Along with all the confusing terminology, there are plenty of fees involved with shipping, and it’s important to know what Amazon will charge you for certain sizes and weights so you have all the information you need to communicate with your supplier. Look for a free tool at the end of this post to help you navigate those Amazon fees!
Here’s the good news: once you have a general understanding of the common terms related to international shipping, everything seems easier. Let’s go through these terms one-by-one, so you won’t look like an amateur when you’re communicating with your supplier.
1. Supplier (Seller, Exporter, Consignor, Shipper)
The supplier is also called the seller. They sell the goods you buy. They’re also called the exporter, because they export goods from their country to yours, and the consignor, because they’re consigning the goods to you. They can also be called the shipper because they’re shipping the product.
2. Buyer (Consignee, Importer)
You are the buyer, purchasing goods from the supplier. You’re also the consignee on your Incoterms (which are terms of service or contractual terms you use when coming into a contract to have someone ship something to you). You’re also the importer, because you’re importing something from the supplier’s country to yours.
The terms for supplier can generally be used interchangeably when it comes to shipping, as can the terms for buyer. The supplier and the buyer are the two main parties in the transaction, but there are plenty of other terms that come into play.
The carrier is any company or person who carries the product from one place to another for you. This could be anything from a person literally delivering the product to you by hand, to a truck or airplane, to a large company, such as FedEx, DHL, UPS, or USPS.
4. Freight Forwarder
A freight forwarder can do the work of a carrier, or they can contract it out to a third-party company. The difference between a freight forwarder and a carrier is that the freight forwarder oversees the entire process, taking care of customs documents, the ISF, the entry fee, the bond, and more. In many cases, they manage the whole process, from when the shipment leaves the supplier to the moment it reaches you.
The most reputable and well-known freight forwarders are FedEx, DHL, and UPS. They help book cargo space, negotiate freight charges, manage insurance, and more, organizing the safe and efficient transportation of your goods from point A to point B.
5. Customs Broker
Any time goods go from one country to another, you’re dealing with two different sets of laws, meaning there are documents and applications that will have to be filled out. That’s what customs brokers specialize in. They’ll help you take care of bonds, certificates, and all the other seemingly endless paperwork.
Legally, you don’t need a customs broker, but they make life easier. If you have a freight forwarder, they’ll often have an in-house customs broker to take care of things.
Now, there are several different ways you can ship things: by air, by sea, or by railway (which is much less common). As a rule of thumb, you’ll ship your first shipment of each product by air, even though it’s more expensive. Why? Because air shipping is faster, and you want to get your products up as soon as possible to beat the competition and start making money. When you place a second, larger order of the same product, you can start shipping by sea.
When you ship by sea, there are two kinds of shipments: full container load and less than container load.
6. Full Container Load (FCL)
This means just what it sounds like – your products fill an entire shipping container. In most cases, being able to fill an entire container means you’ll save on shipping costs.
7. Less Than Container Load (LCL)
If your products only fill part of a container, that’s okay, because other companies will just pay for a spot in the same container. However, separating different products for different companies requires additional labor, which means more fees.
Once you’ve chosen a carrier and a freight forwarder and decided how you’re going to ship your product, there are still a few more common terms you’ll need to learn and understand.
8. Ex Works
Ex works is a contractual term that refers to how you’re going to get the product from your supplier to you. It means you’re paying the supplier to build your product and prepare it for pickup at their location, and then the rest is up to you. You have to find a freight forwarder, get it on a ship or airplane, get it into the country, and have it delivered to you. So, basically, ex works means you’re responsible for everything after the product is built and packaged by the supplier.
9. Free On Board (FOB)
This term only applies to shipping by sea, and it means you’re paying your supplier to build the product, get it on board, and get it cleared through customs in their country. After that, you work with a freight forwarder to get the product the rest of the way. It’s easier than ex works, as it takes some of the responsibility off your shoulders.
10. Delivered Duty Unpaid (DDU)
In this situation, the supplier pays for you to have the products you bought shipped, cleared by customs in their country, and dropped off at an airport in your country. DDU means the product will be delivered, but the duties won’t be paid, so you’ll have to show up at the port or pay a customs broker to fill out forms and get the shipment approved to enter the country, which can be a pain.
11. Delivered Duty Paid (DDP)
This method is the easiest of all because it means the supplier takes care of absolutely everything. You still have to pay for shipping and fees, but you’re paying the supplier (or a freight forwarding company) to take care of the details for you. DDP means the supplier prepares your product for shipment, gets it from their country to yours, and has it taken all the way to your warehouse or Amazon’s warehouse. You might have to pay more for this method, but all the behind-the-scenes work will be taken care of for you, which saves you time.
Hopefully, this post clears up some of the mystery surrounding all the terminology involved with international shipping. Unfortunately, terminology isn’t the only complicated thing. Amazon’s fees can get pretty complicated, too. The size and weight of your packages can affect how much Amazon charges you when you want to sell a product through Amazon FBA.
Shipping is already overwhelming enough, so you shouldn’t have to worry about being hit with unexpected fees for the size and weight of your product. Here’s a link to a helpful tool, “Understanding Amazon FBA Fees,” that will hopefully make your life much easier!