Importing from China to the UK 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 in China. Here are some of the common questions we are asked regularly by our customers.
My contact in China is selling on FOB (Free On Board) 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 what part of the shipping process each party (buyer and seller) is responsible for. CFR and FOB 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).
FOB (Free On Board)
In FOB terms the seller is only responsible for all local Chinese costs such as export customs and delivering goods to warehouse/port of departure. You as the buyer are then responsible for shipping goods from the Chinese port/airport to the UK as well being responsible for all UK arrival costs and delivery (commonly it is your freight forwarder who organises this on your behalf).
There are other shipping terms such as ex works and DAP/DDP for example but above are the more common terms with sea and air imports from China.
If I let the seller arrange shipping on CFR (Cost and Freight) terms will this be cheaper for me?
The simple answer is, not always.
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-EU 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 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 China 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 China to Europe most likely transiting via the Suez Canal.
Typically, it takes around 28-30 days port/port from China to Felixstowe or Southampton. On arrival to the UK the container will then be discharged from the container ship and wait for UK customs approval. After approval, the container will go to a warehouse and be unloaded. The warehousemen will then palletise individual shipments ready for collection.
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 China.
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.
Will Chinese New Year affect my shipment?
Yes! Most Chinese ports are closed for the duration of Chinese New Year so if you have a shipment it’s best to arrange well in advance of Chinese New Year otherwise it will likely only depart after the celebrations.
Also bear in mind shipping costs are often inflated in the run up to Chinese New Year so it can often be far cheaper to wait until after to ship your goods. See our blog on the subject Chinese New Year and freight movements.
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?
If you import on LCL terms it could take 5-6 weeks from factory to your door. If you import on FCL terms it could take 4-5 weeks factory to your door. 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 Chinese 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