If you’re manufacturing goods abroad, it’s important to assess which options are best for your brand after your goods exit the factory. If you’re a little hazy on the precise meanings of these words, then read on for a primer on freight forwarding, importing and fulfilment.
Freight forwarding options: Freight forwarders are agents who act on your behalf to organise shipments of goods from the seller to you.
Sea or air? When you import goods, you need to choose between fast speed or low cost, and this will depend on a number of things:
- The size and weight of the goods
- Whether they are fragile or valuable
- Where they’re coming from
- How quickly you need them
What you need to get a freight quote:
- A packing list
- The carton dimensions
- The weight and volume
- The pickup or FOB point address
- The final delivery address
FOB vs. CIF: FOB stands for Free/Freight On Board, and CIF stands for Cost Insurance and Freight. FOB means that the factory is responsible for clearing the goods for export and getting to port of departure, after that it is the brand’s responsibility to deliver their goods to the desired end destination. The benefit of FOB is that the brand has more control and transparency over costs and freight.
CIF means the manufacturer is responsible for freight, insurance and costs until the port of destination. It can be a more convenient way to import and seamless due to the factory having established freight partners, but is usually more expensive for the brand.
LCL vs. FCL : LCL stands for Less than Container Load, and FCL stands for Full Container Load. LCL means you can share the container (and costs) with other importers and means you can ship smaller amounts from the custom clothing manufacturers overseas. However, the cost of shipping FCL is lower per unit. FCL also makes delivery easier, as there is no sorting of different shipments at the other end.
Importing: Imports are treated and taxed differently depending on whether they come from within the EU or outside it. Imports from outside the EU mean that you must:
- Pay import duty
- Make a customs declaration
- Pay VAT
- Have an EORI number
Duty tax is due on all imports. This is assessed by the duty rate on your product and the total cost of your order. In order to import from outside the EU, you will need an EORI number. Also, VAT is charged on all imports from outside the EU at the same rate as goods purchased within the UK, and you will have to pay VAT on import duty as well.
Fulfilment: You can save time and automate fulfilment by working with a third party logistics provider (3PL), who can outsource your distribution and fulfilment services and ship your product to the end user or customer. Unlike a freight forwarder, a 3PL offers additional services that a freight forwarder does not.
Flora is Co-Founder of SupplyCompass, a product development and production management platform for fashion brands and manufacturers. She started her career working for an innovation and strategy agency working with the likes of Adidas and L’Oréal. She spent 2 formative years living in Mumbai at the start of SupplyCompass, visiting hundreds of factories and suppliers across the country. She remains passionate about harnessing the power of technology to encourage better collaboration, drive efficiency and make sustainable production accessible to fashion brands and supply chains across the globe.
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