Q & A about shipping to Amazon
Q1: Pallet requirements I intend to get the goods palletized on wooden pallets and am trying to work this out with the factory. They prefer to use plastic pallets, however, these are not accepted by Amazon. Do you have any suggestions on the palletizing side?
General requirements and dimensions
Q2: Palletizing place Should we palletize cargo at origin or at destination for FCL & LCL shipments?
Air freight is an airport-to-airport service. The basic air-freight rate is less expensive than the courier-express rate. However, the courier-express rate includes the destination customs declaration and delivery service.
For door-to-door delivery service, if the chargeable weight is less than 200 kg, normally the courier- express rate is more competitive than air freight. Chargeable weight for an air-freight shipment is the cargo's measurement (cbm) x 167.
The chargeable weight for a courier-express shipment is the cargo's measurement (cbm) x 200.
Delivery to Amazon for a courier-express shipment doesn't need an appointment, but there is a volume limit.
Delivery to Amazon for an air-freight shipment (LTL) needs an appointment, but there is no quantity limit.
Follow these general requirements when shipping units to Amazon fulfillment centers. Certain products have other specific requirements. Amazon may refuse, return, or repackage any product delivered to an Amazon fulfillment center with inadequate or non-compliant packaging at your expense, and you may also be subject to non-compliance fees.
Any FNSKU you use on a Unit must be unique and must correspond to one unique product. For example, each assortment type, such as size or color, will have a different FNSKU.
Each Unit must have an exterior scannable barcode or label (which includes a scannable barcode and the corresponding human-readable numbers) that is easily accessible.
Remove, cover, or render unscannable any existing scannable barcodes on the outside of shipping boxes. For example, cover existing barcodes with opaque tape or use a black felt-tip marker to render the barcode unscannable. This prevents the incorrect barcode from being accidentally scanned during the receiving process.
Customs bond is a contractual agreement between the Importer of record, the Bond Surety Company and US Customs & Border Protection (CBP). Customs Bonds facilitate faster Customs clearance because they guarantee the CBP will be immediately paid if any additional import duties, taxes or fees need to be assessed. This allows the CBP to clear the shipment without having to wait for the Importer to submit payment. The CBP is paid by the Surety Company, then the Importer reimburses the Surety.
Customs Bonds are available as Single-Entry bonds, which cover individual shipments, or as Annual/Continuous Customs Bonds, which cover all shipments over a 12-month period. Customs Bonds are required by the CBP for all commercial imports valued at $2500 or more, even if a shipment is duty-free.
Customs Bond pricing depends on the bond value and type. Single-entry bonds are calculated based on the individual shipment, The calculation method of SINGLE BOND is US$65 within US$10,000 . If the value exceeds US$10,000 , US$6.5 will be levied for every US$1,000. The cost of purchasing annual bond is US$550/year plus US$50 as handling fee.
The standard express service includes freight, delivery, import and export declaration. The freight paid to the courier company already includes the cost of all services. Choosing sea and air freight will incur a lot of fixed service fees such as customs declaration fees, bill of lading fees, pick-up and delivery fees, handling fees and etc. Unless the quantity of goods is large enough, because there are fixed expenses, the total door-to-door cost will be higher than that of express delivery. In practice, the total cost of air transportation within 200 kgs or sea freight within 1 cubic meter may not be economical by express delivery.
Normally the import duties for express cargo are paid by importers located in the importing country. Since you are not a company literally located in the importing country, the express company only accepts DDP, the import tariff prepaid in the origin. Since the import tariff bill of the express company takes 1 month or even up to 6 months to be returned to us, the express company will require us to pay 35% of the amount of the goods as a tariff deposit and US$35/shipment as DDP handling fee. This deposit will be used to offset the actual customs duties. Once we receive the customs bill for the goods, the deducted deposit balance will be returned to your company.
Usually, we recommend using PayPal to collect the duty deposit refund to avoid additional bank charges. If you choose wire transfer, you need to bear the wire transfer fee. If we don't receive tariff bill from express company for more than 6 months, we will return the tariff deposit to the customer first.
Although most import tariff rates are lower than 35%, the actual value of the goods recognized by the customs may be much higher than shipper's declared value, so the express company requires a deposit of 35% of the declared value of the goods.
In practice, express company only collect duty deposit for invoice value more than US$500.
We prefer to accept warehousing order only for the shipments we handled the whole process from the beginning. As our overseas warehouse can hardly explain the source of the goods if there is any regulator inspection. As you may know government has increasing strict regulation for e-commerce import goods. We can‘t prove to the government that the goods are imported 100% no problem in compliance.
Sorry we could not provide importer of record agency service if the shipment is not handled by us. As we are unable to physically check the actual product or receive necessary proofs from the shipper. Unless the shipment is officially consigned to us by the shipper along with 100% legally presented documents/certifications.
The COVID-19 pandemic
The shipping industry has been one of the worst-hit sectors by the Covid-19 pandemic. Firstly, all the major oil-producing nations have cut down production drastically due to the pandemic, which has created a demand-supply imbalance resulting in pricing pressures. While crude oil prices were hovering around US$ 35 per barrel until recently, they are currently, more than US$ 55 per barrel.
Secondly, surging demand for goods and shortage of empty containers is another reason for distribution going haywire which has in turn caused freight rates to rise so significantly. With the pandemic bringing production to a halt in the first half of 2020, companies had to step up manufacturing to meet the sky-high demands. Also with the pandemic-related restrictions disrupting the aviation industry, there was enormous pressure built up on ocean shipping for the delivery of goods. This in turn had a knock-on effect on the turnaround time of containers.
Continued reliance on split shipments
Ecommerce retailers have been comprehensively using split shipments for years now owing to multiple reasons. Firstly goods need to be picked from inventories across different locations. Secondly, breaking order into sub-orders, especially if it belongs to different categories can help enhance the speed of delivery. Thirdly with not enough room on a single truck or plane for an entire shipment, it may have to be divided into individual boxes and transported separately. Split shipments happen on an extensive scale during cross-country or international shipment of goods.
Additionally, customers requiring to ship goods to multiple locations may also encourage split shipments. The more the shipments, the higher the shipping costs, therefore the trend ends up being an expensive affair and often harmful to the ecosystem.
Shipment Imports from China
Apart from the above reasons, another major reason behind these surged prices is the tremendous demand for containers in China. China being the largest manufacturer in the world there is a huge dependence of western countries such as the US and Europe on China for various goods. Therefore countries are willing to shed double or triple the price to procure goods from China. So while container availability has anyway shrunk drastically through the pandemic there is a huge demand for containers in China and the freight rates too are substantially high there. This has also contributed significantly to the price hike.
Other factors in the current scenario
Apart from the aforementioned points, there are a few lesser-known contributors to the high freight rates. Communication issues stemming from last-minute diversions or cancellations in the current scenario are one of the reasons for booming freight prices. Also, the transportation sector, like other industries, tends to have ripple effects when corporations take major actions. So, when the market leaders (the largest carriers) decide to increase their costs to recuperate losses, the overall market rates are inflated too.
The industry can resort to several measures to put a check on the rising freight rates. Altering the day or time for the shipment and transporting during ‘calmer’ days such as Mondays or Fridays, instead of Thursdays that are generally earmarked as the busiest can reduce freight costs by 15–20% annually.
Companies can plan in advance to club and ship multiple deliveries at once instead of individual deliveries. This can help companies avail discounts and other incentives from shipping companies on bulk shipments. Over-packaging can augment the overall shipment costs, besides damaging the overall ecosystem. Therefore companies should look at avoiding it. Additionally, smaller companies should seek the services of integrated transportation partners for shipments as outsourcing can help them focus on their core operations.
One of the most effective ways to combat these high freight rates is advance planning of shipments. Cargo cost is increasing every day. To avoid paying surged charges and avail early bird facilities, companies have to strategically plan their shipments well in advance. This can help them save a considerable amount of cost & help them avoid delays. Using digital platforms to leverage historic data on the freight costs to predict the rates as well as the trends affecting the rates also comes in handy when planning in advance for the shipment.
It is digitization that can usher in a strategic transformation in the Shipping & Logistics industry. Currently, there is a tremendous lack of visibility and transparency amongst the players of the ecosystem. Therefore re-inventing processes, digitizing shared operations and implementing collaborative technologies can maximize efficiency and reduce trading costs. Besides building resilience for supply chains, it will help the industry to bank on data-led insights, thereby helping players make informed decisions. The industry, therefore, needs to adapt technologically bringing about a systemic shift in the way it operates and trades.
Source: CNBC TV18
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