There are hidden costs in everything. Just ask any homeowner, parent, entrepreneur, or frequent traveler. The best thing to do is to remain aware of them in advance…and even then, you might still have to pay.
The import-export industry is no different. Those who start an import-export business are often caught off-guard by some of the unforeseen international shipping costs they wind up paying. If you don’t plan ahead, you can end up regretting it.
Because of the complex nature of the import-export industry, many companies choose to hire a customs broker to take care of the shipping details. A customs broker can usually prevent you from paying certain fees and help ease the stress of the customs process.
For everyone who’s involved in an import-export business, here are 8 unexpected international shipping costs you should know about (and how to avoid them when possible).
1. Storage fees
You might run into these fees if your goods are stuck at the port, airport, or land border for more than 3-5 days. Each country has different regulations and charges. Here are some reasons your goods might get stuck:
- Your documents are missing, incomplete, or incorrect
- You have not paid the proper taxes and duties
- You don’t have the correct import permits
- As an exporter, your buyer was unaware of the shipment and did not complete customs clearance on time
How to avoid paying
Make sure you have all of your documents and permits in order. If you believe there’s a chance you might need to store your goods, contact your freight forwarder so they can request to put the goods in a bonded warehouse. This typically costs much less than storing them at the port.
2. Duties and taxes
Most importers and exporters are aware that duties and taxes exist, but it’s not common for them to know exactly how much they will owe for duties and taxes. Of course, this varies by country and classification of goods. For example, if you’re importing goods to Canada, you’ll need to pay Goods and Services Tax (GST) regardless of whether the country you’re shipping from has a free trade agreement (FTA) with Canada.
How to avoid paying
Sadly, there is no way to avoid paying the required duties and taxes. But there is a way to make sure you don’t miss anything. Hire a customs broker who knows the proper taxes and duties so your goods don’t get delayed due to missing payments.
3. Shipping less than container load (LCL)
There are two primary methods of shipping via ocean freight: full container load (FCL) and less than container load (LCL). While there are not necessarily extra charges to shipping LCL, it tends to be more expensive because you’re paying for a section of the container rather than the full container. Goods also take longer to arrive and are handled more during the LCL process.
How to avoid paying
If you have a large enough shipment to fill an entire container, choose FCL. Try shipping goods in bulk whenever possible. If you have only a small shipment, you have no other choice than to use LCL. It still tends to be fairly affordable.
4. Customs exams
It’s always possible that your shipment will be selected for a random customs exam, during which your goods will be inspected by the authorities. Even though the customs agency initiates the exam, it’s the importer who is required to pay the fees associated with the exam. Here are some reasons your shipment may be chosen for a customs exam:
- It is one of your first few shipments
- It is coming from a certain country or geographic area
- It is in a container with other shipments that were flagged for inspection
- Someone in your supply chain has made errors in the past
- You have missing or incomplete paperwork
- You were randomly chosen
How to avoid paying
Once your shipment is selected for a customs exam, there is no way to avoid paying the fees. While there’s nothing you can do to be sure you won’t be randomly chosen, there are some precautions you can take to lower your likelihood of having a customs inspection:
- Make sure your paperwork is clear and complete
- Declare the correct value of your goods
- Choose established partners for your supply chain
- Ship FCL instead of LCL whenever possible
5. Port fees
Some ports have an extra fee that is charged when using that port. For example, Los Angeles has a port fee of up to $70 per container. While this is not a huge additional cost, it’s important to be aware of nonetheless.
How to avoid paying
If you decide to use a port, you are subject to its port fees. Provided you are flexible when it comes to the port of arrival, it may be useful to look into the different fees for the ports you are considering and choose the port with the lowest fees for your cargo.
6. Damaged goods
This is a risk that every importer or exporter takes on. During the long journey overseas, your cargo can face a variety of hardships, such as fires, storms, mishandling, and thieves. Of course, each of these scenarios could result in damages that can quickly sink a fledgling business.
How to avoid paying
The best way to protect your goods is to invest in international insurance for your import export business. International insurance is a safeguard against the damages you may incur during the shipping process.
7. Customs fraud
This is a dangerous and costly accusation that could befall you if you make a mistake in your customs paperwork. Declaring the wrong valuation or misclassifying your goods can result in a shocking charge of customs fraud. Believe me, you won’t be happy to see a $50,000 fine that demands to be paid.
How to avoid paying
The way to prevent customs fraud is actually quite simple: hire a customs broker like BorderBuddy. Because customs brokers are experts in the field, they are able to prepare your paperwork without a hitch. You can rest assured your experienced customs broker will take care of all of the details on your behalf. Give us a call today.