Every importer wants to spend as little as possible on sea freight when it comes to importing goods from China. There is a great deal of cost involved in importing a shipment from China to Australia - from manufacturing and freight costs to customs duties, taxes, road transport and storage. Many costs are fixed, but freight costs will vary. With some understanding of the shipping industry and careful planning when organising the logistics involved in sea freight shipping, you can make considerable savings on your freight from China to Australia.
Reducing Sea Freight Costs for Shipments from China to Australia
There are a number of ways to save money on shipment costs associated with sea freight for cargo being delivered from China to Australia.
#1 Avoid Sea Freight Shipping During Busy Times in China and Australia
Sea freight shipping costs will fluctuate based on the levels of supply and demand. The more demand for container space, the higher you can expect the price to be. This means that during busy times of the year, you'll spend more on shipping goods from China to Australia.
From October onwards, the volume of freight increases worldwide due to Christmas stock being transported to Western countries from China. Whether your business needs goods in stock for Christmas or not, try to manufacture and transport any cargo before the rush begins so you aren’t competing with the retailers for a container.
Chinese New Year Shut Down
Chinese New Year occurs in late January or early February. Factories throughout China wind down for one-to-two weeks before Chinese New Year celebrations officially begin, and remain closed for seven to 10 days. Ideally, importers should aim to have their goods on the shipping container well before the close down period and even avoid shipping altogether between October and February if possible, as demand for container space out of China is at its peak. Remember, there may be a backlog of orders when the factories reopen, so don‘t count on your products being manufactured in the first couple of weeks back from Chinese New Year either.
#2 Fill the Shipping Container with Goods
LCL (Less Than Container Load) means your order doesn’t fill a 20 or 40 foot shipping container. Standardised stackable shipping containers were introduced in the 1950s, and now 90% of non-bulk freight is containerised for easier loading and shipment. Ordering a little more stock may allow you to fill the container with goods and keep what you don't need as inventory until a later date. This could help save on freight costs and pay a reduced price per unit on your import from China.
If it’s not possible to fill a shipment container, freight forwarding services can assist in merging the cargo with other LCL shipments to fill a container. Also known as ‘Groupage Shipping’, a freight forwarder will pack goods purchased or manufactured by multiple clients in order to fill a shipment container. Payment for freight forwarding services is determined by a cubic metre measurement of the container space used by each client. A 20 foot container measures 33 cubic metres, while a 40 foot container measures 66 cubic metres. Importers can also save money by using a 40 foot shipment container rather than a 20 foot container and double the cargo for just a small difference in cost.
#3 Use a Mix of Freight Methods
Shipping lines visit most ports regularly, but some ports receive more ships from China than others. If you are located at a less popular port, you may have to wait longer for your goods to arrive and pay a higher price. In some cases, it may be worth considering mixing freight methods to reduce overall freight costs, such as organising sea freight to a further port and then using a road freight service to have the cargo delivered to your door. Depending on the situation, using multiple methods of freight may be the quickest and cheapest method in getting your goods delivered.
#4 Organise Cargo and Transit Insurance for Freight from China
Your goods face several risks while in transit. Imported goods can be stolen, pilfered, hijacked or damaged through rough handling, dropping, exposure to rain or salt water and variations in temperature. Goods can be lost at sea in rough weather or destroyed through fire, the ship sinking or a road traffic accident on the way to the wharf. Cargo and transit insurance is the only way to protect the buyer or seller and mitigate the financial risks associated with sea freight.
Incoterms with Insurance Included
There are two Incoterms that require the seller to provide the buyer with evidence of insurance for the consignment; Cost Insurance and Freight (CIF) and Carriage and Insurance Paid to (CIP). For all other Incoterms, the buyer should arrange adequate cargo and transit insurance to ensure that all parties are protected in the event of any issues.
Find the Best Insurance Deal for Shipments to Australia
Don’t accept the first insurance policy quote you receive for cargo and transit insurance relating to an import. Some importers buy insurance through the shipping line, but it may not be the cheapest price or most comprehensive policy. Do your research and get quotes from third party insurance companies to make sure you get the best deal for your cargo shipment from China to Australia.
Vara Allied is already insured with shipping, manufacturers and public liability insurance. This means you can be sure that the insurance element of an already complicated sea freight process has been taken care of when it comes to sourcing and importing goods to Australia.
#5 Control the Cost of Freight
If you buy your goods CIF, it is the seller’s responsibility to arrange freight and insurance for the shipment. Often, there is a markup added to cover the seller’s time. If you buy goods Free on Board (FOB), you control the cost of freight and can look for the most competitive rate.
#6 Plan Ahead to Avoid Needing Freight Urgently
Like all modes of shipping (such as road and air freight), the more urgently goods need to be shipped, the higher the price will be. If you need your goods to go on the first available ship out of China, you will pay a higher price than if you book in advance and use time more efficiently. For some industries, it is impossible to plan too far ahead when it comes to knowing whether or not goods will be required. Some businesses will wait for orders to be placed before organising a shipment of goods from China with the customer's specifications. However, if you can anticipate stock requirements in advance, you'll avoid having to pay a premium price for urgent freight services.
#7 Use Freight Forwarding Services
If you are new to importing from China or you don’t ship on a regular basis, it pays to use a customs broker and freight forwarding services. If you don’t have a FCL (Full Container Load), you will need a forwarder to join with other importers in order to fill the container with goods. Freight forwarding services often result in achieving a better rate through a shipping line than if you go direct.
If you aren’t getting the best deal on your manufacturing and shipping, call Vara Allied on (08) 6115 0118 or contact us online.