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  5. China-US Ocean Freight Shipping Guide: From Click to Doorstep

China-US Ocean Freight Shipping Guide: From Click to Doorstep

Explore the journey from ‘Buy Now’ to your home in our China-US Ocean Freight Shipping Guide. Discover the trade, environmental impact, and future of shipping.

Behind every Buy Now button lies an intricate journey: from raw materials transforming into products in China within 30-60 days, to ocean voyages lasting 14-50 days, and swifter air freights that span 1-11 days but come at a premium. Once stateside, items spend a final 1-14 days journeying from local centers straight to your home. Dive in to discover the epic tale behind each purchase.

Key Takeaways:

Introduction

Why US/China Trade Relations Are Important

The trading relationship between the US & China is one of the most significant relationships in the world. According to the US Department of Commerce, both U.S. exports to China and imports from China grew for a third year:

Additionally, the report found that in 2022, 7.5% of total U.S. exports of $2.1 trillion to the World were exported to China, 16.5% of total US imports of $3.2 trillion were imported from China, and 32.4% of total US trade deficit was with China.

For another year, China maintained the position as the US’s third-largest trade partner and most significant import origin. What they trade between them is significant. The US is the largest exporter of semiconductor technology, agricultural products, aircraft, gas turbines, and advanced medical devices to China. Conversely, the US is China’s largest import partner, importing consumer electronics, appliances, clothing, footwear, furniture, toys and other consumer goods.

The amount of importing and exporting volume between the two countries is not an equal relationship in. China exporting more than three-times the amount of goods to the US than China is importing from the US has been a longstanding point of discussion when talking about the trade relationship with China. The gap in volume of import and export activity is a trade deficit.

The topic itselfs not new. Lately, however, the topic has been brought more to the forefront as tensions around trade deficits and China working to reshape the terms that global trade relationships are dictated.

Decoupling and friendshoring have become big topics in the US & global supply chain discussions because the magnitude of interdependence between the two countries is a large undertaking to untangle despite the progress in reshoring into Mexico, Canada and Latin America.

Manufacturing investment in Mexico has remained flat if not declined. In 2022, foreign investment in Mexico is still around 2.5% total GDP according to the Federal Reserve of Dallas.

While these discussions are new as of the last 3 years have increased as companies have realized that the global supply chain is more fragile than previously thought, big shifts in power centers around importing and exporting are likely to be gradual over time but changes to these power centers are expected to occur.

Why Understanding Ocean Freight Shipping Matters

In the context of global trade, ocean shipping is the most important means of transporting goods and commodities around the world. It’s the heart of the global economy. According to one report on the topic of the importance of sea transit and its importance to global trade.

The United Nations Conference on Trade and Development (UNCTAD) estimates that roughly 80 percent of global trade by volume and 70 percent by value is transported by sea. Of that volume, 60 percent of maritime trade passes through Asia, with the South China Sea carrying an estimated one-third of global shipping.

Its waters are particularly critical for China, Taiwan, Japan, and South Korea, all of which rely on the Strait of Malacca, which connects the South China Sea and, by extension, the Pacific Ocean with the Indian Ocean. As the second-largest economy in the world with over 60 percent of its trade in value traveling by sea, China’s economic security is closely tied to the South China Sea.

No matter who evaluates the value of ocean freight and its importance to the global economy, everyone agrees that well over 75% of trade happens by sea:

It’s undeniable the importance of the sea in the movement of goods today as it was hundreds of years ago. Maritime shipping has tremendous benefits over other modes of international shipping like air shipping.

The biggest benefit of maritime shipping is how cost effective it is relative to other means of transporting goods over large stretches of space. The volume of goods and different kinds of goods from cars to toys to agricultural equipment that can be packed, stored and transported is vastly more than any airline could store and move.

Most items can be moved by sea and there are few exceptions to that. The key determinant of what gets situated on a cargo ship is container space. Smaller-sized goods can be packaged together in the same container, space permitting, to fill a container, allowing for cost-sharing of the transportation services. Larger cargo can fill one or more containers, offering shippers unmatched options for breakbulk or project cargo.

A major advantage of sea freight shipping is shipping companies’ ability to handle oversized, heavy or bulky cargo – often referred to as breakbulk (above). Vehicles, equipment, construction materials, amusement park rides - anything objectively large and more falls into this category. Sometimes these kinds of cargo can be transported by road or plane provided they’re able to be broken down and their parts distributed and fitted among one or more trucks or beds, very large cargo is not a problem on many shipping vessels.

Ships are well equipped to transport dangerous cargo and hazardous materials. For many of the same reasons listed above for breakbulk movement, containers and ships can be outfitted to accommodate different kinds of materials easier than airlines or trucks.

When compared to sea shipping, air and many other forms of transportation have much higher carbon footprints. Ships provide the most carbon-efficient mode of transportation and produce fewer grams of exhaust gas emissions for each ton of cargo transported than any other shipment method. These already-low emissions continue to trend downward as technology advances, new ships come online and as liquefied natural gas (LNG)-powered options are utilized.

What This Guide Aims To Explain

The aim of this guide is to capture the full picture of the journey of goods from an origin in China to their arrival to someone’s residence or storefront in the United States. This guide will illustrate the steps taken, key terms and concepts required to gain a high level understanding of how goods move from one part of the world to a doorstep and all the moving pieces required to make that happen.

This article will explain:

  1. How and where products become products in China

  2. The complete import/export process including costs, transportation and more

  3. Choosing a shipping line

  4. Types of ocean containers

  5. Costs of ocean freight

  6. The role of freight forwarders

  7. Types of warehousing

  8. The role of third party logistics (3PL)

  9. Last-mile delivery options

  10. Challenge on the horizon for ocean freight

Chapter 1: Behind the 'Buy Now' Button

An overview of the journey that begins when you click "BUY" online

The moment something is bought online or requested to appear somewhere else more abstractly like a crate of shampoo or a thousand office desks, a whole network of activities engage to make sure that the item or items just purchased or requested arrive where they should by a given date.

At a very high level, the means by which goods make their way from their origin to the end user, or from China to an end user in the United States for this article can be thought of like this:

  1. Raw materials are manufactured into goods by a factory or factories in China by a manufacturer. The goods are soon-to-be-cargo.

  2. When the cargo is ready to ship out of the factory, a shipping representative working for the manufacturer calls a freight forwarder.

  3. The shipping rep gives information over to the freight forwarder including incoterms, port of discharge/port of export, the volume to ship, container type needed and other relevant information in order for the forwarder to put a quote together.

  4. The forwarder then checks the current ocean container rates and shipment base and runs calculations to assemble the quote.

  5. The freight forwarder will reply to the shipping representative for the manufacturer with a quote including information about a sailing schedule, closing time, transit time, estimated time of arrival, estimated time of delivery and total charges.

  6. The manufacturer can then choose to accept the quote or not.

  7. Assuming the manufacturer accepts the quote, the freight forwarder will go and make a booking confirmation and send the information back over to the shipping representative.

  8. Once the manufacturer is booked, they'll plan the loading date with the freight forwarder and make arrangements including pick up and delivery of empty container(s) to the manufacturer. Manufacturers that don’t have special arrangements with shipping lines or other special arrangements tend to work with freight forwarders because of their knowledge of the intricacies of the process and contacts. Moreover, there is one point of contact throughout the arrangement. Freight forwarders also have the responsibility to make sure documents are properly checked and handled without errors to avoid queries by customs people or problems throughout the process for the manufacturer.

  9. To pick up empty containers, the forwarder makes arrangements to pick up from a container depot, the place where shipping lines keep containers. Depots maintain, clean, store and fix containers. Forwarders usually visit the depot early in the morning to make sure containers are in proper condition for shipment. Manufacturers or forwarders can request grades of containers for specific projects.

  10. Once the containers are chosen, they’re then delivered empty to the manufacturer.

  11. The freight forwarder follows up on when to send the containers to the port of export. The forwarder follows up on a date and time to send the containers to port. Companies that ship a lot require proper discussion about shipping schedules. There’s a greater amount of coordination required around cycling empty and full containers in and out of depots and ports. Container needs to be in before closing time.

  12. The manufacturer then fills the delivered empty containers. The process is called drayage and there are different types of drayage.

  13. The forwarder follows up on instructions from the manufacturer to draft the bill of lading.

  14. Once the container(s) gates into port, the forwarder needs to make sure Verified Gross Mass (VGM) and customs declaration are complete before the vessel departs. There are also checks before containers can get into port. Many containers are being collected by port all day everyday. There needs to be enough time to load and unload before the ship leaves.

  15. The total weight of the container needs to be controlled and is checked by port professionals. Cargo weight must be evenly distributed within the container for risk that the gantry lifting it unexpectedly shifts the cargo in the container and damages it.

  16. The forwarder then needs to follow up finalizing the bill of lading from the shipping line once the ship has departed and send that to the manufacturer.

  17. The manufacturer will send the bill of lading to the consignee, the person or company to whom the goods and documents are being sent to, when payment has been made. Payment and bill of lading are usually sent via usually sent by DHL or Fedex.

  18. Before the ship arrives at port of import/port of discharge, the shipping line offers notice of arrival and commercial invoice of terminal handling charges to consignee.

  19. The consignee gives the bill of lading to the shipping line to exchange for delivery orders. The consignee are paying terminal handling charges and local charges to handle delivery orders.

  20. Once the consignee gets delivery orders from the shipping line, the shipping line agrees to release containers to the consignee.

  21. The forwarder of consignee goes to customs clearance and arranges for the customs to be evaluated, needing a bill of lading, commercial invoice, packing list and certificate of origin if any.

  22. Once the container(s) is/are delivered to the consignee, the journey and transaction are complete.

The process, from origin to end user, is lengthy and complex, demanding tremendous amounts of coordination between lots of different groups of people working collectively on very precise deadlines and handling delays and issues as they arise. Every business has a goal to create the most efficient supply chain to pass the savings onto the customer to make more sales. You can see the most efficient supply chains in action at stores like Walmart and Target. It’s no wonder the logistics and supply chain industry is an over $8 trillion dollar industry by some estimates.

Overview of Supplier Contracts and Terms

Terms of engagement between a supplier/manufacturer and a business are very important to making sure the supplier builds, stores and transacts goods and interacts with other members of a company’s supply chain in a compliant way. It’s the glue that helps hold these complex, often multinational relationships together.

Supplier contracts or supplier agreements are pivotal in business operations. These kinds of agreements are legally binding agreements that define the terms of engagement between organizations and their suppliers. Agreements can cover and adjust to cover many different situations and stipulations but generally most supplier agreements will cover these major points.

There are several different kinds of agreements. How, when and in what capacity they’re drawn up and used can vary from relationship to relationship. Below are some of the major kinds of agreements suppliers and companies will engage in:

Which agreements are in place with what business or what supplier(s) is something usually entirely out of the vision of the end user. The terms of the contract and what the contracts are, usually, will help businesses ensure parts of their engagements with suppliers are guaranteed and predictable. So much so that companies can know with near certainty what costs will be incurred, where and how such as to properly forecast pricing and delivery availability throughout the supply chain.

This table breaks down the key uses for when a shipper would consider using FCL and/or LCL:

Shipping Costs During Export & Import

Costs can vary between services required to complete the journey. Major expenses, including these below can vary tremendously but as a benchmark, these figures can be helpful in understanding what costs are involved in moving goods from China to the US:

Costs can also change depending on the incoterm in effect.

Incoterms are used to define which organization has responsibility and liability for goods during the life of a shipment. Each term denotes a different stage of ownership. The terms spell out when responsibility for the goods transfers from the supplier to the buyer. They also define who pays which costs for the goods and their transport.

Transportation to the Port

Assuming that the manufacturer has accepted the freight forwarder’s quote, the next step will be to move the manufacturer’s goods out of their facilities and to the port of export.

To do that, empty containers will need to be drayaged out of a nearby container depot and delivered to the manufacturer. During deliberations the forwarder and manufacturer likely discussed specific types of containers, dimensions, materials or if the containers needed to be able to handle special materials like refrigerated or hazardous material. The forwarder handles the coordination of booking the empty containers and their delivery to the manufacturer’s facilities.

Once the containers arrive, they’re then filled up, reloaded to trucks and sent over to the port of export’s warehouse for storage until their shipment date or sent right to port.

A forwarder would have also secured the shipping line, date of departure and clarified estimated date of arrival, departure and other important information for the manufacturer.

Port costs can vary. It’s difficult to provide a range of what costs a shipper can expect to pay because costs are usually tied to the port, lane and goods being shipped on top of other details like whether there is a premium added on for faster delivery.

via: https://www.beckerlogistics.com/wp-content/uploads/2020/10/Intermodal-and-Drayage-Trucking-Process-01.png

If everything is set up without any issues, confirmation is the last paperwork step. A booking confirmation is the document issued by the freight forwarder to the manufacturer.

The booking confirmation contains all the basic shipment details such as:

and other important information about the booked shipment and the contents.

The booking confirmation documents help parties including the consignee, the shipper, and the buyer finish the transaction with the bank. The booking confirmation number is often used as the main shipment tracking code.

Booking confirmation and Bill of Lading can be thought of as receipts for the booked container. There is likely other documentation that can and should be included as part of the full package of documents associated with a container.

The volume of documentation is usually something that causes shippers a lot of headaches and document management in logistics is its own set of skills. Freight Right’s Visibility tool is designed to help shippers better manage documents associated with their containers and shipments.

Chapter 2: Ports of Departure: China's Oceanic Gateways

Major Chinese ports involved in US trade (Shanghai, Shenzhen, etc.)

China has over 150 major ports and over 1800 minor ports dotting their coastline. There is no shortage of points for China to send goods out of or intake goods into the country. China has invested around $11 billion dollars in its port infrastructure to handle the shipping volume.

Many countries, like Mexico, in the last 3 years have made significant investments in their port infrastructure as a means to make their shipping operations an attractive alternative to countries looking to decouple their import/export activities from China but those investments are young and come with their own set of political and geographic challenges that China doesn’t have.

Though there are hundreds of ports in China, at time of writing this 7 of the 10 ports handling the most TEUs (define) per day are in China.

Port of Shanghai (SIGP)

The port that holds the number one spot for the highest volume of TEUs is Port of Shanghai.

As of 2021, Port of Shanghai has handled 47.03 billion TEUs. Singapore, the second highest volume port in the world handled about 10 billion TEUs in 2021, 37.49 billion.

The Port of Shanghai was founded in 1842 near the East China Sea, at the mouth of the Yangtze River. Port of Shanghai has numerous terminals, but some of the major terminals at the include:

Port of Ningbo-Zhoushan (CNTAO)

The Port of Ningbo-Zhoushan was officially founded in 2006 through the merger of the Port of Ningbo and the Port of Zhoushan.

It is located near the East China Sea, at the confluence of the Yangtze River and Hangzhou Bay. Some of the noteworthy terminals in Port of Ningbo-Zhoushan include:

The Port of Ningbo-Zhoushan is known for handling a wide range of cargo, including containers, bulk cargo (such as coal and ore), general cargo, and oil products. The port is significant particularly because of its proximity to the Yangtze River Delta.

Port of Shenzhen (CNSEZ)

The Port of Shenzhen, officially known as the Shenzhen Port Group, consists of multiple terminals and areas along the Shenzhen River. There is no one port that makes up the Port of Shenzhen with different founding years and establishments.

The collective Port of Shenzhen is in the southern part of Guangdong Province along the coastline of the South China Sea in the southern part of the Pearl River Delta.

The Port of Shenzhen comprises several terminals and areas, including:

Port of Guangzhou (CNCAN)

The Port of Guangzhou, also known as the Port of Canton, has a long history dating back over 2,000 years. It is one of China's oldest and most important ports, with its origins in the Qin Dynasty (around 221 BC).

via: https://www.gzport.com/enweb/foreground/EN

The Port of Guangzhou is also located near the Pearl River in southern China, providing access to the South China Sea.

Some of the busiest terminals at Port of Guangzhou include:

Port of Qingdao (CNTAO)

The Port of Qingdao, also known as Qingdao Port, has a history dating back to 1892 when it was established as a trading port during the Qing Dynasty.

via: https://maritime-executive.com/editorials/qingdao-china-s-iron-gateway-to-the-arctic

The Port of Qingdao is located on the Yellow Sea, providing access to the Bohai Sea and the broader Pacific Ocean. The Port of Qingdao consists of several terminals and areas, each specializing in different types of cargo. Some of its key terminals include:

Port of Hong Kong (HKHKG)

The Port of Hong Kong, one of the world's busiest and most prominent ports, has a history that dates back centuries. It served as a trading hub well before British colonization in the 19th century. However, in its modern form, the Hong Kong Port as we know it today developed during British colonial rule.

via: https://www.hkmpb.gov.hk/en/port.html

Most goods arriving in the United States, whether toys, iron ore, furniture or agricultural equipment, are likely coming from one of these ports.

Choosing a Port

Choosing a port for your goods to leave from is unquestionably critical. There are hundreds of shipping lines going from China to the US and a balance of cost, time and efficiency to consider.

Selecting the appropriate port for your shipments holds considerable sway over your supply chain. It's imperative for shippers to scrutinize various factors before settling on a port. Making changes when plans are finalized is certainly possible to do and does happen but usually will come with additional costs from the freight forwarder or shipping line to accommodate.

Below are some of the major factors typically taken into consideration when choosing a port:

The first aspect to weigh is the port's location. Shippers need to consider proximity to shipping and delivery points and how the proximity translates to cost savings because of the accessibility and reduced transportation expenses.

The infrastructure and equipment within a port exert a direct influence on cargo handling efficiency and safety. Elements like navigable channels, berthing for large vessels, and strong connections between shipping lines and port operations are pivotal for seamless transport. This aspect pertains more to how efficiently goods move around the port which can translate to reliability and handling safety.

The availability of land transport options within and around the port is pivotal. Major ports occasionally confront service disruptions due to strikes or expansion initiatives, prompting consideration of smaller, slightly distant ports that can improve safety and reduce cargo handling durations.

Customs procedures can vary substantially from one port to another. Certain ports process specific customs processes faster than others which can make them preferable for particular cargo categories such as vehicles or international removals.

Port size is perhaps the biggest factor to consider. Larger ports boast a greater array of carriers and vessels, translating into more direct services and improved transport management efficiency over smaller ports. This factor influences both facility capacity and carrier costs.

Modernization and digitalization in the shipping industry have ushered in enhanced transparency in booking and shipment tracking. Advanced ports have introduced automated gate-in procedures with biometric identity verification systems, and other technologies to reduce the risk of misplaced containers, unauthorized people at ports and other things that can cause delays or worse damaged goods that can’t be shipped.

Port congestion looms as a substantial challenge in maritime logistics. This issue arises when vessels encounter delays in berthing, often during peak seasons, prompting shippers to explore alternative solutions.

All ports experience some kind of delays and accounting for delays at time of booking can be the most challenging as it’s the least predictable but it is something to keep in mind if a port has a reputation for congestion, labor shortages or other things that lead to delays.

Customs Procedures in China

Exporting goods from China is a common area issue that can emerge for shippers and companies. Understanding the full scope of how Chinese export customs procedures work can be a daunting task and, again, usually one a forwarder or customs broker will better know the ins and outs of and can advise accordingly.

An essential document in China's export process is the export license. This document grants suppliers permission to export specific goods, particularly crucial for hazardous or prohibited items.

An export license is a document that compiles information about the exporter, the buyer, the cargo, the value and the mode of transportation.

The validity time of an export license depends on the delivery date that is established in the contract. Usually, an export license expires about six months after it is issued. An exporter can apply for a two-months overtime if the goods are not exported during the license validity time.

Without such an export license, your cargo will not be cleared through the Chinese customs.

It’s important to be familiar with China's Export Prohibited and Restricted Technology Catalog. This collection of information outlines bans 33 technologies from export without government licenses. These technologies mainly pertain to telemetry coding, encryption software/hardware, artificial intelligence, cryptography, security tech, and advanced defense technology.

Pre-Shipment Inspections

In addition to export customs, China’s pre-shipment inspections (PSIs) are the step to make sure that the exported goods.

China formally adopted pre-shipment inspections in 1994. Starting that year, pre-shipment inspections were formally implemented as part of an accord aimed at enhancing global trade standards. This agreement was established within the framework of the General Agreement on Tariffs and Trade (GATT), subsequently succeeded by the World Trade Organization (WTO).

China’s pre-shipment Inspections (PSIs) helped to establish it as a great, reliable superpower in shipping. These inspections verify that goods meet both the buyer's standards and relevant governmental regulations.

PSIs offer significant advantages to both manufacturers and buyers. They often serve as a prerequisite for customs clearance, mitigating supply chain bottlenecks and ensuring adherence to quality and safety norms.

The benefits of PSIs include:

The PSI process in China encompasses supplier visits, document signing, and comprehensive inspections covering quality, packaging, functionality, size, weight, and barcode checks. Successful inspections lead to legal certificates and detailed reports.

Below is a more detailed breakdown of aspects that China’s exports officers evaluate exports for:

Chapter 3: The Ocean Voyage

Types of Ocean Shipping Containers

via: https://guidedimports.com/blog/lcl-vs-fcl/

During the process of booking shipment, options will be available for Less Than Container Load (LCL) and Full Container Load (FCL) storage.

Both types of containers have their applications to shippers. The good itself being transported, and cost are two significant reasons.

This table breaks down the key uses for when a shipper would consider using FCL and/or LCL:

Aspect LCL (Less than Container Load) FCL (Full Container Load)
Shipment Volume Suitable for shipments as small as 1 CBM. Ideal for volumes < 15 CBM. Accommodates any volume, efficient for 15 CBM or more.
Shipment Weight Max weight per CBM: 1 ton (1,000 kg). Considerable for >150kg <1 CBM. Max weight per CBM: 1 ton (1,000 kg).
Freight Cost Costs usually lower for volumes < 15 CBM. May be more cost-effective. Overall costs can be less due to fixed local charges per container.
Speed Longer transit time (at least four days). Goods need to be Faster transit as containers move directly to the final destination.
Security and Damages Higher risk of damage, theft, or loss due to shared containers. Lower risk as it travels directly to a single consignee.
Trackability Tracking less accurately, may end at the port. Easier tracking as containers move under one consignee.
Split Shipment Suitable for splitting shipments to different places. Can be split but involves additional steps and costs.
Delivery Appointments Easier to book for deliveries to fulfillment warehouses. Appointments might take longer for approval.
Booking During Holidays Space can be easier to book before holidays. Container availability may be limited before holidays.
Amazon FBA Requires appointments with Amazon's warehouse. Requires appointments with Amazon's warehouse.
Local Charges Billed per CBM, may have higher local charges. Fixed local charges per container, often lower.
Customs Clearance Similar process. Higher chances of the entire container examination. Similar process, random examination possible.

Shipping Container Costs

LCL tends to be more expensive than FCL on a per-unit basis however that trend is changing with advances in container visibility and digital pricing in air and ocean freight.

LCL expenses are primarily dictated by volume, usually measured in cubic meters (CBM). Larger space requirements translate to higher costs, as calculating multiple shipments in a single container is more complex than straightforward FCL.

Below are some of the major considerations that go into LCL pricing and what can usually cause it to be more expensive than FCL:

While the main leg of the shipment may not be the priciest, CFS charges can be high due to equipment and labor. Determining cost-effectiveness between LCL and FCL hinges on factors like shipment volume, route, timeline, and overall expenditure.

When shipment volume nears 15 CBM, typically a freight forwarding company is consulted for rate comparisons, transit times, and potential ancillary charges.

via: https://artexnaman.com/ocean-freight-shipping-fcl-vs-lcl-pros-cons/#Shipping_costs

The Role of Freight Forwarders

Amidst all the cost, documentation, technical details that go from having a good on one side of the world and getting to the other side of the world, freight forwarders are the people who specialize in handling these details.

A freight forwarder is a specialist in transporting goods from one place to another efficiently and securely. Freight forwarders don't own transportation vehicles. They typically serve as intermediaries with extensive knowledge of the shipping process, ensuring successful delivery.

Freight forwarders are tasked with knowing how to move goods through various means of transportation including by ocean.

It’s their skill in navigating the intricacies of the shipping world, access to rates, networks of different kinds of intermodal transportation and warehousing options that shippers and companies pay for when hiring one for a one-time project or multi-project arrangement.

Forwarders' services are invaluable for navigating the complexities of global trade, guiding clients on what can be shipped, proper procedures, documentation, and contingency planning.

Companies could book container space themselves without going through a forwarder or team of experts. The burden, however, is solely on the company to manage all the details mentioned above from customs paperwork, coordination of delivery and trucking teams, inventory moving in and out of warehouses and more.

Oftentimes it might not be any cheaper if not more expensive to self-book container space on a cargo ship. Forwarders in addition to having the necessary knowledge of all the above mentioned topics and details might also and often do have preferred rates and agreements with different entities throughout the shipping process. What that means for the shipper is cost savings that wouldn’t have otherwise been unlocked if noth through the relationship with the freight forwarder. Freight forwarders and shipping lines are not the same groups of people.

via: https://www.freightos.com/wp-content/uploads/2023/06/freight-forwarders-manage-image-blog-post-1024x295.jpg

Part 4: U.S. Ports of Entry

Major U.S. West Coast ports (Los Angeles, Long Beach, etc.)

With container space booked, the lanes selected, customs cleared and containers loaded onto their respective ship or ships, goods will then sail across the Pacific Ocean and arrive in a port in the United States.

Most goods from China will generally arrive in 2 west coast ports, Port of Los Angeles or Port of Long Beach. Each port respectively ranks #17 and #22 in terms of volume of TEUs moved in 2021 according to WorldShipping.

Both the Port of Long Beach and Port of Los Angeles publish annual statistics on how much container volume, container volume of what good and other useful figures to better capture how much import/export volume is done at these ports.

Some fast figures include: Port of Long Beach’s combined inbound and outbound loaded volume decreased -4.26% between 2021 and 2022 and saw -2.74% less total combined throughput of 20-foot equivalent units or 20-foot-long cargo containers, the total sum of inbound and outbound empty containers and inbound and outbound loaded containers.

Port of Los Angeles:

Addressed in the previous section, the decision to land goods in one port along a specific shipping lane at a certain time can tie back to cost and delivery dates. It might be more cost effective to land in a port further away with a longer voyage but there’s guaranteed to be cheaper modes of ground transportation to travel over a shorter distance to the end user or destination.

For goods incoming from China, Los Angeles and Long Beach tend to be the most common ports for Chinese exports to land in.

Port of Los Angeles (3007)

The Port of Los Angeles, often called Los Angeles Harbor, and is situated near San Pedro Bay, has a long history that dates back to the late 19th century. It officially became the Port of Los Angeles in 1907 when the City of Los Angeles took control of the harbor.

Port of Los Angeles is one of the busiest ports in the world and typically handles over 8,000 vessel calls annually.

The Port of Los Angeles consists of multiple terminals, with approximately 27 cargo terminals that handle various types of cargo, including containerized cargo, liquid bulk, dry bulk, and more.

Some of the major terminals at the Port of Los Angeles include:

Port of Long Beach (2704)

The Port of Long Beach, also known as the Long Beach Harbor, has a history dating back to the early 20th century. It was officially founded as the Port of Long Beach in 1911 when the citizens of Long Beach, California voted to create a harbor district and is also located near the San Pedro Bay.

Port of Long Beach is one of the busiest ports in the United States and typically handles over 6,000 vessel calls per year, comparable volume to Los Angeles.

The Port of Long Beach is home to multiple terminals, with approximately 11 container terminals and various other terminals for handling different types of cargo. Some of the major container terminals at the Port of Long Beach include:

Navigating U.S. Customs

The flipside to Chinese export customs procedures is the US import customs procedures.

All goods being imported into the US require a customs bond. A customs bond is a contract between the importer and The U.S. Customs and Border Protection (CBP). A customs bond is a contract designed to guarantee the payment of import duties and taxes upon entry into the United States and is required by the CBP for all import shipments.

There are 2 kinds of customs bonds: Single Entry/Transaction Bonds and Continuous/Annual Bonds.

A Single Entry Bond (SEB) covers a single Customs entry of one shipment. Most bond companies will not issue an SEB more than three times a year, as it creates scrutiny within the U.S. Customs and Border Protection.

Continuous/annual bonds are valid for a single year. As they are attached to a company’s tax ID/EIN number and can be reused on multiple imports. Moreover, annual bonds are not specific to a certain broker or freight forwarder, so even if you switch customs brokers, your bond will still be valid. A typical annual bond costs $500.

Continuous bonds are attached to a company's tax ID/EIN number and can be reused throughout the year for multiple imports. Annual bonds are not a broker or forwarder-specific bond, so in the case that you switch customs brokers, the bond will still be valid.

The US Customs & Border Protection website offers a fantastic explainer video of the import customs process along with supporting links to documents. The process for those who aren’t licensed customs brokers can be lengthy and confusing.

To summarize the process, however, the US import customs process resembles the set of steps below:

Import duties and taxes are worthy of its own explainer for its complexity, details and nuance.

The process of understanding the US’s Harmonized Tariffs Schedule (HTS), the guiding document by which the US taxes and assigns tariffs to imported and sometimes exported goods, is often lengthy and seemingly inconsistent to many.

The United States' HTS is an essential framework for categorizing and applying tariffs to imported goods. Aligned with the international Harmonized System (HS), it classifies products into specific categories and assigns unique Harmonized System (HS) codes. These codes determine tariff rates and trade measures, including quotas and restrictions.

The United States International Trade Commission (USITC) maintains and updates the HTS, making it a crucial tool for accurate classification and cost calculation in international trade.

Businesses must navigate the HTS to ensure compliance with customs regulations and determine the financial implications of importing goods into the United States.

Import duty also called a tariff or customs duty is a tax imposed by customs authorities on imported and some exported goods. It's typically based on the item's value and may be referred to as customs duty, tariff, or import tax. Customs duties have dual purposes: generating government revenue and promoting locally produced goods by taxing imports. Some countries also use them to penalize specific nations.

Mentioned above, In the United States, import duties are established by Congress and listed in the Harmonized Tariff Schedule (HTS). Rates differ based on trade relations status. The de minimis threshold, currently $800, exempts shipments below this value from customs duty. Calculating customs duty can be intricate, with methods including manual calculation, outsourcing to forwarders, consulting experts, or using automated solutions. Common pitfalls (and there are many pitfalls to be mindful of in handling import duties) to avoid involve:

Additionally, making last-minute tax assumptions, not researching regulated products, incorrect tariff code assignment, and disregarding total landed cost can lead to compliance issues and unexpected expenses.

It can’t be understated enough: a customs broker will handle all these nuances, details and situations on behalf of a person or business. It is essential that one is hired for any importing work into the United States.

Unloading and Storage

With customs cleared and duties paid to the US Customs & Border Protection (CBP), then comes the process of unloading goods off of the ship and out of their container(s). Drayage is the process of delivery/pickup of a container to/from a seaport container terminal. Drayaging goods can vary depending on the terminal type involved. Not all drayage procedures are treated the same.

Terminal Types:

Drayage also has several layers of security and monitoring to make sure authorized people handling containers are who they say they are and they’re handling the freight they should be. Gate passes, paperwork verification, container and chassis checks, and interactions with terminal staff are abundant to ensure a smooth transfer of containers.

In a transit between China and New York, goods are typically drayaged twice. The first time is from the supplier to a warehouse associated with the exporting port and again out of containers to an importer’s warehouse.

Drayage is often arranged by a freight forwarder early when all the plans for import/export are taking place and container space is being assigned. Usually a forwarder will ask (clarify) if goods need to be drayaged.

Drayage can cost typically between $1,600-$3,000 all-in but from above those costs can vary depending on the port, freight and other conditions. A full service container drayage tends to include the following and estimated to account for:

Whichever service is booked for drayage, it’s important to remember detention and demurrage penalty fees that can occur if a container isn’t returned to port on time. Trucks should return containers within, typically, 3-5 business days back to port. Something our own shipment management tool provide custom alerts for.

Chapter 5: From Port to Warehouse

Distribution Centers & Warehouses

When goods are taken away from port they’re stored in warehouses. People will often use a warehouse and distribution center interchangeably but they are not the same kind of storage solution.

Warehouses large facilities that goods are sent to and stored. When goods are taken out of a warehouse they’re sent to distribution centers. Distribution centers tend to be more regionally focused or specialize in a certain good.

There tend to be a few warehouse locations but many distribution centers strategically positioned throughout the country. Amazon is famous for the number of distribution centers and the precision of their applications.

Put another way, if you, located in Connecticut, order a chair from Amazon, the chair does not arrive in 2 days from a warehouse somewhere in the US. The order for the chair is processed through Amazon’s logistics network to find what distribution center in or around Connecticut has that chair stocked in it currently. Steps are taken then to arrange a pickup from that distribution center and then dropped off at your doorstep within the quoted amount of time.

If the chair does not exist in any of Amazon’s distribution centers in and around Connecticut then the chair is pulled and transported from another distribution center or nearby warehouse into one closer to Connecticut such to make the delivery deadline. A new set of logistical procedures must take place to get that chair from somewhere in America to you, the end user.

In this section we’ll cover more about warehousing, distribution and third party logistics providers in more detail.

Types of Warehousing

Warehouses can vary tremendously depending on the kind of goods being stored in them.

There are about 6-10 different kinds of warehouses, each with their own different uses. Not all warehouses are designed to store all the same kinds of goods or volumes of goods.

Typically when we think of warehouses we’re thinking of places that store furniture, toys, games, electronics, clothes or other common consumer goods but warehouses can also specialize in what they store.

Distribution Center/Distribution Warehouse

A distribution center/distribution warehouse is a logistics operation that helps businesses store, pick, pack, and ship products out to consumers. Third-party logistics (3PL) companies usually own and operate distribution centers. 3PLs are different from freight forwarders although the titles are often used interchangeably.

Aspect Third-Party Logistics Providers (3PLs) Freight Forwarders
Roles Offer end-to-end logistics solutions, including transportation, warehousing, inventory management, and value-added services. Specialize in coordinating the transportation of goods.
Scope of Services Provide a comprehensive range of logistics services, optimizing supply chain operations. Primarily focus on arranging and managing the transportation aspect of logistics.
Responsibilities Manage various logistics functions, streamline processes, and optimize the entire supply chain. Coordinate the movement of cargo, ensuring efficient routing, bookings, and proper documentation.
Expertise Have expertise in multiple logistics areas, offering strategic guidance and comprehensive solutions. Excel in international shipping, customs procedures, and transportation logistics.
Customer Focus Work closely with companies looking to outsource and optimize their supply chain. Serve various industries and adapt to customer needs. Concentrate on facilitating the efficient movement of goods, often working with shippers and exporters.

Many distribution centers offer extra services like packing orders to create a unique unboxing experience or the experience that customers receive when they open a box and examine the contents inside, and handling returns. A distribution center (DC) is a strategically located facility within the supply chain used for receiving, storing, and distributing goods. DCs manage stock levels to meet demand efficiently. Goods are typically held for short periods of time.

DCs typically handle:

Pros of Distribution Centers:

Cons of Distribution Centers:

Cold Storage Warehouse

Cold storage warehouse maintains items at constant temperatures to prevent goods from spoiling. These kinds of warehouses are critical for perishables like fresh produce, flowers and botanicals and pharmaceuticals and medicines.

Benefits of Cold Storage Warehouses:

Beneficiary Businesses:

Smart Warehouse

Smart warehouses use warehouse management systems (WMS) to manage warehouse operations, tasks and inventory. Warehouses using WMS typically can manage and keep better track of and manage many of the items listed below:

Pros of Smart Warehouses:

Cons of Smart Warehouses:

Beneficiary Businesses:

Bonded Warehouse

Bonded warehouses store imported goods without immediate duty payment. These kinds of warehouses allow up to five years of storage before duty fees apply. These warehouses are typically used for cross-border trade or in cases where goods are going to be held in one place for extensive periods of time and there’s no expectation they move at consumer-good-transactional-speeds.

Advantages of Bonded Warehouses:

Disadvantages of Bonded Warehouses:

Public Warehouse

Public warehouses are very short term solutions typically for e-commerce. Public warehouses offer rental space for product storage. Many provide fulfillment services. Allows smaller businesses to compete with larger counterparts. Typically offers flexible month-to-month leases. Often equipped with Warehouse Management System software.

Pros of Public Warehouses:

Cons of Public Warehouses:

Beneficiary Businesses:

Consolidation Warehouse

Consolidation warehouses or a consolidated warehouse is a warehouse that aggregates shipments from multiple businesses. These warehouses combine small shipments into cost-effective truckloads but those truckloads are shared spaces between the goods of many different businesses. These kinds of warehouses, however, facilitate distribution to multiple sites efficiently.

Benefits of Consolidation Warehouses:

Drawbacks of Consolidation Warehouses:

Beneficiary Businesses:

Private Warehouse/Proprietary Warehousing

Private warehouses are warehouses that are privately owned by manufacturers, distributors, or wholesalers. These facilities offer customization and ample opportunities to modify and design them to whatever the needs are of a business but to achieve that ends require significant investment. Private warehousing provides control over warehousing and shipping timelines as there’s nothing to share or divide with other businesses or interests.

Pros of Private Warehouses:

Cons of Private Warehouses:

Beneficiary Businesses:

The Role of 3PL (Third-Party Logistics) Providers

Third-party logistics (3PL) is an important aspect to making sure goods once arrived and stored in the US are properly positioned for the last mile (more below).

Small and medium-sized shippers tend to struggle with efficient supply chain management, the full set of actions mentioned throughout this article. 3PL Warehousing specifically is an important and accessible solution.

3PL Warehousing involves outsourcing supply chain and logistical operations to external 3PL warehouses, eliminating the need for initial investments, maintenance, and complex operations. There can be differences between the different kinds of services 3PLs can offer and in what capacity.

Freight forwarders and 3PLs are often referred to one another interchangeably but they are different. Freight forwarders coordinate the movement of goods from one point to another. 3PLs handle more logistical duties once goods are inside of a warehouse or distribution center.

3PL Warehousing specifically can cover:

Part 6: The Last Mile: Delivery to Doorstep

How the Product Arrives to the End User

With goods now securely in the US and sitting in their warehouses, now begins the final part: last mile delivery.

Throughout this entire journey it is usually the last mile that is the most expensive part. 53% of the entire cost of moving goods around the world is wrapped up in the last mile delivery.

Last mile delivery is its own subdivision of the supply chain industry. Some facts about the last mile industry include. The global last mile market in 2021 was valued at $131.5 billion. The industry is projected to reach $288.9 billion by 2031, growing at a CAGR of 8.13% from 2022 to 2031.

It is this leg of the journey that consumers expect Amazon-style delivery times and easy returns. Deliveries should be fast, predictable and precise and the cost for most companies to accommodate those tasks is high and growing for companies that aren’t Amazon.

Last mile delivery refers to the very last step of the delivery process when a parcel is moved from a transportation hub to its final destination. Typically someone’s residence or a store. This is the step where DHL, UPS, FedEx and other parcel carriers become involved and what most of us think of as goods getting shipped around.

Postmates, GoPuff, Getir, Grubhub and Uber Delivery are some less thought of but no less relevant additions to the last mile delivery infrastructure albeit for smaller household items and food.

Last-Mile Delivery Options

Last mile delivery options are typically the brand names we all think of when we think of deliveries. These are the companies tasked with picking up goods at distribution centers and delivering along the route for the day.

These are some of the major, common names in last mile delivery:

Role of E-commerce Platforms and Fulfillment Centers

Fulfillment centers and fulfillment warehouses are often interchanged but have distinct roles in the ecommerce supply chain. Here, we clarify their differences and functions.

A fulfillment center, integral to the supply chain, manages logistics processes from order processing to shipping. Typically operated by 3PL providers, it prioritizes efficient order fulfillment for ecommerce retailers.

Fulfillment Center Operations:

In the fulfillment center, inventory is strategically stored. After an order is placed, inventory is picked, packed, and labeled for shipping. Fulfillment centers handle both B2B and B2C orders and streamline order management for ecommerce businesses.

Understanding Fulfillment Warehouses:

Fulfillment warehouses are often used interchangeably with fulfillment centers but mainly focus on inventory storage, offering fewer operational services.

Operational Distinctions:

Fulfillment centers are dynamic, handling various services, including inventory reception, picking, packing, labeling, shipping, and returns. In contrast, warehouses are less active and primarily store inventory.

Shipping Carrier Pickups:

Fulfillment centers require daily carrier pickups to ensure timely order delivery. Warehouses have less frequent scheduled pickups, particularly for freight shipments.

Part 7: Challenges and Solutions

From inception to delivery, it’s no small wonder how the global supply chain network functions as reliably as it does as often as it does. Just about anything can be delivered from anywhere to anywhere else in the world.

Just about is the key word. Global shipping and fulfillment is not without its challenges. In this section we’ll look at some of the current challenges that global shipping will face in 2023.

In the shipping industry, new challenges have emerged alongside environmental concerns.

Some highlights to consider about the current state of maritime shipping and some of the challenges and opportunities coming around:

Delays and How to Mitigate Them

Delays to shipping can be challenging to pin down. They can be planned in the case of blank sailing which can happen because seasonal demand fluctuations and fewer voyages across a certain line take place, economic factors, or operational adjustments or unplanned in the case of labor strikes. Delays can also be environmental in the case of the Panama Canal drought this year.

Tactical logisticians and forwarders make their mark if they can pivot and handle these types of situations as they emerge and come out ahead for their customers or company. One-off or planned delays aside, ocean shipping also requires professionals to be aware of larger, gradual shifts that the industry and mode of transport are expected to handle in the coming years. Below is a short list of some of the ideas front of mind to those in the international shipping industry:

Environmental Regulations

Digitalization

Politics

Rising Costs

Security

The adoption of real-time container tracking enhances supply chain visibility, reducing errors and bolstering efficiency.

Conclusion

The Container’s Journey

The journey of goods from their origin to a doorstep is lengthy, complex, measured, documented, tedious and amazing all at the same time. It’s no small wonder how such a feat can occur across languages, time zones, cultures and countries.

For consumers and businesses alike, what happens to the global supply chain affects everything connected to and associated with it. The pandemic was a powerful reminder of what was taken for granted for the last 40 years since the revolution in thinking towards global trade and breaking down national barriers in the name of economic prosperity.

Paying 5 dollars for a set of three boxers at Walmart is a function of the cost of making goods in one part of the world and the efficiencies brought about by managing the cost to produce goods and the cost to ship volumes of goods around the world through the most optimal means. The global supply chain brings cost and lifestyle benefits by its efficiency and scales of cooperation between nations.

Glossary

Frequently Asked Questions (FAQs)

How are goods typically transported from China to the United States? Are there different shipping methods available?

By ocean & container based shipping or by air cargo are the most common solutions for transporting cargo from China to the United States.

What factors influence the cost of shipping goods from China to the United States, and how can businesses manage these expenses?

Costs can vary tremendously depending on but not limited to the type of cargo, the urgency of the delivery, the means of transportation, costs and fees determined port-by-port based on the cargo type for packing on and unloading the cargo on and off ships and taking to warehouses. Asking your forwarder what costs are associated with this particular shipping line on this particular day and what the port fees are by exporting and importing at a given port can help the forwarder provide a more accurate quote and prime you for all the costs that can emerge.

How long does it take for goods to arrive from China to the United States using different shipping methods, and how can delays be minimized?

Goods by sea can take between 30-60 days. The shipping line, urgency of the delivery, type of cargo and space availability can all influence if the delivery is made on the side closer to 30 days or closer to 60. Delays can be hard to minimize as a shipper. Asking your forwarder what delays can be expected is a good way to surface the question and prompt your forwarder to let you know if there’s delays ahead as a function of port congestion or environmental issues along certain routes. Forwarders will usually provide an alternative option if the route originally quoted is expected to have delays.

What role do freight forwarders play in the shipping process, and how can they help streamline logistics?

Freight forwarders handle the coordination of freight moving from one place to another. Oftentimes they are the same person that will coordinate with customs brokers to make sure imports and exports are compliant with the country of import and exports’ standards. They can streamline the logistics of moving freight around because of their specialized expertise in the industry and connections to freight moving solutions where special deals have been arranged and savings passed on to customers that they otherwise wouldn’t have received booking directly.

What happens once goods arrive at U.S. ports, and how are they distributed to their final destinations?

When goods arrive at the Port of Destination and assuming there aren’t any issues clearing customs, the goods are then unpacked from their containers and the containers have 3-5 days to unload and return the containers to port. This milestone is called Last Free Day (LFD).

How can businesses track the progress of their shipments and ensure real-time visibility into their supply chain?

Businesses can track their shipment with freight visibility tools. Freight Right offers customers a free-to-use shipment visibility and document management tool.

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