Do you know whether you’re importing from China the most cost-effective and risk-diverse way possible?

US importers have a very important choice to make when purchasing from their overseas supplier. The term of of an importer’s purchase (FOB China departure port or Ex-China Factory to China departure port versus C & F to destination port or airport) drives the freight responsibility onto the supplier or the importer. Knowing the difference when making your purchase matters.

What does C&F Stand for?

It stands for “cost and freight,” which means as the importer, you’ll be paying the exporter for the cost of the goods AND the freight up until it reaches its destination port or airport. So, if you’re shipping to Los Angeles, for example, the seller will pay for all expenses (less insurance) up until it reaches the port in LA.

Importers using C & F destination to their US port /airport

It actually sounds nice, doesn’t it? To not have to worry about the logistics of your freight shipment, but it’s that level of false comfort that makes it such a problem for so many people. It’s a common mistake, actually, when importers use the C & F US destination port or airport method of shipping, as opposed to something like FOB shipping (more on FOB shipping here). It’s a mistake because it places too much responsibility on the supplier, and not enough on the entity that is most impacted when things go wrong.

It creates a lot of unknowns, and just because you don’t see, hear, or feel the problems occurring as they unfold, you certainly will when customs slaps a $5,000 fine for not having your ducks in a row.

It’s your product, and even though your supplier wants your business again in the future, they won’t suffer nearly as much as you will when something doesn’t go right.

The many reasons why it is not the best choice

In this C & F USA destination port or airport scenario, the importer is importing a shipment of goods from China, letting his supplier control movement of the goods beyond the making or selling the shipment. In doing so, the importer lack of control can be costly when no local US representation from an international freight forwarder is involved with their international agent.

Here are some examples of the reasoning behind this thinking:

  • The supplier has more leeway to delay a shipment
  • They will use their own international network, one that has no ties to you, the buyer
  • Buyers typically have insufficient knowledge of the shipping documents required by the USA Customs
  • Customs will have no problem fining you for lack or late filing of the importer safety documents ($5,000)
  • There are many ways to ship goods, and you won’t be the one having conversations with the freight forwarders, and therefore, won’t have their helpful guidance
  • You still need to get a local freight forwarder to ship from the port to your final destination
  • Transfer times tend to be slower
  • There tend to be greater transfer costs
  • No communication until something has already gone wrong to the point of fines, delays, and other expenses and problems

These things happen more than you may realize, and while they are, you’ll be in the dark, so why risk so much?

Importing from China the right way: FOB or Ex-factory departure port / airport

The US Importer designates its international freight forwarder, confirming the term of purchase, discussing the shipment description, weight & volume, obtaining a freight bid, knowing the frequency & transit time.

When you use a forwarder in the US, they can handle the logistics from the point of origination to your warehouse. Any issues that come up with the supplier are detected early, shipping costs & transit times are known in advance, and arrival notices are dispatched early & a pre-clearance filing can be in place to expedite the process. This way you’ll also suppress any supplemental time for additional billing of a transfer cost, eliminating costs and extra hands in the process.

I should tell you, that it’s not just Chinese imports that are experiencing these issues, although we see a lot more here than we really ought to. These problems exist whether you’re im porting from China, Australia, Japan, or anywhere else overseas where your suppliers are separated by oceans and thousands of miles.

I suggest you streamline your importing processes by building a relationship with an international shipping company, because they will help you alleviate the unknown, & secure a proper time line for your import shipment.

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