Learning the ropes of imports and exports is crucial for Amazon FBA sellers. At the very least, you need to have a reasonable understanding of your shipping options.
For newbies, the international shipping landscape can be a daunting task. Forwarding freight is littered with paperwork, regulations, processes and costs.
Needless to say, getting your shipping options right will help you maximise your profit margins.
In the complete guide to freight forwarding, we explain how the international shipping process works and describe what you can expect from a freight forwarder. We also discuss alternative options.
Given shipping costs is one of the heaviest expenses for Amazon FBA sellers, its worth investing the time to figure out how to keep your costs as low as possible.
What is Freight Forwarding?
Freight forwarders are specialists in end-to-end import and export. The understand the industry inside-out and have contacts throughout the logistics industry.
Most freight forwarding companies will provide shipping and storage facilities together with a smattering of other valuable services Amazon FBA sellers should be taken advantage of including:
- Supply and prepare international shipping documents
- Organise inland transportation and track movement of goods
- Negotiate freight charges
- Book cargo space
- Freight consolidation
- Arrange cargo insurance
- File insurance claims if necessary
What Can You Expect From Freight Forwarding Services?
Exporters must adhere to shipping regulations. This involves knowing various shipping laws, incoterms (shipping codes) and how to fill in the relevant documentation.
Using freight forwarders that provide relevant services makes import and export far easier - and ensures you do not fall foul of your legal obligations.
When searching for a freight forwarding company, ask whether they offer advise and assistance on how to efficiently ship goods internationally. Ideally, they should help you organise the end-to-end movement of goods over land, sea and air.
Because freight forwarders have established relationships with various carriers across the logistics spectrum, they are best placed to identify the best trade routes and negotiate the best price.
You should expect a freight forwarding company to:
- Prepare all the relevant paperwork
- Packaging service (essential for Amazon FBA sellers)
- Organise a shipping route and make bookings with carriers and warehouses
- Arrange payments to carriers, customs and taxes
- Troubleshoot any problems with the shipment
Do I Need a Freight Forwarder? What Are The Options?
Amazon FBA sellers do not have to use a freight forwarder to move goods. Using a freight forwarding company makes the entire process easier but it is not the only option.
1. Use Your Supplier
You may agree for your supplier to arrange the entire shipping arrangement. If so, make sure this agreement is written into the contract with the appropriate incoterm. (Learn more about incoterms here).
It’s worth bearing in mind that your supplier will look to recoup the cost of shipping goods back. The more likely scenario is that will be looking to make a profit and inflate the cost of your agreement accordingly.
2. Share Costs With Your Supplier
Other incoterms (especially CIF) pave the way for supplier to arrange and pay from the shipment of goods to the destination port in the UK.
However, be warned, this is a classic shipping trap that newbie Amazon FBA customers fall into easily. The con is that it leaves you stumping up fee for inflated costs.
Why Use A Freight Forwarding Company?
Freight forwarding companies offer a number of advantages:
As outlined above, the costs involved in alternative shipping options are always going to be more expensive than using a freight forwarder. Moreover, because they have multiple contacts, they will find you the best price and consolidate your costs.
2. Navigate Regulations
Freight forwarders specialise in import and export. It is their business to stay abreast of the latest regulations, customs tariffs, tax brackets and obligatory paperwork.
If the legal requirements for import and export are satisfied, your shipment will be held up - which is most likely to impact your business and devour time you could spend putting to better use.
3. Safer Shipment
There are various ways of packing and shipping goods. There are also a number of things that can go wrong between supplier and buyer I.e damaged goods.
Freight forwarders have a network of transportation and storage options. This gives them more control over how goods are best shipped. For example, using a courier form that specialises in shipping fragile merchandise or over-sized goods is a better option than using a standard courier service.
In short, freight forwarders give you more control over how your merchandise is shipped. They have the expertise to organise the safest passage for your shipment.
How Do Freight Forwarders Charge For Services?
The cost of freight forwarders obviously differ from one company to the next - not just in terms of competitiveness but also the services they offer and how these services are included in the cost.
For example, some freight forwarders will include a specific service as a standard charge. Another company will have a lower standard fee but include optional services as add-ons.
You may also find the freight forwarder does not offer the service you require at all. This leaves you having to find a suitable third-party provider as well.
Ideally, you should use a freight forwarder that provides flexible end-to-end shipping services.
Moreover, the company you use should specialise in shipping goods to Amazon FBA warehouses because there are certain costs and protocols involved. (Find out more in our comprehensive guide).
Before agreeing on a fee, make sure the freight forwarder provides all the service you require. It’s best practice to get a quote first.
What’s more, you should expect the freight forwarder to break the quote into detailed segments so you can determine precisely where the costs are proportioned. This will also enable you to compare prices against other quotes.
A typical breakdown of costs will include:
- Carrier costs - (sea freight or air freight)
- Container costs - (FCL/LCL)
- Container type - (suitable container relevant to goods)
- Cargo volume and weight
- Packaging and pallets
- Documentation costs - (paperwork, Bill of Lading, invoicing)
- Port fees - (handling charges, clearance, warehouse fees, unpacking)
- Inland courier costs
- Administration fees - (co-ordinating, organising and management of shipping route)
- Cargo insurance
- Surcharges - (fluctuation in currency, risk of war, security, peak season, demurrage penalty)
How To Organise An Amazon FBA Shipment with a Freight Forwarder?
Shipping goods to an Amazon FBA warehouse has slightly different requirements with packaging, labelling and storage than standard shipments.
It’s advisable to work with a freight forwarder that has experience preparing shipments for Amazon Fulfilment centres. If the requirements are not met, Amazon’s warehouse staff will refuse to accept the delivery and your shipment will be returned to the port - at your expense.
Your initial approach to a freight forwarder will be to request a quote. It is important that you include precise details at this stage. The quote serves as your freight forwarder’s commitment to providing the service promised following your agreement of the quote.
When requesting a quote, follow the checklist:
- Include the full address where the goods will be collected from and the full address of the final destination including postcode, and if relevant, apartment number, department or bay etc.
- Name the port of origin using the abbreviated international freight location codes; ie. GAT (Gatwick airport), DOV (Dover)
Weights and Measures
- Input the total weight of your shipment in kilograms.
- Measurements should be stated in cubic volume (CBM).
- If you are shipping goods in bulk, you must list the weight and measures of each individual box together with the pallet size. Freight forwarders will provide guidance if you are not sure.
- When you are shipping goods into the UK, the products must be labelled with a standardised Commodity Code. Failure to add a commodity code will result in your shipment being held up at customs.
- If you don’t know which commodity code your goods are classified under, use the government’s Trade Tariff tool. You can also contact HMRC for classification advice.
How To Choose A Freight Forwarding Company
The number of freight forwarding companies his overwhelming. There are over 1500 in the UK alone - not all of whom are licensed.
Essentially, a freight forwarder is a long-term business partner so it’s in your best interests to choose one that will consistently deliver. Moreover, if you are an Amazon FBA seller, the sensible option is to use a freight forwarder that specialises in Amazon shipments.
Because of the intricacies involved in transporting shipments to the UK from overseas, you should ideally choose a freight forwarder that delivers and end-to-end service together with organising all the relevant paperwork and logistics.
It’s worth bearing in mind that large globally-recognised freight forwarding companies typically only deal with large shipments. As a consequence, they tend to favour clients that ship large quantities of goods and do not offer good customer service to client that use them less frequently, i.e Amazon FBA sellers.
Good customer service is essential when dealing with freight forwarders. You want to be able to trust the company you use to resolve any problems that might occur swiftly and with minimum fuss.
On the flip side, smaller freight forwarders don’t always have the tools, internal resources or extensive network to transport goods. If a freight forwarder is not able to provide an end-to-end service, there is more chance of something going wrong, and the cost is likely to be higher.
If you are shipping goods that have special requirements, choose a freight forwarder that specialise in handling these types of shipments. For example, some freight forwarders will not transport machinery, vehicles bulk commodities such as wheat and corn etc.
There may also be a maximum size and weight which your shipment exceeds. Although this is rare for Amazon FBA sellers, it is something you should be aware of. For example, not all freight forwarding companies will carry “hazardous cargo” which includes lithium batteries commonly used in mobile technologies.
Not all freight forwarders ship to all parts of the world. If you are importing and exporting goods from multiple countries, consider a freight forwarder that covers a wide geographical area.
If you initially choose a freight forwarder that only ferries goods to a limited number of countries, you will probably have to find another freight forwarder or work with several companies. This can be time consuming and costly.
The priority for most Amazon FBA sellers will be price. After all, shopping costs eat into your profit margins.
Your actual priority should be to make sure the freight forwarding company you choose provides the full-quota of services you need in a reasonable turnaround time. If anything goes wrong, your goods are held up and you will probably have to pay more to sort out the problem.
That said, the competition within the shipping industry is so fierce, companies usually offer competitive prices. They are well aware that price can be the difference between winning a new customer or losing out to a competitor.
Bear this in mind when you are fishing for quotes from various freight forwarders. However, going with the lowest quote may not always be in your best interests.
As mentioned above, freight forwarding companies offer a variety of services. Some of these services are included in the standard cost of the shipment, others are not. So before you accept a quote, make sure you know exactly what you are getting for your money.
In addition, look out for hidden charges. Some forwarders include surcharges in their Terms and Conditions. This makes the quote appear attractive at first glance but you get a surprise when you receive the final invoice.
If the price of a quote seems very low - compared to other freight forwarders - it is too good to be true. The likelihood is that you will not get all the service you need and certainly won’t receive the customer service you expect.
To ensure your Amazon FBA business runs smoothly, it’s important to receive your merchandise on time for a good price. This all hinges on the freight forwarder you use.
When choosing a freight forwarder as a long-time business partner, perform due diligence in advance. To recap, make sure the freight forwarding company:
- Performs an end-to-end delivery service (including negotiating prices and booking space)
- Has a strong network of logistic contacts that cover the geographical areas you import/export
- Handles all the legal obligations and relevant paperwork
- Knows the packing rules for Amazon Fulfilment Centres
- Provides excellent customer service (including troubleshooting and insurance claims)
If you’re looking for a freight forwarder you can rely on to provide comprehensive services and end-to-end delivery, contact us now to get a free quote.