Importing and exporting to/from the USA and Canada for the first time can be a confusing business. There are a host of shipping acronyms and incoterms to decipher on top of the logistics, as well as the challenge of negotiating with the seller or buyer. Here are some of the common questions we are asked regularly by our customers. If you need a quote or specialist advice, please contact us.
Why trade with the USA and Canada?
The best answer to this is distance. There are weekly services to/from EC USA and Canada that only take 7-10 days from port to port. This means you can buy or sell your goods and they can (in theory, all going well) be with your customer within 14-18 days, allowing for customs formalities at each end.
We all speak the same language! Its an obvious one but speaking the same language makes the whole process from sales to logistics a lot easier to navigate.
My contact in USA/Canada is selling on EXW shipping terms but advises they can also sell on CFR (Cost and Freight) terms. What are these shipping terms and what do they mean?
For any commercial import or export there will always be agreed shipping terms that outlay which part of the shipping process each party (buyer and seller) is responsible for.
CFR and EXW are widely used incoterms sellers use to establish which party is responsible for which part of the shipping process and the relevant costs involved.
CFR (Cost and Freight)
With CFR terms, the seller of goods arranges shipping to port/airport of arrival in the UK (Felixstowe or Heathrow for example). You as the buyer would still be responsible for UK arrival charges, UK clearance and delivery (commonly these are paid through your clearance agent).
EXW (Ex Works)
Ex works shipping terms means the buyer is responsible for all shipping and customs formalities including collecting from sellers premises. In our experience this common term preferred by USA/Canadian suppliers. Don’t worry though, t.ward shipping have excellent representatives in the USA that can handle EXW shipments with no hassle to you or your supplier.
There are other shipping terms such as FOB (Free on board) for example but the above are the more common with sea and air imports from USA/Canada.
My customer in USA/Canada will only buy on DDP or DAP terms.
Most USA (less so Canada) prefer to buy/import goods on either DAP terms or DDP terms.
DAP – Delivered at place which means the seller/you are responsible to deliver goods to customers premises. However, in most circumstances the buyer will still be responsible for arranging import customs clearance and relevant import taxes.
DDP – Delivered Duty Paid. This is similar to DAP but you the seller also pays for USA customs clearance and import taxes. Unlike many other countries its possible for a non-USA company to register for a CAIN (customs assigned import number) and pay for USA import taxes.
If this is something you’re interested in doing we can assist via our USA agent in setting this up for prospective USA sellers.
If I let the seller arrange shipping on CFR (Cost and Freight) terms will this be cheaper for me?
The simple answer is no.
The shipping costs given by your seller may be cheaper than you’ve been quoted in the UK but when buying goods on CFR terms you must take into account when your goods arrive in the UK you will have to pay warehouse and handling charges; as well as onward delivery and UK customs clearance. This can often mean it ends up being more expensive than if you had organised shipping yourself (through a UK based freight forwarder)
My seller advises I need to get a customs clearance agent in the UK. Do I need one and what do they do?
If you are importing any goods from a non-UK country via sea or air freight you will always need to arrange customs clearance of your goods and pay the relevant import taxes and duties owed to HMRC.
You can appoint your own clearance agent who can arrange all customs formalities for you.
My goods are arriving into Felixstowe or Southampton but I am in the North of England or Scotland. Is there a closer port my goods can come to?
If you are importing FCL (full container load) you can import to ports such as Liverpool, Tees, Immingham, Greenock or Grangemouth.
If you are importing via LCL (less than container load) it is likely the only option for port of arrival will be Southampton, Liverpool or Felixstowe. However, due to the excellent palletline networks we have in the UK, this often doesn’t increase the overall cost.
I am importing a lot of cargo; would it be any cheaper to have a whole (FCL) container instead of sharing container space (LCL)?
This is something a freight forwarder can give you a comparison on, but we often find that once you get to around 15-20 m³ (cubic meters) worth of cargo it can prove cheaper to ship via FCL (full container) basis.
The other advantage of shipping via FCL is that once your goods are stuffed into the container, the container doors won’t open until they reach you in the UK which means there isn’t any additional handling of goods during transit.
What is the process my goods go through from leaving the factory to arriving at my door here in the UK?
Below is rough guide but this may vary depending on type of cargo and your terms of shipment.
Your goods will be collected from factory in USA/Canada and then go to a warehouse close to port of departure. They will then be stuffed into a shipping container, of which there could be several other shipments as well. Your goods will then be loaded onto a huge container ship and then depart EC or WC USA or Canada.
Transit time for EC can be 10-15 days but WC can be up to 30days.
The process is very similar to LCL but usually the whole container will be stuffed at the factory and then sent direct to the port of loading in USA/Canada.
On arrival in the UK you can either have the whole FCL container delivered to a warehouse of your choice or the whole container can be delivered to your depot where you can unload items.
What is a bill of lading?
A bill of lading is a legal contract or document between you and the seller and evidence of the shipment between you and the seller.
My seller asked if I want a telex b/l or original bills of lading?
Our preference and recommendation would always be for telex bills of lading, as this cuts out risk of losing original bills of lading in the post. However, depending on your method of payment, if you are paying via letter of credit the seller may insist on sending original bills of lading. If you have original bills of lading you will be required to present/send these to the UK arrival agent or the UK shipping line office prior to release of cargo.
My goods are due to arrive into Felixstowe. Do I need to appoint a clearance agent at Felixstowe or the port or airport my goods arrive at?
No is the simple answer. You are free to appoint any clearance agent as many freight forwarding companies have customs badges for all container ports and airports around the UK, so you can often appoint a clearance agent that is local to you.
I’ve been told I need to get an EORI number how do I get this?
You need an EORI number to trade export/import commercial goods. All information is on the HMRC website but if you need further assistance please get in touch. The application process usually takes about 2-3 days depending on how busy HMRC are; we always recommend getting this well before your shipment arrives. Without an EORI number you cannot customs clear your goods.
How long will my shipment take to arrive in the UK/USA?
If you import/Export on LCL terms it could take 3-4 weeks from factory to your door. If you import on FCL terms it could take 2-3 weeks factory to your door but as Canada and USA are very large countries it can also very much depend on where the collection point is. All subject to final sailing and arrival dates.
If you are importing by airfreight we would allow transit time factory to your door of 3-7 days all subject to available space with airlines and subject to no customs clearance delays.
What import duty/VAT will I pay in the UK?
This will depend on the commodity code of your goods. Your USA/Canadian seller will be able to inform you what HS (harmonized commodity) or Commodity code they use and from this we/you can determine with UK HMRC what the import VAT and duty levels will be.
For further information please go to - https://www.trade-tariff.service.gov.uk/trade-tariff/sections