This blog aims to provide small and medium-sized businesses with tips and best practices for international shipping.
In the rapidly globalizing economy, small and medium-sized businesses (SMBs) are stepping beyond local markets and expanding to international trade. One crucial aspect SMBs should be aware of is the variety of shipping options available to them, including air, ocean, and land. While often challenging, understanding and utilizing these diverse international shipping methods is a key component of this expansion, despite many SMBs being resource-constrained compared to larger companies. With the right international shipping solution, SMBs can streamline operations, cut costs, and extend their global reach.
This blog aims to provide small and medium-sized businesses with tips and best practices for international shipping. SMBs can use these tips to evaluate their current shipping operations and understand the expectations and complexities of international trade and cross-border shipping. We hope that these insights will help them determine how to optimize their shipping operations in the long run and make better decisions.
Preparing Documents for Customs Regulations
Customs regulations vary by country, so it’s essential for small businesses shipping internationally to be aware of the documents needed to ship to and from different countries. . These documents reflect the types of goods, taxes, fees, or specific documentation you will be importing or exporting. Below you can find common import and export documents to guarantee a smooth shipping experience.
Important Customs Documents SMBs Should Know About
Customs documents SMBs should be familiar with include the following:
- Commercial Invoice: This is a detailed document from the seller to the buyer listing the goods sold, their prices, and any other charges related to the shipment. It also includes information such as the buyer and seller’s contact information, terms of the sale, and a description of the goods.
- Bill of Lading (BOL): This is a contract involving the owner of the goods and the carrier. It acts as a receipt for the cargo and evidence of a contract of carriage.
- Packing List: A document that provides detailed information about the packaging of a shipment, such as the number of boxes, their size and weight, and the content in each box.
- Proforma Invoice: This document is like a preliminary invoice used to declare the value of the trade. It is often used for customs purposes in importation and sometimes to obtain letters of credit in advance of a shipment.
- Certificate of Origin (COO): This document certifies the country in which the goods were manufactured. It is possible that it could produce a significant impact on the amount of duty that the goods are subjected to.
- Insurance Certificate: This document is proof that insurance will cover the value of the goods while they are being transported.
- Shipper’s Export Declaration (SED): Used by U.S. exporters, this document provides information that is used for export statistics. It’s required for shipments over $2,500 and for any shipment requiring an export license.
- Import/Export Declaration: This is a document that must be submitted by the importer or the exporter to the government declaring where and what is being imported or exported.
- Dangerous Goods Form: For shipments containing hazardous materials, a dangerous goods form may be necessary. It provides details about the contents of the shipment and how they must be handled.
- Inspection Certification: Certain countries require a certificate of inspection for certain types of goods, verifying that the goods have been inspected and meet quality, quantity, or other standards.
Consider the Packaging and Labeling Requirements
The packaging should be strong enough to withstand the rigors of international shipping, such as possible rough handling and varying temperatures and humidity. Ensure that the labeling complies with the regulations of the destination country. For example, some countries require certain warnings or information to be displayed in their language.
Language Application on Packaging Labels
As an example of warning information written in different languages, in North America, many multinational businesses develop their labels using a combination of English, Spanish, and French, as those are the three most widely spoken languages on the continent. While laws in the United States suggest that providing foreign language translation for safety information on certain packages is “appropriate,” it’s not necessarily required by law. However, having information in the customer’s language can enhance customer satisfaction and repeat orders.
Explore Trade Zones and Free Ports
Trade zones, also known as free-trade zones or foreign-trade zones, are specific areas within a country where goods can be imported, handled, manufactured, or reconfigured and then re-exported under specific customs regulations and are generally not subject to customs duty.
Free ports are similar, but they often extend further benefits. The term port is commonly associated with traditional ports, but nowadays may also be referred to in reference to areas with even lighter economic laws, including minimal taxation, to stimulate business activity.
To take one example, in the Canary Islands Free Zone, corporate tax rates (June 2023) are only 4%, which is significantly lower than in the rest of Spain, where the rate is 25%.
Key Considerations SMBs Should Take into Account
- Duty Exemption: Goods entering these zones aren’t subject to import duties or taxes until they leave the zone and enter the broader economy. This advantage can significantly reduce upfront costs, allowing for more flexible and affordable inventory management.
- Regulatory Relief: Businesses in these zones are often exempt from some standard regulations, streamlining operations and reducing red tape.
- Tax Incentives: Engaging in business within these zones can come with tax breaks, improving your bottom line and freeing up capital for reinvestment.
- Re-exportation: Goods can be stored, modified, or manufactured within these zones, then re-exported without incurring customs duties. This feature is particularly valuable for businesses operating in assembly or manufacturing.
Observe Cultural Considerations
Culture matters in international business. From understanding local consumer habits to respecting national holidays, these aspects can profoundly affect your shipping strategy and overall business operations. For instance, some products might require tailored packaging to appeal to foreign markets, and delivery schedules might need adjustments to account for local holidays. Understanding these nuances can significantly improve customer relations and foster better business growth.
Mitigate Risks with Insurance
Shipping goods internationally comes with inherent risks, including the possibility of damage, theft, or loss during transit. In order to safeguard your business from potential financial losses, it is crucial to have a comprehensive insurance plan in place for your shipments. By securing the appropriate insurance coverage, you can effectively mitigate these risks and protect your investments. In the event of unforeseen circumstances, such as accidents or natural disasters, having insurance helps ensure that you are financially protected and can recover from any potential losses. Additionally, insurance provides peace of mind, allowing you to focus on your core business operations without the worry of potential disruptions.
Prioritizing comprehensive insurance coverage for your international shipments is a proactive step in ensuring the smooth and secure movement of goods across borders.
Prioritize Digital Tools
Leverage digitization to streamline the international shipping processes. This includes using digital tools for tracking shipments, requesting quotes, as well as having convenient and secure payment methods. Not only can this save you time and minimize errors, but it can also provide you with valuable insights that can help you refine your shipping process in the future.
Consider Currency Exchange Rates and Payment Methods
Be aware of the current exchange rates when pricing your goods for international markets. Fluctuations in currency rates can significantly affect your profit margins. Also, ensure that your payment methods are safe and compatible with those preferred in your target markets.
Know Your Incoterms
Incoterms, also known as “International Commercial Terms,” are a set of rules that define the responsibilities of sellers and buyers with regard to the delivery of goods under sales contracts. These Incoterms were first published by the International Chamber of Commerce (ICC) in 1936 and have been updated several times, with the last revision being in 2020.
Here are the most recent Incoterms as of 2020:
- EXW (Ex Works): The seller provides the goods at their premises or another named place. It is the buyer’s responsibility to cover all costs and risks involved in taking the goods from there to the desired destination.
- FCA (Free Carrier): The seller delivers the goods to the carrier or to a third party designated by the buyer at the seller’s location or another agreed-upon location.
- CPT (Carriage Paid To): The seller pays for the transportation of the goods to the designated destination. However, the goods are considered to be delivered when they have been handed over to the first carrier, and the risk transfers to the buyer at that point.
- CIP (Carriage and Insurance Paid to): According to this arrangement, the seller pays for both the carriage and the insurance to the named destination point, but risk passes when the goods have been handed over to the first carrier.
- DAP (Delivered at Place): The seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport, ready for unloading at the designated location.
- DPU (Delivered at Place Unloaded): This is the only Incoterm where the seller is responsible for unloading. The seller delivers goods once they have been unloaded from the arriving means of transport and are placed at the disposal of the buyer at a named place of destination.
- DDP (Delivered Duty Paid): The seller delivers the goods when they are placed at the disposal of the buyer, suitable for import, and ready for unloading at the designated location. It is the seller’s responsibility to bear the costs and risks of transporting the goods to their final destination and has an obligation to clear them not only for export but also for import, to pay any duty both for export and import, and to comply with all customs formalities.
- FAS (Free Alongside Ship): The seller delivers when the goods are placed alongside the vessel at the named port of shipment. All risks associated with loss of or damage to the goods pass to the buyer once the goods are alongside the ship. From that point on, the buyer takes responsibility for all costs.
- FOB (Free on Board): The seller delivers the goods on board the vessel nominated by the buyer. The risk of loss of or damage to the goods passes when the goods are on board the vessel, and the buyer bears all costs from that moment onwards.
- CFR (Cost and Freight): The seller must arrange for the goods to be loaded on board the vessel of transportation. The risk of loss of or damage to the goods passes when the goods arrive on board the ship. The seller must negotiate and pay the costs needed in order to transport the goods to the named port of destination.
- CIF (Cost, Insurance, and Freight): The seller has the same obligations as under CFR, but in addition, he has to procure marine insurance against the buyer’s risk of loss of or damage to the goods during the carriage.
Find the Capable and Efficient Logistics Provider
Businesses often outsource some or possibly all of their international shipping to a third party. SMBs should consider hiring a freight forwarder to simplify the complexities associated with shipping goods internationally.
It is a freight forwarder’s job to act as an intermediary between businesses and various transportation services, expertly managing the logistics of delivering cargo from its initial point of origin to its final destination. They handle all necessary documentation and customs clearance, as well as find or suggest competitive shipping rates, which helps SMBs save time and money. A freight forwarder also ensures that shipments comply with international laws and regulations, reducing the risk of costly delays or legal issues.
When shipping internationally, it is important for SMBs to consider financing, such as buy now and pay later options available from freight forwarders, which can be crucial for small businesses struggling to secure loans for export operations.
Continuously Review and Improve
Continuously review your shipping process and strategy. You, or your trusted shipping partner, can regularly check for changes in customs regulations, analyze your shipping data to identify areas for improvement, and by seeking feedback from your customers. By continuously improving your shipping process, you will be able to increase efficiency, reduce costs, and boost customer satisfaction.
Ship4wd is the International Shipping Partner of Choice for Small and Mid-size Businesses
Choosing Ship4wd as your international shipping solution simplifies your global market strategy and propels your SMB towards growth.
- Our Services Are Tailored for SMBs: We are familiar with the challenges and needs of small and medium-sized businesses whose operations involve international shipping. As a digital freight forwarding company, we aim to support your business success by offering superior levels of service and attention, thereby enabling efficient shipping operations for your business.
- One dashboard with all your Shipments : Our user-friendly digital platform, crafted specifically for SMBs, combines all the shipping information into one dashboard, which enables easy and quick search of shipping quotes, full price visibility, and shipment tracking, saving time and allowing more focus on core business functions.
- Exceptional Customer Support: What sets Ship4wd apart is our 24/7 exceptional customer support, ready to assist at every step of the shipping process, offering personalized and real human interaction rather than automated responses.
- International Shipping Flexibility: Ship4wd offers air and ocean freight shipping. The platform’s flexibility caters to the distinctive needs of each business, offering Full-Container Load (FCL) and Less-Than Container Load (LCL) services.
- Digital Capability: Our dedicated digital freight forwarder services, with its robust global transport network, helps ensure accuracy and efficiency to help you remain competitive, tracking shipments in real-time, and guaranteeing secure online transactions.
- Global Network: With a broad reach of international partners, customs brokers, and logistics service providers, we can provide a comprehensive range of logistics services, covering all stages from transportation and customs formalities all the way up until your goods arrive at their destination.
- Cost-Effective Solutions: Our strong relationships with carriers around the globe allow us to obtain competitive pricing for our clients. By choosing Ship4wd, you can reduce expenses without compromising on service quality.
- Financing Solutions for SMBs: Limited cash flow presents a challenge to small and medium-sized businesses seeking to import or export goods. Ship4wd offers an innovative financial alternative: ‘Buy Now, Pay Later,’ where SMBs can schedule their shipping needs today and experience the convenience of making their payment up to 90 days post delivery, which gives SMBs a significant advantage.
- Time-Saving Services: We take charge of all logistical coordination, allowing you to concentrate on your primary expertise – managing your enterprise.
Sign up with Ship4wd today and discover why we offer the best international shipping solution for SMBs, giving you the strategic advantage you deserve.
At Ship4wd, we understand the complexities of international shipping and strive to provide reliable, efficient, and customized freight forwarding solutions. Contact us today to discuss your shipping needs and experience the difference of working with a trusted partner.