We were recently approached by a UK based company, Nim’s Fruit Crisps, to assist with the import shipping of some machinery that they were purchasing from China.
Nim’s had purchased the goods from the Chinese manufacturer on an FOB (free on board) basis. FOB is one of many international trade terms (INCOTERMS) which sets out who is responsible for different parts of the international shipment. It is generally recommended to agree to purchase your goods FOB when they are coming from China. FOB means that the supplier of the goods (the exporter) will arrange for your shipment to be delivered either to the port or warehouse in China. From there, you are free to arrange for any UK based freight forwarder to take control of the shipment and arrange for the freight to the UK, UK customs clearance and delivery to your door.
FOB is best used when importing from China because it gives the UK agent ultimate control of the UK costs once the shipment arrives in the UK. We have found that sometimes if the exporter (the company/person you are purchasing the goods from in China) arranges the ocean freight for you, the cost may seem competitive compared to what the UK freight forwarder is offering. However, we have seen many importers stung financially, as once the shipment arrives in the UK there are extremely high charges to be paid upon import which cannot be avoided. It works whereby the exporter has arranged for a UK agent to accept the shipment once it arrives, for which the exporter expects a remuneration in kind for giving the shipment to that particular agent. The collection of this remuneration in kind unfortunately is built into those high charges you did not expect to be billed for. It’s essentially a ‘back hander’.
Fortunately Nim’s agreed an FOB term, and so they contacted us to handle the ocean freight, UK clearance and delivery for them. Our agent in China assisted to liaise with the Chinese exporter to arrange the drop off of the machinery to the origin port: Huanghua. Huanghua port is just outside Beijing and Tianjin, in the north-east of China. We were then able to arrange the sea freight from China to Felixstowe port in the UK.
As the cargo was not enough to fill a full shipping container, we arranged for the crated machinery to be loaded and shipped in a shared container. Opting to ship goods as an LCL (less than container load) shipment brings the cost of the freight down. Sea freight from China takes around one month.
Once the shipment arrived in the UK, Mercator complied the documents, arranged to pay HMRC import VAT & Duty that was due on Nim’s behalf, and then arranged for a truck to deliver the machinery to their door.
It is always recommended that you speak with a freight forwarder before you commit to buying goods, just to make sure that the commodities you are hoping to purchase will not be costly or impossible to import into the UK, to get advice about which Incoterm you should negotiate and to find out how much importing the goods might cost you. If you want to import goods from China, then get in touch to discuss or to get a quote: +44 2392 756 575 or email sales@mercatorcargo.co.uk
