Basics-Shipping

NB: To visualize, a house of 100m2 to move out, we need a 20' (around 25 cbm)

► The dimensions of a 20 feet are the following: length 6,058 m x width 8 feet 2,438 m x height 8,5 feet (2,591 m)
► The dimensions of a 40 feet are the following: length 12,192 m x width 8 feet 2,438 m x height 8,5 feet (2,591 m)

At the beginning we have to ask a forecast of the quantities per carton.

Ask for the dimensions of the cartons (or impose them), NB: normally this is calculated since the quotations

ex1: order of 10 000pcs. For a carton of 60cm x 40cm x 40cm (=0.096m3 or cbm) we put 12pcs per carton
volume: 10 000 / 12 = 834 cartons x 0.096cbm = 80.064 cbm
Need of : 1 QH (69cbm) + 11 cbm in LCL

ex2: order of 3 000 sets of 3pcs, we put 18pcs per carton

volume: 3000 x 3 / 18 = 500 cartons x 0.096cbm = 48 cbm
 Need of : 1 40' (69cbm)

NB: Breakeven point: 20' vs LCL? Knowing that TT (transit time) is one more week + for LCL (4 weeks vs 5), it is 18cbm
NB: knowing the unstaffing fees are 500$ + for LCL
If 18 cbm, LCL: 18 cbm x 110$= 1980 + 500 = 2480 $
If 18 cbm, FCL: 2500 $

Ex2: Different options

Option1: 500 leather jackets

packing list: 10pcs per carton whose the dimensions are 60cmx40cmx40cm = 0.1cbm (0.1 cubic meter)
NB: let s round up to simplify and taking a buffer in case of bigger size

500 / 10 = 50 cartons x 0.1cnb = 5cbm

FCL price LCL price* *for LCL you have unstaffing extra costs
20' 40' HQ [1-5 cbm] [6-10 cbm] [11-20 cbm] +500$
1500 2000 2100 60$/cbm 55$/cbm 50$/cbm
total X 800
 Obviously LCL is more interesting

Option2: 1,000 leather jackets

packing list: 10pcs per carton whose the dimensions are 60cmx40cmx40cm = 0.1cbm (0.1 cubic meter)
NB: let s round up to simplify and taking a buffer in case of bigger size

1,000 / 10 = 100 cartons x 0.1cnb = 10cbm

FCL price LCL price* *for LCL you have unstaffing extra costs
20' 40' HQ [1-5 cbm] [6-10 cbm] [11-20 cbm] +500$
1500 2000 2100 60$/cbm 55$/cbm 50$/cbm
total X 1050

Obviously LCL is more interesting

Option3: 2,000 leather jackets

packing list: 10pcs per carton whose the dimensions are 60cmx40cmx40cm = 0.1cbm (0.1 cubic meter)
NB: let s round up to simplify and taking a buffer in case of bigger size

2,000 / 10 = 200 cartons x 0.1cnb = 20cbm

FCL price LCL price* *for LCL you have unstaffing extra costs
20' 40' HQ [1-5 cbm] [6-10 cbm] [11-20 cbm] +500$
1500 2000 2100 60$/cbm 55$/cbm 50$/cbm
total X 1500

At first sight we could have thought immediately to go for a FCL 20' but prices are same, we will go for a 20' feet FCL
Our breakeven point for this situation in between LCL and FCL is for a volume of around 20cbm.

Dilemna: what if?

same quantities but the prices of LCL are 47$ for a transit time of 10 more days or even for the same as before?
 FCL price LCL price* *for LCL you have unstaffing extra costs
20' 40' HQ [1-5 cbm] [6-10 cbm] [11-20 cbm] +500$
1500 2000 2100 60$/cbm 55$/cbm 47$/cbm
total X 1440

We could say if it is 1440$ we will go for this option. Actually it depends of the situation if you are in hurry or not
But if 3 days are not a big deal, +50/100$ difference it is not neither a big change.

2) By air

The way for air is a different than by sea. The problematic will be balanced in between the ration of weight vs volume.

We will calculate both the weight and the volume and we will take the most expensive.

How is air freight calculated? There are two methods

a) 1st method: dividing by 6 your volume

Prices (air freight rates) are always quoted per kg/6 dm³. This is also known as the volume ratio (1:6 or 1 m³ = 167 kg).
That means you either pay for the weight or the space necessary for the transport of your consignment.

The calculation is based on the following equation regardless of whether you're paying for the weight or the space:

Length (cm) x width (cm) x height (cm) / 6000 (equals the volume weight in kg)
or your volume in dm3 by 6 or your volume in cubic meter / 0.006

Example 1
You are sending 1 mini bar weighing 80 kg and the dimensions of it are 50 x 50 x 50 cm.
As the actual weight of 80 kg is higher than the volume weight (20.83 kg), the 80 kg are calculated as the freight weight.

You multiply:
50 x 50 x 50 cm = 125,000 cm³ (or 125 m³)
You divide: 125,000 cm³ by 6000 = 20.83 kg volume weight
or You divide: 125 dm³ by 6 = 20.83 kg volume weight
 or You divide: 0.125 m³ by 0.006 = 20.83 kg volume weight
Example 2
You are sending 8 boxes with a total weight of 45 kg. All the boxes are the same size (each box is 60 x 40 x 20 cm).
As the volume weight of 64 kg is higher than the actual weight (45 kg) the 64 kg are calculated as the freight weight.

You multiply:
8 boxes x 60 x 40 x 20 cm = 384,000 cm³
You divide: 384,000 cm³ by 6000 = 64 kg volume weight

b) 2d method: multiplying by 167 your volume

Example of the orders of Pillows

ex1: order of 10 000pcs. For a carton of 60cm x 40cm x 40cm (=0.096m3 or cbm) we put 10pcs per carton
volume: 10 000 / 10 = 1,000 cartons x 0.096cbm = 96.4 cbm
Need of an equivalent of: 1 QH (69cbm) + 27.4 cbm in 20' feet
the weight of a single piece is 300 gr (0.3kg). Your total weight equals 3,000 kilos (3 tonnes)

If for instance the cost of freight is 3.4$ per kilo, you will not pay 3.4$ x 3,000 = 10,200$
why? Because 16,099 > 3000

Reality Ratio*
weight: 3000
volume: 96.4 16099
*we apply the volume x 167

 The amount of air freight will be 16099x 3.4$ = 54,736.6

Example of the orders of Tiles

order of 2 000tiles of 1mx1mx0.1. You put 10 tiles per cartons. You can put 5 cartons on a palet. One palet volume: 1mx1mx0.5m=0.5cbm
volume: 2 000 / 10 = 200 cartons = / 5 = 40 palets
40 x 0.5 cbm = 20 cbm

Need of an equivalent of: 1 20'

 the weight of a single piece is 2.5 kg. Your total weight equals 2.5x2,000= 5,000 kilos (5 tonnes)

If for instance the cost of freight is 3.4$ per kilo, you will pay 3.4$ x 5,000 = 17,000$
why? Because 5,000 > 3,340

Reality Ratio*
weight: 5000
volume: 20 3340
*we apply the volume x 167

 The amount of air freight will be 5,000x 3.4$ = 17,000$

Example of the orders of polos

ex: order of 10 000sets of 3 polos. For a carton of 60cm x 40cm x 40cm (=0.096m3 or cbm) we put 60pcs per carton
It means we can put 20 sets of 3 polos per cartons
NB: very important to make mure which selling unit, SKU, here it is a set of 3 polos
volume: 10 000 / 20 = 500 cartons x 0.096cbm = 48.2 cbm
Need of an equivalent of: 1 40' feet
the weight of a single piece is 200 gr (0.2kg). Your total weight equals (0.2x3) x 10,000 = 6,000 kilos (6 tonnes)

If for instance the cost of freight is 3.4$ per kilo, you will not pay 3.4$ x 6,000 = 20,400$

Reality Ratio*
weight: 6000
volume: 48.2 8049
*we apply the volume x 167

 The amount of air freight will be 8,049x 3.4$ = 27,366.6$

The biggest cargo plane's name is Antonov 225 Mriya, it is from Ukrain and it is dimensions are 84m of length and
18m of height. Its onw weight is 285 tonnes.
Its total capacity is 640 tonnes
2) Arrival charges

They correspond to all the costs once the goods arrive at the harbour or airport, for making the customs clearance, the unstaffing
from the vessel or cargo then organize the trcking up to the final destination (according to your agreements relative to the incoterms
you define with your client).

B/L Fee in costs of the Bill of Lading, as the costs of a VISA but for a shipment, with seal number, container number…
Like the ID of the shipment
Handling fee in the costs to take the container from the carrier vessel on the floor
Custom handling fee in the costs to manage the customs declaration: costs for being representated to present the documents.
Like the fees for a lawyer just fr heritage
Harbor/Airport fee in These are costs for using few days (3-5 days) the warehouse of the harborb waiting for customs clearance
Like paying hotels waiting for your flight for your holidays
Unstuffing in Once the container has been on the floor it has to be unstaffed rearranged mainly if it is LCL as your goods
will not go to the final destination of other goods which are not beonging to you
Paletisation in It is not compulsory, up to you and your client, to preserve the goods.
Like putting film at the airport for your own lugguage it is not compulsory
Trucking in Once the customs is done, a truck from the harbor (Le Havre, Antwerp…) is bringring your good to your
final destination

3) Customs duties

a) Principle

The reason of being of customs duties is the protectinism of one country or a group of country to preserve themselves from
importations of articles they also produce. This is also an entrance taxation allowing the country to take advantage of importing.

Customs duties are according to the article itself and of the place of production : it has to find the HS code the customs rate
accordingly.
The HS code has been created by customs according to the countries of departure and arrival with a classification per
product/material of which its code is linked. This code is linked to a customs rate according to the import/export regulations linked
to the laws of each country.

We can search the HS code on the website called Taric or we can ask to our forwarder or to a responsible of customs.
ex1.a: The custom rate on parkas in polyester (fleece) is 12% coming from China (made in China)
 ex1.b: The custom rate on parkas in polyester (fleece) is 9% coming from India (made in India)
ex1.c: the custom rate on parkas in polyester (fleece) is 0% coming from Bangladesh
ex1.d: the custom rate on parkas in polyester (fleece) is 0% coming from Vietnam if the fabrics is made in Viet Nam to Europe
ex1.e: the custom rate of parkas in polyester (fleece) is 12% from Vietnam if the fabrics is imported from China to be exported to EC
ex1.e: the custom rate of parkas in polyester (fleece) is 0% from Vietnam if the fabrics is imported from China to be exported to USA
ex1.g: the custom rate on parkas in polyester (fleece) is 9% coming from Viet Nam (made in Viet Nam) if the fabrics is produced in
India to export to Europe
ex1.h: the custom rate on parkas in polyester (fleece) is 0% coming from Viet Nam (made in Viet Nam) if the fabrics is produced in
India to export to USA
ex1.i: the custom rate of parkas in polyester (fleece) is 0% from Vietnam regardless the fabrics to be exported to USA

ex2: the rate of parkas in buffalo leather is 5% made in China

ex3: the rate of a wallet in buffalo leather is 4% made in China

b) Customs calculation

It is simple once you have your HS code and your customs rate. You apply this rate (customs duties rate) on the value of your CIF value:
CIF value=
purchasing value
+ shipping costs: freight and insurance

That's all.

eg: ► qty: 5,000pcs

► 10 USD
► 20pcs per carton (60x40x40)
► 5,000/20= 250 cartons=25 cbm
► a 20' container cost for the month of my shipment 1,800 (because it is peak season)
► My selling value (DDP price to my customer will be 20$), My selling DDP value will be 100,000$
 My purchasing value: 50,000$
Shipment: 1800$
Insurance: $ 385
Total basis: 52,185$
If my customs rate is 12% 6,262 option 1
If my customs rate is 5% 2,609 option 2

NB: To get the big picture

The total arrival charge: 4,000$

My margin option1: 100,000$ -50,000$ - 1,800$ - 385$ - 6,262$ - 4,000$ = 37,553$ (37.5% of margin rate)
My margin option2: 100,000$ -50,000$ - 1,800$ - 385$ - 2,609$ - 4,000$ = 41,206$ (41.2% of margin rate)

Example of total calculation of logistics costs

Data:
► Parka fleece
► Client target price: 4.50euros DDP Evreux (warehouse)
► Qty: 50,000pcs
► Just one shipment
► Packing List: 10pcs per carton standard 60cmx40cmx40cm
► Forwarders quotations: doc8
► Rate EUR/USD: 1.23
Calculation template: doc9