Chloe’s Sea Freight Experience

One of our readers recently went through the experience of using sea freight to import her new product range. This is something we thought might be of interest to you guys, so Chloe kindly outlined her experience. Please note this is from China to Australia but regardless of your location, we hope you find some valuable take aways. 

My experience with sea freight was importing goods from China to Brisbane, Australia using the customs interactive website (requires a digital certificate) in 2013 (disclaimer!) I do not know what audience would read this but as I was a newbie, I pitch it to this group and just set out the steps I did with some info I learnt along the way. I do not mind if you change/do not include on your website, this is good for me to have as a workflow outline.

My process was as follows:

  • Get details on volume, weight of consignment (shipment), contact details of supplier and terms of sale (in my case, FOB) as well as loading port and discharge port (Brisbane, Australia). Some suppliers have a preferred forwarder, but as I was asked to arrange one, I found my own. There are differences if you are using a full container load (FCL) verse a less than a container load (LCL). The following relates to LCL.
  • Contacted freight forwarders for quote (itemized and also requested insurance – this was needed as some quotes varied by a few hundred dollars. INSURANCE: Some used external brokers for this item The bill of lading covers for a certain amount per kg, but you have to process your application through the country of origin of the carrier. Insurance covers for ‘general average’ – if they had to throw containers overboard in an emergency, you pay a proportion of cost depending on size of consignment relative to total ship cargo – or salvage charges if runs aground/sinks at sea. TRANSIT TIME: Some list total time from loading port to unloading – only if they have their own warehouse. Others list from loading to port – unloading is done by external contractors and can add up to 7 days, best to check which is used in their calculations. There are also fast or slow vessels so there may be an option to specify which – it might just cost more for sea freight. PORT/TERMINAL CHARGES: Some list additional charges not specified on the schedule of fees from the port – query these – for Brisbane port, these charges are listed here: http://www.portbris.com.au/ShippingOperations/PortCharges. CUSTOMS CLEARANCE: This was one charge that was most variable, even if they specified number of lines and extra per line. I chose to do this myself so had to inform the freight forwarder when I agreed to their services; they need to know this upfront so you can receive documentation in time).
  • Arrange freight forwarder to send shipment and confirm with supplier all details (telex release, paperwork, ship information). The freight forwarders will give details on ETA and pre-alert notice. This is used when filling in customs clearance and vessel information (and route of ship) is needed for external insurers.
  • As I was doing customs clearance (I had a digital certificate through Australian Customs so could lodge forms electronically – this takes a while to setup so do this well in advance if you want to do similar), I needed the following documentation from my supplier: Bill of lading (telex/express release in my case, though you can use original – just make sure it arrives quickly so you can fill out paperwork), commercial invoice (helps to have goods and the material detailed on this for tariffs – this is mainly for own use in selecting the tariff classification),packaging list and packaging declaration (stating if there is/is not timber in boxes/pallets/crates – if there is, this may incur more processing time and cost through quarantine – else the supplier has to state it meets the ISPM15 standards).
  • Prior to arrival (or really soon after arrival in port – you are notified of this by your forwarder in an arrival notice), fill out Nature 10 form (N10), submit and lodge it. Answer the AQIS questions correctly (note, the importer is not necessarily accredited to clear an LCL, all customs brokers are, but it will not necessarily mean it will go to quarantine). There is a detailed guide to the N10 form to explain the sections and what is to be filled out: http://www.customs.gov.au/webdata/resources/files/DocumentaryImportDeclarationGuideUpdatedJan2013WEB.pdf. The manual way just costs a bit more and you have to go to the local office for the Australian customs and boarder protection; you MUST have downloaded the form and have details filled in – they only type into the fields, they do not offer advice, especially regarding tariff classifications and preference scheme (TARIFF CLASSIFICATIONS: This is dependent on goods description and material used and is found in the Customs Tariff Act:  http://www.customs.gov.au/tariff/tariff2012.asp. If you do not know this (or if it is difficult in the case when multiple items are packaged together of different materials), it is best to contact the customs but their advice can take up to 30 days to process so you must do this in advance of your goods arriving. You also need to fill in the statistical code so make sure you are paying attention to the italic script in the tariff classification section. Of interest, you can apply for import duty exemption, but this takes over 200 days to get a ruling, and you have to be sure there are no similar products in Australia or the business to refute your request in that time. You also need to be aware of the country PREFERENCE SCHEME for trade agreements – this is also used for import duty calculations). As with all customs documentation, ignorance of the law is no excuse so if you are unsure it is best to use a customs broker for the customs clearance.
  • Send in (either fax or email, if email you pay an electronic processing fee on top of AQIS processing fee + extra charges based on their ruling) bill of lading, commercial invoice, packaging list and packaging declaration to department of agriculture, fisheries and forestry (DAFF, which process quarantine – AQIS) referencing the N10 lodgement ID for tracking. NOTE: This is not an explicit step in the customs flow process, but if it is not processed then your shipment is not cleared and is held at the warehouse – after 3 days storage you then pay for each day per cbm. In addition, weekends are counted as days even if the warehouse is not open and some close at 3:30pm.
  • The forwarder will send you (within a few days of arrival) the ‘outturn report’, which you need along with delivery orders (one with you as consignee, the other as forwarder as consignee).
  • Once all paperwork has been processed, customs will declare your consignment ‘clear’.
  • Pay all duties (depends on tariff code and preference scheme as well as ruling from DAFF) – this can be done at the customs office if processing manually, through your customs broker, by credit card or if you have a digital certificate and previously submitted two forms (at least 5 working days for processing) B320 (direct debit request) and B322 (ICS EFT client authorisation) customs will process this immediately it is cleared.
  • Customs sends you ‘authority of deal’, which may be requested by warehouse when picking up goods. You will need the bill of lading (original or telex release), packaging list and commercial invoice to pick up consignment from the warehouse.

I managed to only pay the following:

1. Insurance, freight and handling charges (the freight forwarders quoted costs), which included:

International Freight
Port Service Charges
Destination Terminal Handling Charges
Delivery Order Fee
CMR Fee
Import Terminal Security Fee
Cargo Automation Fee

2. AUD50 for N10 form processing
3. AUD59 for electronic processing of AQIS documents to DAFF, AUD14 for N10 processing to AQIS and AUD6 for AQIS container charge, and
4. The duties and taxes on my consignment (NOTE: GST is on total of consignment value, import duty on the consignment, insurance & shipping). I did call customs a few times to confirm details, and you do have to be very careful when inputting details into all the forms. I also phoned the forwarder each day to find out where the consignment was at each stage. It is of note that I was told some consignments are grouped together if from the same supplier on the one ship, so duty and taxes will be charged on the total of all of these.

I must admit the self customs-clearance process involved a lot of reading of documentation and forms, so you need to make sure you have enough time to understand what information is needed, and when. As it is reiterated on various documents and recorded messages in wait queues: Ignorance of the law is no excuse (for getting the form/s wrong).

If you have anything you can add then please comment below or email us.