Ship! Ship! Hooray!

July 31, 2019

Considerations When Shipping from China

Congratulations! You’ve just created an amazing custom collectible or perhaps a brand new toy with your China manufacturing partner, and it’s time to ship! But don’t celebrate quite yet – ensuring your precious cargo is delivered safely, without damage, on time and on budget is one more hurdle (actually, four) to clear before the finish line.

 

As you might expect, large importers have entire departments dedicated to international logistics – which can be quite complicated and expensive. While I’m pretty sure none of you wants to read a tome on this topic, it might be helpful to share a high-level overview of things to consider when shipping overseas. A basic 101, if you will, from our experience working with clients who distribute CEs, toys and other unique products across the globe.

 

Product packaging

You may be surprised to learn that your shipping journey actually begins with packaging. Safe transport requires packaging that protects your product along the way. And sometimes that road can be a bit rough. So, it’s critical, right off the production line, to ensure your item is packed with a blister, foam, recycled pulp, or other cushioning materials designed to maintain its integrity until delivery. You can determine the effectiveness of your packaging by conducting transit tests.

 

Transit tests

These structured tests are designed to simulate the transportation conditions your product will need to withstand during shipment. Will your goods be shipped by: Ocean? Plane? Rail? Truck? How many times will your cargo be transferred and moved from vehicle to vehicle? Will it endure excessive heat or cold? Can humidity impact the packaging and product?

 

One way to vet the uncertainty of travel conditions in advance is a Drop Test – and it’s as simple as it sounds. Your product master carton is raised to a given height (depending on size and weight) and dropped 10x, to hit each side, edge and corner. Then you assess the damage. Did the packaging seams burst open – but the product itself is fine? Or maybe the outer box came through with flying colors, but your product broke because the interior blister was not sufficient.

 

Another test to simulate the potential vibration of product in the back of semi traveling cross country for 10+ hours is a Shake Test, whereby your product is secured to a platform that shivers, shudders, quakes, wobbles and wavers. Liken it to one of those crazy carnival rides where you exit not knowing the direction of the earth from the heavens!

 

 

Weather conditions such as freezing, intense heat and high humidity are also systematically scrutinized until results are achieved that guarantee product will arrive in the condition that was intended.

 

In short, it’s important to try what might go wrong during transit during the package design and prototyping phases to ensure the packaging is effective for the planned shipping environment.

 

Carton markings

OK, now that you’ve passed your transit tests, you’re probably feeling pretty good about your master carton and product pack-out. You can check safety / protection off your list. The next consideration is the number of product versions or SKUs you’ve created – if only one, you have it pretty easy. If you have 10 different language versions, each of which is being sent to a different region, things are a little more complex.

 

It’s critical that the master cartons for each product SKU are properly labeled, so they can be easily distinguished and sorted for shipment to the correct destination. You don’t want the friendly warehouse supervisor at your Latin America distribution center (DC) calling to ask, “¿Por qué está todo mi producto en Japanese?” – that might qualify as a bad day.  And to take labeling a step further, you may also need specific markings on the master carton that are required by each country by law, or by each DC to accurately code the inventory in their local system.

 

Establishing these parameters up front goes a long way to ensuring your product ends up in the right place with “no problemas.”

 

 

Container Optimization

Now it’s time to think about the most cost-effective way to get your product from the China factory to your warehouse. Typically, this entails ocean shipping in sea containers, especially for large quantity, bulky or heavy product. In these cases, ocean transport is much more economical than courier or air shipping.

 

You’ve probably seen pictures of these colorful sea containers on massive steamship carriers in port.

 

They come in three standard sizes and handle most of the shipping worldwide.

 

Your goal is to fill a container to capacity, using all available space. Otherwise, it’s like paying for every seat on an airplane and only using some of them. FCL, or Full Container Load, is a flat container rate, so the more you fit, the lower your per unit shipping cost. Often, to maximize the available space, product is floor loaded, meaning the master cartons are individually stacked instead of palletized (there’s a verb you don’t hear every day!). Pallets will not be as tightly loaded since they need to have some surrounding space for fork lift maneuvering.

 

Let’s pause here, for a moment, to talk about pallets. If you do need to ship by pallet, choosing the right one will help make the best use of the storage space in your container, reduce transportation costs and ensure the efficient handling of your goods throughout the transportation process. 

 

Pallets can be wooden or plastic and come in two basic sizes:  Standard and Euro. The stacking height of each pallet is contingent on the size of the container as well as the weight and fragility of the product and any restrictions set by the final destination warehouse. Pallets can also be stacked on each other, provided the lower pallet will withstand the weight of the top pallet without damaging product – again, remember upfront transit testing?

 

As an example, you can load 9 or 10 Standard pallets on one tier in a 20’ container, depending on how they are arranged, and 20 or 21 pallets in one tier in a 40’ container. Planning your pallets is a critical part of container optimization and should be considered early in the process.

 

Now back to our regularly scheduled program… The alternative to FCL is LCL – Less Than Container Load. If you can’t completely fill a container, you can rent space in part of one and share it with other shippers whose goods are going to the same place. This option is more costly (about a 25% surcharge) because a freight agent must work with multiple companies to fill the container – you can’t ship one that’s partially full. Further, your product must be palletized, and carton markings are critical – that’s because when the container arrives at its destination port, the contents must be unloaded and sorted. An FCL container, on the other hand, can be lifted, fully loaded, off the ship and transported directly to your DC for unloading, with less opportunity for confusion in handling. Due to the additional loading/unloading, transit for LCL shipments take about 1-2 weeks longer than those sent FCL.

 

The irony, lest it’s not immediately obvious, is that the smaller your master carton, the more you can pack into a shipping container. However, if your master carton is too small, it may not adequately protect your product. There’s a delicate balance going on here, so it’s important your manufacturing partner works with you to find the optimal solution to get your container’s worth!

 

FOB

Here’s another industry acronym you may have heard – FOB (no, I’m not talking about keys). Also known as Freight on Board, this term refers to the point at which the costs and risks of shipping your goods transfer from the development company-manufacturer / seller to the buyer (you). An FOB arrangement indicates the seller will cover the cost to ensure your product is delivered from the factory to the port and loaded aboard the shipping vessel. At this point, you – the buyer – take responsibility for insurance and sea shipping costs to your final destination.

 

While there are many variations of FOB, you should be aware that if you are shipping product to 10 different destinations, each potentially requiring a different sea container or vessel, your factory will charge more than if you only have one destination. These costs cover Customs documentation and port delivery for each destination. So, make sure your FOB quote addresses your full distribution plan.

 

Ocean Shipping

Whew! The product is on the water! Another milestone achieved!

 

Now you sit patiently and wait for it to reach port again, which, by the way, can take a while. Ocean freight is less expensive, but it’s also a lengthy journey. How long? Here are some rough shipping times from China to various ports:

 

Shanghai to Los Angeles: 18 days
Shanghai to New York: 35 Days
Shanghai to London: 30 Days

 

In fact, depending on your final location, shipments can take up to 60 days to arrive in port. The timing can vary depending on the trade route and does not include any days for container loading and unloading. It’s possible you may also experience delays due to vessel schedules, inclement weather and Customs clearance. And then, you’ll need to account for transit time from the arrival port to your final destination – say, your warehouse in Chattanooga, TN.

 

You get the picture. Just start your production early enough to account for lengthy sea shipping on the backend.

 

Freight Forwarders (are your friend)

If your head hurts about now, don’t despair! There are specialists who actually do this for a living, so you don’t have to sweat the details (thank goodness, right?). Freight forwarders are companies that arrange the importing and exporting of product on your behalf – they can handle as much or as little of the process as you wish, from document preparation, to freight charge negotiation, to booking cargo space, to securing insurance and filing claims – even more minutiae than I’ve talked about here, believe it or not.

 

Freight forwarders are a huge asset to any company that moves goods internationally. Due to the incredible volume they manage, forwarders can recommend the most efficient travel mode at a better rate than you could secure on your own. And they can act as a broker with Customs negotiations and declaration since they have experience with myriads of goods worldwide. I could go on and on here, but I sense that we’re all winding down a bit with information overload – kind of like drinking from a fire hose! Suffice it to say that forwarders will make your transportation life much easier.

 

Moving On…

I meant to also go through several terms that are worthy of explanation (Incoterms, Bill of Lading, HS Code, etc.), but I’m going to save these juicy topics for another blog, on another day! So, this concludes our Shipping 101 session – for now.

 

Until we blog together again, hope all your amazing goods arrive safely, in ship shape!!

 

Cheers!

 

Mike Flecker

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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