International Freight Shipping

International freight shipping is the movement of commercial goods between countries by air, ocean, truck or a combination of modes. Every international shipment must clear export rules in the origin country and import customs in the destination country, so documentation is as important as transportation. Shipments typically involve several parties: the shipper, the consignee, one or more carriers, a customs broker and sometimes a freight forwarder that arranges the international legs. The right approach depends on how urgent the goods are, how large and heavy they are, where they are going and the terms of sale agreed between buyer and seller.

FCL stands for full container load, meaning one shipper's goods fill or reserve an entire ocean container. LCL stands for less than container load, meaning a shipper's goods share a container with other shippers' cargo. FCL is usually more economical per unit for large shipments and involves less handling, because the container is sealed at origin and opened at destination. LCL suits smaller volumes, but the goods are consolidated and deconsolidated at warehouses, which adds handling and time. Shippers often compare the cost of LCL against a full container once their volume approaches a significant share of one.

Incoterms are standard trade terms published by the International Chamber of Commerce that define the responsibilities of buyers and sellers in international sales. Each term states where the risk passes from seller to buyer, who arranges and pays for transport and insurance, and who handles export and import clearance. Common terms include EXW, FCA, FOB, CIF, DAP and DDP. Incoterms are written into sales contracts and quotes, usually with a named place, such as a port or city. They do not cover payment or ownership of goods, but they determine which legs of the trip each party must book.

FOB, or Free On Board, is an Incoterm used for ocean and inland waterway shipments. Under FOB, the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment, and handles export clearance. Risk passes to the buyer once the goods are on board. From that point, the buyer is responsible for ocean freight, insurance, import clearance, duties and delivery to the final destination. In the United States, FOB is also used in domestic shipping with a different meaning, so contracts should be clear about which definition applies.

DDP, or Delivered Duty Paid, is the Incoterm that places the most responsibility on the seller. The seller arranges and pays for transportation all the way to the named destination, handles export and import clearance, and pays any duties and taxes in the destination country. The buyer's main responsibility is to unload the goods on arrival. DDP is convenient for buyers, but it requires the seller to be able to act as or appoint an importer of record in the destination country. Sellers should understand the duty and tax obligations before quoting on DDP terms.

EEI, or Electronic Export Information, is the export data submitted to the U.S. government through the Automated Export System, known as AES. It includes details such as the exporter, the consignee, the commodity classification, the value, the quantity and the destination country. EEI is generally required for exports above a set value per commodity classification and for any shipment that requires an export license, among other cases. Filing produces an internal transaction number that appears on shipping documents. Carriers may refuse to load freight without proof of filing when it is required, so it should be completed before tender.

An HTS code is a classification number from the Harmonized Tariff Schedule of the United States, used to identify imported goods for customs purposes. It is based on the international Harmonized System, with additional digits specific to the United States. The HTS code determines the duty rate, whether trade agreement benefits apply and whether other agency rules or quotas affect the goods. Classification depends on what the product is made of and how it is used, which is not always obvious. Incorrect codes can lead to wrong duty payments, delays and penalties, so many importers rely on a customs broker for classification.

A customs bond is a financial guarantee that an importer will pay duties, taxes and fees and comply with U.S. customs regulations. It is required for formal entries, which cover most commercial imports above a set value, and for certain other import situations. A bond is purchased from a surety company, either as a single-entry bond covering one shipment or a continuous bond covering all imports for a year. If the importer fails to pay or comply, customs can claim against the bond. Importers who bring goods in regularly usually find a continuous bond simpler than buying one for each shipment.

ISF stands for Importer Security Filing, a requirement for ocean shipments entering the United States. It is often called 10+2, because the importer supplies ten data elements and the ocean carrier supplies two. The importer's data includes the seller, buyer, manufacturer, ship-to party, country of origin, HTS code and container stuffing location, among others. The filing must be submitted before the cargo is loaded on the vessel at the foreign port. Late, inaccurate or missing ISF filings can lead to penalties and cargo holds, so importers usually have their customs broker file it as soon as the shipment is booked.

A customs broker is a licensed professional or company that handles customs clearance for importers and exporters. The broker classifies goods, calculates duties and taxes, prepares and files entries, and communicates with customs authorities to get shipments released. In the United States, customs brokers are licensed by U.S. Customs and Border Protection. Brokers also advise on documentation, trade agreement eligibility and other agency requirements. A customs broker does not usually move the freight itself; that is the job of carriers and, when used, forwarders. Clear and complete documents from the shipper make the broker's work faster and reduce the chance of delays.