Thinking of importing goods from China? Make sure you read this before you commit to anything.
It is becoming more of an issue that when goods are purchased in China and the freight is prepaid by origin, the importer will receive a bill for extra (but unfortunately payable) charges.
When you buy goods from China (or from any country in the world for that matter) you will agree with the seller a ‘buying term’. The ‘buying term’ used will be from a list of Incoterms – which are internationally recognised terms, set out by the international chamber of commerce. An Incoterm will outline who is liable for paying for what in order to transport the goods to its destination. Commonly you’ll come across FOB (free on board – where the seller is liable for the costs to get the goods onto a vessel, the buyer is then responsible for the ocean freight and any costs from then onwards); CFR (cost and freight – the seller is responsible for loading the goods onto the vessel and for the ocean freight, the buyer is liable for the unloading of the goods and all costs from then onwards); CIF (cost insurance freight – same as CFR but the seller also arranges the marine insurance). There is a whole book on Incoterms, so if you are not sure then make sure you do your homework or ask a reputable freight forwarder for some help.
Why is it important to make sure you have the correct Incoterm when it comes to importing from China? Unfortunately we have seen the same issue come up time and time again where someone has agreed the purchase of some goods from China on either a CFR or CIF basis (or others where the seller arranges the freight). When the goods arrive in the UK, the buyer gets a large bill from a UK based agent (who has been nominated by the seller). You are under no obligation to clear the goods with that nominated agent, however, you are liable to pay for the charges that they have billed to you. It works on a kind of ‘back hander’ basis. Your seller in China has contacted the UK agent, agreed they can accept the shipment when it arrives in the UK, and for that the Chinese seller will expect a remuneration in kind, which you’ve been billed for. It can be hundreds of pounds – so it is so important to avoid this situation.
How do you stop this happening? Agree a term such as FOB with your seller. They’ll arrange for your shipment to get on the vessel in China and you can appoint a UK agent to accept the goods in the UK (a freight forwarder such as Mercator Cargo). When the shipment arrives there will be ocean freight, UK landing charges and customs clearance to pay. No hefty fees on top, just the regular price to pay. Be careful of the sellers who say they can arrange your freight for a very low price, as they will be making up for this via their nominated UK agent. Don’t pay too much unnecessarily.
Having full control of the freight element of the goods will ensure you avoid these surprise charges.
Just yesterday, we had a new customer call us asking for help as this had unfortunately had happened to him. He understood that we were unable to do anything about the charges from the other UK agent. However, he did not want to use that particular agent for the clearance and delivery as he felt he could not trust them, so came to us. We have arranged to clear and deliver his shipment for him, and also to help him for future shipments so that the same issue does not happen again.
We have partner agents in China, so if you do not wish for your seller to be involved in any of the transport of your order, we could arrange for the whole shipment from door in China to door in the UK – Simple!
Don’t get caught out, make sure you appoint a reputable freight forwarder who can offer you reliable and cost-effective advice. Make the most of the professionals who are willing to help and go the extra mile for you.
Still need some help? Get in touch, we’ll be happy to discuss this issue with you. Or if you need to find a UK based freight forwarder who can handle the freight from China, give us a call with the details and we’ll get a quote together for you: +44 2392 756 575 or email sales@mercatorcargo.co.uk
