With the increasing trade between China and the Middle East, do you have a hankering to try importing goods from China, the world factory, and selling them in the local market when reading this article?

So, what's stopping you from wanting to make a fortune? Can't find a supplier? No, with the global Internet being so advanced, finding suppliers is no longer a very difficult task. A quick search on Alibaba will present you with countless suppliers. The headache for many importers today is how to choose an efficient shipping method. Because from a long-term trade point of view, especially for importers doing FOB price terms, not knowing how to arrange transportation rationally is indeed a money-burning business.

Here are analysis of 3 aspects from the sea freight, air freight and international express. We look at the range of freight costs to be borne by the importer and how to achieve the best value for money in transport costs. Read the following carefully and you will save a lot of money.

1.Sea freight

Take Saudi Arabia as an example, sea freight to the port of Riyadh in Saudi Arabia.

When placing an order upfront, it is important to determine the way the goods are quoted. The following quotations are common.

FOB price: including cost + inland freight from the factory to the port of origin

CFR price: including cost + inland freight from the factory to the port of origin + sea freight

CIF price: including cost + inland freight from factory to port of shipment + sea freight + insurance

EXW price: cost price, which is often referred to as ex-works price.

Let's move on to the choice of shipping method for export by sea, using FOB and EXW prices as examples. Why choose FOB and EXW? Because from the point of view of foreign trade export data, these 2 price terms, in the price of all sea export goods in the way, account for nearly 90%.

Many importers want to know the price calculation of sea transport methods. Don't worry. Before talking about the price calculation, and then the following 2 common shipping methods of sea transport.

One is LCL (bulk transport), that is to say, the volume of your goods do not meet the full container, need to be assembled with other goods to achieve a container of goods volume.

There is also FCL (Full Container Load), which is the opposite of LCL, but the volume of the full container load is generally large enough to fill a container.

There are three common types of full containers as follows:

20" GP: container length 20' (approx. 6.1m), width 8' (approx. 2.44m), height 8.5' (approx. 2.6m), actual loading volume approx. 28 CBM (1 CBM = 1 Cubic Meter).

40" GP: Container length 40' (approx. 12.2m), width 8' (approx. 2.44m), height 8.5' (approx. 2.6m), actual loading volume approx. 58CBM.

40" HQ: container length 40' (approx. 12.2m), width 8' (approx. 2.44m), height 9.5' (approx. 2.9m), actual loaded volume approx. 68CBM.

Now we can start talking about the costing of ocean freight modes.

Let's start by looking at costing under the FOB price terms.

First let's review the specifics of what is included in the FOB price terms: FOB price includes cost + inland freight from the factory to the port of origin.

Again we use the case method to facilitate understanding.

Case 1：Now there is a batch of FOB price terms of wall switches need to ship. The outer box dimensions are 24cmx36cmx24cm. The gross weight of the outer box 10KG, the number of a total of 3238 boxes.

By calculation, we can derive the total volume of goods:

3238x24x36x24/1000000=67.1CBM

The volume of the goods can just take a 40GP container. The whole container transport does not need to own the goods to the dock to load the container. The supplier will ask the freight forwarding company directly from the container yard to pull out the empty container to the factory to load. So on the one hand, it eliminates the goods twice loading and unloading, and on the other hand inland transport costs are cheaper.

Because of the FOB terms, the importer does not need to calculate the inland freight costs from the factory to the port of origin. These costs are already included in the supplier's quotation. However, if you are aware of this you can take a look at the cost breakdown below, which will help you to be aware of the supplier's inland costs in addition to the ex-factory costs when you are bargaining with them.

Take the port of loading port Ningbo as an example, generally a 40HQ container hauling cost (from the wharf to the cabinet, empty cabinet to the factory, and then from the factory to the full container pulled to the wharf) is about 2000-3000RMB. This is only the cost of hauling the cabinet. Freight forwarding companies will also charge about 3000-4000 inland operating costs, which are included in the factory FOB quotation costs.

Under FOB pricing terms, suppliers are concerned with ocean freight rates, which are usually calculated in US dollars. Sea freight rates in the current climate of the epidemic have risen to a maddening level. The reason behind such a crazy price increase is that the epidemic has brought about a reduction in shipping company staff, and production and consumption in various countries have been affected. But with China as the world's factory, the development of the epidemic is currently under control, so production and delivery schedules in normal. After the containers are loaded with goods from China, the customs clearance and sales of the destination port will be slowed down due to the epidemic. On the other hand, under the FOB price terms, sea freight is borne by the importer. And some importers postpone shipping time for goods that are not very urgent to be sold. This also brings a very big problem to the supplier's capital flow.

After the sea freight costs, the importer also has to bear the port clearance costs of the destination port to inland freight from the port to the warehouse. You can consult the freight forwarder at the port of destination and compare several transport companies. Pay attention to whether the cost of inland transport includes insurance, especially for fragile goods, which are prone to loss during transport, and negotiate with the transport company about compensation for breakage.

Therefore, the cost formula for the importer under the sea freight method with FOB price terms is as follows:

Value of goods at FOB price + ocean freight + destination port charges (customs clearance + inland transportation costs)

Usually, long-term traders, who have their own sales plan every year, will choose the sea freight method. After all, sea freight is the cheapest way of transportation, and the transportation process is also safe and reliable. I forgot to mention that the "cheapest" was before the epidemic, but at present, in the global epidemic environment, the sea freight costs are rising, so if your goods happen to be in a great hurry and need to rush sales, you can consider air freight.

2.Air Freight

For long-term importers, it is rare to choose air freight. After all, the price is so high that profits are posted in. The following circumstances are the main reasons why importers choose air freight.

1)The goods delivery date is seriously delayed, in order to catch up with sales have to air freight.

2)The properties of the goods themselves, the need for air freight.

3)When the product value is high and the volume is small, the importer can choose air freight.

4)Special unpredictable circumstances, such as the epidemic under the high cost of sea freight and lack of containers.

Here we focus on the first situation, which many importers will encounter. Mature importers will have their own comprehensive sales plan, when to place orders, when to ship and when to sell. Generally the importer will specify in the contract a clause stating the penalties in case of delay in the goods. Beyond a certain time delay, the importer will require the supplier to air freight the goods or cancel the order.

Again, let's look at the calculation of the cost of air freight as an example.

Before I give you an example, let me go over the following 2 types of weight for airfreight billing: heavy cargo and bubble cargo.

A heavy cargo is a product with a high weight and a relatively small or moderate volume. The international definition of heavy cargo is cargo that weighs more than 1 kg per 166 cubic inches or more than one pound per 166 cubic inches.

Bubble goods are goods that are light in weight and relatively large in volume, also called light goods. The international definition of blister goods is: goods weighing less than 1 kilogram per 366 cubic inches or less than 1 pound per 166 cubic inches.

Here we have an example to understand the calculation of freight costs for 2 types of goods.

Case 2: Now there is a batch of wall switches under FOB price terms. The outer case dimensions are 24cmx36cmx24cm in length, width and height, respectively, and the gross weight of the outer case is 10KG, a total of 3238 cases, because the importer adjusts the sales plan and needs to air freight 50 cases of them in advance.

By calculation we can know that the product belongs to the heavy goods range. The chargeable weight of the heavy goods is its actual weight. If the unit price of air freight to Dubai is US$40, then the total air freight cost for 50 boxes of goods is:

10KG(weight/ctn）*50CTNS(number of ctn）*40USD(unit price of air express)=20000USD

The air freight cost of 20000USD does not include the customs clearance cost, as well as the handling fee of the freight forwarder, etc. From the amount, the air freight cost is much higher than the sea freight cost, and the percentage of normal trade by air freight is still very small.  

Case 3: A batch of model aeroplane foam under FOB price terms needs to be transported by air, the outer package is 85cm long, 55cm wide and 40cm high.

As we can see from the introduction of foam goods, the foam aircraft model belongs to the foam goods. In addition to its own weight, we also need to know its volume weight. The volume weight algorithm is as follows: L*W*H/6000 : 85*55*40/6000 = 31.17, less than 1kg according to 1kg

Volume weight = 32kg, then the air freight cost of a single box is volume weight * unit price.

The above example is a case where it is very easy to distinguish between heavy goods and soaked goods. Some goods cannot be distinguished at a glance which category the goods belong to. Then you need to follow the method mentioned above, calculate the volume weight. Take the weight of the larger between the actual weight (gross weight) and volume weight.

In addition, airfreight cargo differs from sea freight in that it needs to be palletized at the time of boarding the aircraft. You can choose to have your own pallets punched by the supplier or have them towed by the air freight forwarder. The latter will be more expensive so you can ask the supplier to punch the pallets in advance at the factory. The air freight forwarder needs to be consulted as to whether there are dimensional requirements for palletizing, and if so, the goods need to be reasonably aligned when they are palletized, and the length, width and height should not exceed the airline's limits.

3.Express（DHL/FEDEX/TNT)   

The two most important trade methods in the Middle East trade were mentioned earlier. In conventional trade, we often encounter the need to send product confirmation samples before the production of large quantities, or the development of some new products, the need to play samples to confirm the quality of the samples. In this case, the importer will choose to use international courier. international courier high speed, high efficiency. The most important international couriers: DHL, FEDEX, TNT.

Different international couriers have different prices and different routes of advantage, but the freight algorithm is similar. Do long-term trade importers friends, you can compare the price of different international courier, choose a long-term cooperation, and then you can talk to the courier company discount prices. In general, you can talk about the original price of 7-8% off.

The Middle East market I use the most is DHL, for the weight of the goods in 0.5 ~ 20KG, currently fighting for a very good discount. The regular sample express, 20KG weight limit has been more than enough. Interested importers friends can leave a message to consult me for discount prices. Below I take DHL as an example to introduce the specific price algorithm.

Case 4: 1 sample needs to be sent by the supplier for final confirmation. The sample is packed with an outer box size of 10*15*10cm and weighs 1.8KG.

So, how should I calculate the cost of choosing DHL Express?

The above chart is part of the collated DHL price list. Most of the Middle East countries belong to the price range of zone 8. According to the table weight, 1.8KG belongs to the 2KG cost reference price line. Thus the corresponded price is 402.15RMB.

If you check the price on DHL's official website, you only need to follow the following steps.

1.Register a DHL account.

2.Select I want to send a shipment and fill in the correct sender and recipient information.

3. Choose Economy or Priority. Priority shipments will be more expensive than regular shipments, but for very urgent samples, it is recommended that Priority shipments are considered safer and more efficient.

4. Display the price to generate the final order.

It is worth noting that the price on the official website is the original price without discount. It is not recommended for long-term importers to place orders directly on the official website. Now you can find many international express agents, and they will have a good discount.You can also leave a message, and we will calculate the price plan for you for free.

The rest of FEDEX, TNT, UPS, etc. are also commonly used international couriers. The normal time limit in the Middle East market is 3-5 days to the recipient. Currently because of the impact of the epidemic, customs clearance and delivery may be delayed, and you need to arrange express delivery as soon as possible.

4.Other

In addition to the above three main modes of transport, shipping to the Middle East can also be done by a combination of postal international parcels, sea freight and local logistics.

Postal international parcels are a way that many businesses doing cross-border e-commerce will choose, and generally the items sold are not of high value. Because, the postal international parcel transport does not bear in the process of transportation of lost items, this provision for sending high value items, it is really more than worth the loss.

The combination of sea freight and local logistics can also be well understood. After the sea transport arrives at the destination port, the conventional process is to arrange logistics transport to the importer's warehouse after customs clearance by the freight forwarding company. These logistics companies are always docked with the sea container, and the normal delivery time is not high. Some long-term import trade businessmen, in the freight forwarding docking logistics companies appear low efficiency. When transport process of product safety protection is not enough, they should choose their own cooperation in all aspects of a satisfactory local logistics company, the container to the destination port after the inland logistics docking, so that the distance to the warehouse and container terminal for importers, is also worth considering a way.

So much has been said above about sea, air and international express transport, let's summarize again:

1.The goods in the normal plan of the regular shipments to choose sea transport.

2.Choose air transport for rush sales, the properties of the goods themselves demand and high value small volume items.

3.Choose international express for samples, cross-border e-commerce one shipping.

Now with the continuous development of transportation and the Internet, to the Middle East market transportation methods in addition to the introduction of several, but also is bound to gradually develop a more efficient and cheaper way of transportation. Pay attention to us, always know and consult the latest efficient way of transportation to the Middle East.