or sea transport, but the higher costs may be offset by faster delivery, lower insurance, cheaper warehousing, exotic markets and better inventory control.
Sea/Air: combines the cost benefits associated with sea freight and the rapid transit of air in delivering cost effective and timely solutions.
Rail: common used in domestic transport or when shipping to and from seaports. TradeLink also offers scheduled rail freight services between China and Europe. Learn more here.
Road: Popular for domestic collection and delivery of goods or for getting the products to another mode of transportation.
Shipping documents are prepared by you or your freight forwarder. They allow the shipment to pass through customs, to be loaded onto a carrier and transported to the destination. Key shipping documents include:
- A commercial invoice
- A special packing or marking list
- A certificate of origin
- A certificate of insurance
- A bill of lading
A bill of lading is used for land and ocean freight, and an air waybill is used for air freight.
Note that the ocean bill of lading can be a negotiable instrument that passes title to the goods. Other types of bills pass title to the consignee as soon as the goods are delivered.
Packing, marking and labelling your goods
To ensure your goods arrive on time and in good condition it important to consider the journey and mode of transport. During transit, handling and storage, your goods may have to endure bad weather and extreme temperatures. Proper packing can reduce the risk of damage during transit.
To ensure goods clear customs without delay and conform to local requirements, it is also important to label the goods correctly. Marks shown on the shipping container must match those on the bill of lading or other shipping documents, and may include some or all of the following:
- Buyer’s name
- Point/port of entry into the importing country
- Gross and net weight of the product in kgs or lbs
- Identification of the country of origin, e.g. “Made in Canada”
- Number of packages
- Appropriate warnings or cautionary markings
Your forwarder can provide a packing list identifying and itemizing the contents of each container. Each container must also contain a packing list itemizing its contents.
To provide a common terminology for international shipping and minimize misunderstandings, the International Chamber of Commerce (ICC) has developed a set of terms known as Incoterms. First published by ICC in 1936, Incoterms® provide internationally accepted definitions and rules of interpretation for most common commercial terms used in contracts for the sale of goods. More information is available at the ICC website.
Some of the more common Incoterms include:
- Cost and Freight (C&F): The exporter pays the costs and freight necessary to get the goods to the named destination. The risk of loss or damage is assumed by the buyer once the goods are loaded at the port of embarkation.
- Cost, Insurance and Freight (CIF): The exporter pays the cost of goods, cargo and insurance plus all transportation charges to the named port of destination.
- ExWorks (EXW): The price quoted applies only at the point of origin. The seller agrees to place the goods at the disposal of the buyer at the specified place on the date or within the period fixed. All other charges are for the account of the buyer.
- Free on Board (FOB): The goods are placed on board the vessel by the seller at the port of shipment specified in the sales contract. The risk of loss or damage is transferred to the buyer when the goods pass the ship’s rail (or the air carrier at the specified airport of departure in the case of air freight)
Export Regulations and Customs formalities
Exporters need to familiarise themselves with your target market’s import regulations, product standards and licensing requirements.
TradeLink provides assistance about export and import controls and permits and ensures goods clear through customs. Our local market specialists are highly trained and experienced to navigate the complicated customs process. With our understanding of local restrictions and laws, documentation procedures and regulations, legal and insurance concerns, local protocols and office hours, TradeLink ensures your shipment is processed through customs without unnecessary delay or expense
Delivery deferral and duty relief
If you’re importing goods in order to re-export them, you might be able to use the Duty Deferral Program administered by the Canada Border Services Agency (CBSA). The program relieves or defers payment duties if the goods are in transit through Canada and will not be sold here. There are three components to the Duty Deferral Program:
- Duty Relief Program — enables eligible companies to import goods without having to pay customs duties, as long as they export the goods after importing them
- Drawback Program — duty is refunded on previously imported goods when these goods have been exported
- Bonded Warehouse Program — a warehouse facility in which you may store goods without having to pay duties and taxes. TradeLink provides bonded facilities in Toronto, ON and Edmonton AB
TradeLink’s end-to-end solutions support customer entry into new markets, facilitate global sourcing and help our customers bring new products to market quickly and cost-effectively. Our supply chain offering includes:
- Supply chain assessment – detailed review and development of supply chain strategy by our consultant team
- ‘Control Tower’ solutions – a single point of contact responsible for the operation and coordination of all supply chain activities
- PO/ Vendor Managed Inventory (VMI) – supply chain coordination of vendors and product in line with replenishment lead times, inventory carrying costs, key performance indicators, transportation costs and service modes
- Warehouse & Distribution – industry-specific solutions based on clients’ unique storage, handling, operating systems value-added services and distribution requirements
- Risk Assessment – identifying and addressing vulnerabilities in the supply chain including security, cargo insurance, hazardous cargo, local market restrictions, controls and protocols
- Special cargo handling – pick up/packaging/palletizing/shrink wrapping/labelling
- Track and Trace ™ shipment tracking
For more information on our export advisory service and international logistics solutions or to discuss your unique requirements contact us