Digging Deeper - Actual Landed Costs Examined. Part 1 of 3

I am straight shooting numbers man. I like less talk and more actual figures from which to base my decisions. Sourcing/importing is a risky game and you will be ever the wiser with the more data you accumulate. We have tapped the brains of experienced importers to give you the numbers behind their successful and failed import ventures. Get prepared with the actual figures of which you can take the ball and run with.

Each import venture is different and there are many variables to contend with. Let’s first examine the actuals, highlight missing incidentals and then analyze/detail each category that will affect your landed cost.

The Actuals
The following are actual figures from a 2007 import.

The shipment was a 20ft container FOB Xiamen to Doraville, Georgia (US). Contents of the container included pre-fabricated granite, stainless steel kitchen and vanity porcelain sinks.

Ocean freight…………………………..$2990
Customs clearance fee ……………….$125 per entry
Customs Single Entry Bond……………..$45 (min. fee - based on value of shipment)
Courier/postage ………………..$425
Delivery order/coordination fee…………$20
Customs Duty/ fees…………………..$1100 (Duty is based on total invoice of $26,273.8: SSteel Sinks; Porcelain Sinks; Granite counter tops; Granite back splash)
Truck from Atlanta to Doraville………$330 *(Includes current 25% fuel surcharge)
Customs X-RAY Exam…………………………..$400

UNKNOWN Incidentals

Customs Exam (storage; exam; moving to exam site, etc.); (MAY/MAY NOT BE EXAMINED)
Additional incidentals (Fed-Ex; Special courier, etc);
Any deviations from pro-forma invoice total value (i.e. invoice changes or additional items to be classified)
Additional time needed to unload container (after 2 hours free time…$60/hour thereafter).
Demurrage calculates differently depending on the port but ranges around $100 a day that the container sits in a holding facility.

Back in November SourceJuice reported on the 9 Costs That Can Affect Your Landed Cost. Keeping with the nature of our latest article we will dig a little deeper into some of these costs with supporting information, data and links.

Invoice Price: FOB rate means that the factory pays trucking, customs clearance, etc (all fees) associated with getting the container from the factory on board the vessel at the port. Once the container is on vessel, you are responsible for all costs to the final destination. This is typical FOB terms, but it is still good business to clarify the terms of sale. Clarify what charges are the responsibility of each party, factory and purchaser/importer.

Shipping Cost: VIP treatment, it’s everywhere and if you do a lot of business or know the right people you can get past the import velvet ropes much cheaper. Ocean freight providers ship two ways: quoting rates by the shipment with current rates or on a contract basis with huge discounts.

If you plan to ship a large volume of containers, use a single ocean freight company and negotiate a contract. This will lock in low rates and sometimes help to avoid fuel and other surcharges.
If you are a smaller importer then consider going with the big boys! That’s right, search your contacts and your contacts’ contacts for a large importer or logistics/freight or forwarding company. You can often times negotiate to ship containers under a big players existing contract. You are still paying, but not as much and you are helping to meet your new partner’s shipping quota (make sure to remind them of that when negotiating the contract). Note: Many times your customs broker can put you in touch with the big players. Thought we’d leave you hanging without a link? Not a chance, try: Triple Eagle

Insurance: Marine Cargo Insurance, Freight Forwarding Insurance and Cargo Insurance are the main/most common types. These various insurance types protect the importer from unforeseen disasters such as the ship sinking, fire, accidents, pirates, etc.

Customs Bonds: A customs bond or surety bond is a guarantee from a bonding company to the United States government that the importer will faithfully abide by all laws and regulations governing the importation of merchandise into the United States.

What you should know about U.S. customs bonds
“U.S. customs regulations provide that a customs bond be posted for each importation of merchandise entering the United States. When goods are imported into the United States, the importer is responsible for making the goods available to the U.S. Customs Service for inspection, ensuring that labeling and packaging requirements have been met, making transaction records available for audit and paying estimated or additional duties and fees, where applicable. The surety company issuing the bond guarantees that the importer will comply with U.S. customs regulations.” -Livingston International

Here is the gist: there are single entry and continuous use transactional bonds.

Continuous Use Transactional Bond: If you are going to import multiple containers this year then getting the continuous use bond is your ticket to import savings. A continuous bond is normally obtained by importers who have a large number of entries and/or imports through several ports of entry during a given year. It has a term of one year and is automatically renewed each year. For importers, the minimum continuous bond amount is $50,000 or 10 percent of the total taxes and fees paid in the previous 12-month period whichever is greater. Please note that all bond amounts will be rounded up to the next whole dollar amount in multiples of $1,000.
Single Entry Bond: Single Entry Bond amounts are set by the port director who accepts the bond. The bond amount for a single entry bond generally is not less than the total entered value plus all duties, taxes, and fees. If merchandise is subject to other federal agency requirements or is restricted merchandise, the bond amount set is not less than three times the total entered value of the merchandise.

Monetary Guidelines For Setting Bond Amounts are on the CBP website: http://www.cbp.gov/linkhandler/cgov/toolbox/legal/directives/3510-004.ctt/3510-004.txt.

Ok, I got it! Now where do I get it? Where can I get a bond?
Treasury Department Circular 570, which is published annually, is a list of Treasury approved, certified surety companies. The most current list of Treasury authorized companies is available through their Website at http://www.fms.treas.gov/c570.

Delivery: No loading dock to unload your container upon arrival? - This is a big one, if you don’t have the tools or facilities of the trade it will cost you.

Warehouse storage……………………………………………………$350.00
L & D fees for unloading container and re-loading on a flatbed………………………………$635.00
US domestic interstate flatbed delivery ……………………………………………………………….$1030.00
Customs broker delivery order/coordination fee/warehouse/flatbed company…………$25.00
Destination unloading: forklift, delivery & operator for 2 hours……………..$500.00

Dylan Blankenship signature
dylan@sourcejuice.com // Dylan Blankenship

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Comments

4 Responses to “Digging Deeper - Actual Landed Costs Examined. Part 1 of 3”

Unloading Containers - Be Prepared When the Goods Land! : SourceJuice on January 27th, 2008 1:34 am

[…] Cross-dock the container to a warehouse facility that can unload your container and reload it to a flat bed. If you have a good customs broker they can arrange this for a number of fees and some substantial costs. This method will require that the product be in forklift friendly pallets or crates. If they are not, consider having them recrated at the warehouse where they will be cross-docked - this is real expensive. Flatbed trucks are available with “piggy-back” forklifts or you can rent your own. Note that the forklifts that come with the flatbed typically are used for brick pallets (on a brickyard) and hence have rather large tires. Check the sizes of your delivery location’s doors before hand. More information relating to the cost of this method can be found on a recent Sourcejuice article: Digging Deeper - Actual Landed Costs Examined. […]
Digging Deeper - Actual Landed Costs Examined Part 2 of 3 : SourceJuice on February 2nd, 2008 3:41 am

[…] and get quotes directly from ocean freight carriers. Before contacting ocean freight lines, review part 1 of this Digging Deeper article. FreightWorld has a list of ocean freight carriers categorized by […]
Derli Antonio Antonelli on March 19th, 2008 2:06 pm

Necessito de valores atualizados do custo de frete internacional (containers) com destino ao Brasil e com origem em Taiwan e correia.
The SourceJuice Team on March 20th, 2008 7:19 pm

Derli, obrigado pelo seu comentário. Nós recomendamos que você solicitar uma cotação de Triplo Eagle. Seu site é: http://www.triple-eagle.com. Se você precisar de ajuda, por favor use o nosso formulário de contacto e vamos fornecer informações adicionais.