Although shipping may seem like an arbitrary concept for most civilians, there are plenty of factors to consider when shipping goods, especially on an international level. Importing and exporting using the largest container ships involve meticulous planning and organization, which is why most companies acquire the assistance of experienced international freight shipping companies.
Enlisting the help of third-party logistics companies can help businesses properly execute the process in the most cost-efficient way possible, and can alleviate any confusion that may arise when trying to cost products and shipping accurately.
Before you agree to import your goods, take the time to evaluate all aspects of the amount you’re spending. Some costs to consider include the purchase price of your product, proper exchange rates, paying for insurance, customs duty, tariffs, and freight costs.
When you import goods, especially on an international level, it’s vital to factor in the exchange rates of your costs. This applies to everything, from your original purchase price, freight costs, and custom authority rates, to your insurance and risk assessment fees. Other components that may affect your costs include the fragility of your product, such as if it requires refrigeration, particular packaging, or special handling.
Also consider the shifting value because the cost of your goods is calculated on the day of shipment from the country of origin, not purchase, so if the exchange rate fluctuates, you could be subjected to higher import costs when involved in international trade.
Freight Costs and Insurance
Compared to other industries, freight forwarding companies can offer relatively low insurance premiums for high value. Make sure you consider all factors of purchasing insurance because the hazardous state or fragile qualities of the imported goods could increase your insurance plans.
Global suppliers can either choose to sell goods in two ways: free on board (FOB) or by cost, insurance, and freight (CIF). Familiarize yourself with the two options to determine which best suits your needs. The former means that the seller can cover the risks and costs to load your products on the shipping vehicles, leaving you responsible to cover the remaining balance of transport, insurance, and clearing costs. The latter proposes the seller cover the transport and insurance costs until it safely arrives at the destination dock, leaving you responsible for the remaining transport and insurance costs from that point onwards.
Customs Duty Tax and Value-Added Tax (VAT)
After you finalize your insurance, make sure you determine the right customs duty tax before you decide to import your goods. Paying a duty tariff is unavoidable; import duty is a tax imposed on any good when it crosses international borders. Customs brokers monitor import duty tax. Each type of good has a specific rate of duty tax that is assigned. You can get the correct duty tax by looking for the proper tariff code since each tariff code is associated with a certain exempt from duty tax.
Additionally, incorporating VAT in your price calculations may seem obvious to qualified freight forwarding companies, but it’s always useful to remind all importers. VAT is essentially a consumption tax that is placed on a product at every level of the supply chain, starting from its production stage to the point of sale. When the goods are cleared by customs and border protection, you can pay the VAT, and even claim it back if you are VAT-registered. Value-added taxation is more common in the European Union, and although more than 160 countries use it.
A harmonized tariff schedule is absolutely imperative for the successful shipping of overseas imports. The destination country’s imports may be subject to different tariffs and regulations. In the goods and services industry, it is very important to closely monitor the current state of international tariffs. Thanks to the North American Free Trade Agreement tariffs are less complicated across the U.S., Canada, and Mexico, but overseas tariffs play a huge role in international politics and constantly shifting, even more so in recent years.
Big changes in tariff costs on steel and aluminum have been circulating in the press lately. The new tariff rates went into effect during the spring of 2018.
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