10 Common Questions About Importing Your Goods via Ocean Freight
If you’re new to importing goods via ocean freight, you probably have a lot of questions. As international freight forwarders, we get a lot of questions from importers who are interested in bringing in their goods by ocean freight.
Here are the 10 most common questions we hear (and answers) about shipping via ocean:
1. How long does it take to receive my cargo?
Many factors can influence shipping times: for example, the origin and destination of the shipment, or if you’re shipping a less than container load (LCL), etc. Generally, however, if you are importing goods from one of the main ports in China to Los Angeles or Long Beach, you’re looking at approximately two weeks on the water.
However, don’t expect your goods to be in your hands within 14 days. Once your goods arrive at port, they must be unloaded from the vessel, become available for pickup and then be delivered to your door (that is assuming they already cleared customs).
Shipping LCL adds additional time to the overall transit. This is due to the extra steps of consolidating your shipment with cargo from other shippers at the origin and then deconsolidating it at the destination. These steps occur at a specialized warehouse called a container freight station (CFS).
2. Why do rates change?
There are a few reasons the shipping rates of a freight forwarder can change:
GRI: This stands for General Rate Increase, which, simply put, is when ocean carriers raise rates in a particular trade lane. While GRIs can take place throughout the year, you can typically count on one happening on May 1st which marks the beginning of a new 12-month “contract season” between shippers and carriers.
Supply/Demand: Ocean shipping rates increase during certain times of the year, especially when demand for space is high. One of these times is referred to as the “peak season.” The traditional peak season roughly spans July through October and coincides with the rush of cargo ahead of the holiday shopping season. Since retailers are looking to have products on shelves for Black Friday, shipping rates will tend to increase in the preceding months.
The Lunar New Year (Chinese New Year) holiday is another period that is impacted by supply and demand. Many countries in Asia shutter factories for two weeks or longer to celebrate. As a result, the weeks prior to the shutdown see a surge in cargo and rates. The Lunar New Year start date varies each year but occurs between late January and February.
Cost of Oil: Just like the cost of gas for our cars, a shipper’s rate may increase or decrease due to the cost oil. Changes are reflected in the bunker adjustment factor (BAF). Bunker fuel is the term for the fuel oil used in vessels.
The best way to stay on top of rate fluctuations is to work with a reliable international freight forwarder, who can keep you informed on market conditions.
3. Do I need insurance?
Short answer: It’s always recommended.
Long answer: While you don’t need marine cargo insurance and aren’t required to buy it, having it is usually a good investment. Just as with home or car insurance, you’re protecting yourself from potential damages or losses that may occur. Specifically, marine cargo insurance can cover damage, loss, theft, non-delivery, etc., while your goods are in transit.
One thing that makes marine insurance different than your home or car insurance is a concept called “General Average.” A general average scenario occurs when some cargo is voluntarily sacrificed in an effort to save the voyage. This could come in the form of jettisoning some containers to stabilize the ship in a severe storm. General Average states that all cargo owners are responsible and will share in the loss (even if your cargo wasn’t actually lost). Marine insurance can protect you against a general average situation and avoid the additional expenses with retrieving your cargo.
4. Wouldn’t it be easier to allow my supplier to handle the shipment?
Yes and no. While it may be “easier” by giving your supplier the responsibility, there are many disadvantages. One issue is compliance. For example, who will be filing your Importer Security Filing (ISF)? Ultimately, the ISF importer will be responsible for any mistakes or liquidated damage penalties for noncompliance.
Another issue is control. If your supplier is handling their shipments, that means they’re working with their freight forwarder to handle the transit process. That freight forwarder may not provide you with the ability to track your shipments, or even give you updates on your cargo. Communication problems with overseas forwarders can make scheduling deliveries to your warehouse difficult to coordinate and lead to unnecessary demurrage charges.
What if you have more than one supplier? Keeping track of each different shipment can be a logistical nightmare in that case too.
At first, letting the supplier handle your shipment may sound appealing. However, as your business grows, it starts to become more of a burden than an asset. That’s why experts recommend that you control the shipping process by using your own international freight forwarder. They can help uncover more efficient ways of shipping such as building consolidations from multiple suppliers and offer tools to track every step of the shipping process.
Want to learn more? Check out the other pros and cons of letting your supplier handle shipments here.
5. Should I ship via air or ocean?
A better question would be: How soon do you need your cargo? If you need it as soon as possible, air freight is a far faster shipping option than ocean freight. However, that speed comes with a cost — shipping rates for air freight are significantly higher. In most all cases, ocean freight will be the most cost-effective mode.
There are exceptions, of course: If your cargo is less than 100 pounds, shipping via air is often more cost-effective. Also, if your goods are perishable or sensitive (e.g., flowers or medicine), air freight is often the best option. Additionally, high-value merchandise may be better suited for air freight because of concerns over damage, theft, or the time value of money.
Environmental impact may be another factor to consider. The carbon footprint of shipping via air freight is massive compared to ocean.
Before you start shipping via air, find out everything your freight forwarder wants you to know about air freight.
6. How many pallets fit in a container?
Depending on the pallet size, there are roughly 9 to 11 pallet spaces in a 20’ container and roughly 21 to 25 pallet spaces in a 40’ container.
To learn more about fitting pallets in a container, check out our chart on container dimensions.
7. Is there a weight limit?
Yes. There are different weight limits depending on how you are shipping. For example, ocean freight usually has less weight restrictions than domestic freight. That’s because trucks can only carry so much weight; not to mention, state and federal laws govern how much a truck can carry on U.S. roads. The weight restrictions for trucks can range from 38,000 pounds to 44,000 pounds, depending on container size and other state restrictions. Tri-axle chassis are used for heavy loads.
8. Why do I need to fill out a power of attorney (POA)?
There are two main reasons a POA for import shipments is required. If you hire a customs broker, they need to have the authority to conduct Customs business on your behalf.
Also, you will need a POA if your customs broker or international freight forwarder submits your Importer Security Filing (ISF) to U.S. Customs. The ISF must be submitted 24 hours before being loaded onto a U.S.-bound vessel, which gives time for customs to screen your cargo for any safety and security concerns. If the ISF doesn’t get to customs on time and accurately, you can face fees and penalties.
9. When should I ship FCL vs LCL?
The larger your shipment is, the more likely you’ll want to ship full container load (FCL) to help reduce landed cost, potential handling damage, and receive your cargo faster.
If your shipment is less than 15 cubic meters (CBM), it will be more cost effective to move it as less than container load (LCL) cargo.
Your international freight forwarder can help analyze market rates for your shipment to determine the breakeven point for shipping less than container load (LCL) or FCL.
10. Why are the commercial invoice and packing list important?
They’re required by customs. Breaking it down, however, these two items are important for different reasons:
Commercial invoice: Like other types of invoices, the commercial invoice describes the transaction happening between the exporter (your supplier) and importer (you). It lists your goods and the price you paid your supplier. Details on the commercial invoice will be used to determine the duties and taxes applicable to your shipment.
Packing list: At first glance, the packing list may look similar to the commercial invoice. However, where the commercial invoice focuses on item prices, the packing list focuses on the physical count and breakdown of the related shipment. For example, a packing list would include the size, weight, and count of individual boxes/cartons matching a corresponding commercial invoice. Therefore, the packing list can be used in insurance claims to identify losses or by Customs when inspecting cargo or by your warehouse to reconcile what was expected vs. what was actually received.
Do you have more questions about importing your goods via ocean? Contact us today to get answers to your ocean freight questions.