Shipping Incoterms And Transit Times with Abby Duffield

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Hello, this is Abby Duffield. I am with a company called Shapiro, which is a customs broker and freight forwarder. And today we're going to talk about incoterms and transit times. Hope everybody's having a great day as we kind of go over this together. Okay, so what to know about incoterms and transit times. First off, a little quick recap on my company. Shapiro is a customs broker and freight forwarder. We're located in Baltimore City, Maryland. We've been in business for over 100 years. We focus on compliance, good customer service, and making sure that your e commerce solutions are handled. All right, the biggest thing to know about a transit time is what are the different pieces in the entire timeline chain that I'm looking at? And so sometimes when you're looking at a quote, more often than not when it hits a transit time on there, it is talking about the port to port transit time. So you'll see on the PowerPoint here is that we have the loading port of Sydney, Australia. We have the unloading port of Chicago, Illinois in the U.S. so if you're looking at a transit time for, let's say, an air shipment, that transit time is going to be from one port to the other. So it might say two to three days. It doesn't mean that your entire shipment is going to take two to three days. It's going to take longer than that. So you want to make sure that you're planning out fully what the entire scope of this timeline is going to be. We're going to keep breaking this down a little bit more. All right, so this first process here that we're starting off with is really called the onboarding process. And that onboarding process for air takes about three to five days. For ocean takes about seven to 10 days. What that includes is picking up from your supplier's door and taking it to the port for loading. So if it's going to go onto an ocean vessel, it's going to be picked up on a truck, taken to a warehouse near the port, loaded into a container. Then that container gets loaded into the vessel for an air shipment. It's very similar. It's getting picked up from your supplier's door Taken to the airport, loaded into the belly of the airplane and then it's taking off. So that loading time, depending on when your supplier has the cargo done, when they have availability for the pickup, that can take three to five days or seven to ten days for ocean. Next part is the transit time. That's what's listed on your quote. Usually for air, it can depend you're looking at there are slow, medium and fast transit times. Fast bean, usually the most expensive and has the quickest transit in the air about a day. Slow beans. Well, it's going to take a stop over here and it's going to take a stop over here. Going to be more cost effective, but it's going to take longer. Which air tends to be more expensive than ocean anyway. And you want it to get there fast. So you want to make sure you're looking at the best time frame for the cost. Ocean, it depends. West coast from, usually from Asia, you're looking at about 15 days from Asia to the West Coast. If you're looking from Asia to the east coast, that usually takes anywhere between 30 to 35 days. And this again is just that port to port time. This isn't including that onboarding section or the last section. We're going to talk about delivery. So if you're looking to get something very quickly, make sure you're letting your forwarder know, say, hey, these are my windows, this is my time frame. And they'll try to work with you to get that solution. Okay, last part. Delivery. Delivery depends on what you need. If it's going directly to your warehouse and it doesn't need to have any rework, the move for the delivery should take about three to five days. That includes the trucker going to the port, picking up the cargo and then taking it to the warehouse and scheduling what that appointment may be for delivery if rework is required, which we do see a lot for E Commerce shipments, especially stuff going to Amazon. So if you need palletizing, if you need labeling, that's going to take longer. It's going to depend on what the trucker or the warehouse, whoever is handling the rework, they have availability for how quickly they can do it. And then that appointment going to the E Commerce facility. Okay, so quick review. Door as a supplier, port of loading, port of unloading, door for delivery, you're looking at a quote. You're mainly looking at that port to port portion. Make sure you're taking into account that onboarding and that delivery. Other things to keep in mind when you're making your Timeline, there are always going to be delays, whether it's going to be weather, which it could be weather, like there's fog around the vessel before it leaves. The vessel can't leave because the captain can't. The vessel's been delayed two days. That has happened. So keep in mind for weather delays, there are congestion delays as well. So when a trucker goes to the port, this happened a couple years ago in la. Trucker goes to the port. Louisiana is completely backed up because there's a strike that's going on with the longshoremen. Trucker can't pick up the container. It takes weeks to pick something up that's a delay. It's something that you can't necessarily expect either. But you can help mitigate that time by adding in some buffer time, which I've got as another point that's here. Keep in mind about holidays. Not only holidays that are in the country of destination, but from the country of origin, too. China has a slew of holidays that they like to go through the US we have our own holidays. You could experience supply chain issues in terms of who can handle what service, depending on if they're open or closed or not because of a holiday. The last one there for delays is customs exams. There's a variety of customs exams. I'm not going to go down the rabbit hole with how many that there are and how long they take. But. But it can take a variety of time, taking from a day to a couple of weeks, depending on how severe it is. So things to keep in mind for delays. Like I said, adding in buffer time will really help you when you're making up this plan. I usually say personal note, about a week, seven days extra on that plan time when you want to get something in. But in order to kind of do that and know what that buffer time is, you need to make sure you're telling your forwarder, freight forwarder, what you're looking for with your timelines and expectations. It is so crucial to make sure that they know that information. Because if you were trying to hit a window, or let's say Christmas, Christmas is a huge one. You're trying to hit a window for Christmas. You want to start looking at shipping by at least September, October, no later than November. If you're looking to do an ocean shipment in November, you're probably already going to be too late. So the earlier the better. And you say, you know what? I want my shipment to get in to where I want it to go by December 1st, no later. You let your forwarder know that and they're giving you options for the quote. They might come back and say, you know what, the lanes that we're looking at, the transit times that we're looking at, they're not going to meet that deadline. Let's do part of this as an air shipment and part of this as an ocean shipment. So your forwarders should be willing to work with you about what those timelines are, what those expectations should be for when things should get in. Keep in mind that extra services take time. So if you need something like rework labeling, if something's got to be opened up and processed differently, that's going to take extra time, probably during the delivery portion or maybe at origin, depending on when you need it to be done. So keeping that in mind, at the end of the day, this all comes down to time versus money. The faster you want something to get to where it's going to go, the more money it's going to cost. It's better to plan in advance. That way you can have the most cost effective option. While the time frame may not be the shortest because Ocean usually takes a lot longer, the cost for Ocean is much more cost effective. And if you plan it right, that time isn't going to hurt you. Incoterms matter. So we talked about the different parts of the door, port to port and then back to the door when for the delivery. And the reason that I bring that up is that who is handling what in your shipment comes down to the incoterm. So who is handling the move from the door to the port can define different pieces about your shipment and what that time frame is going to be. So just to do a quick review, incoterms are international shipping terms that defy who? The buyer, the seller. So the buyer is usually you as the importer of record. That's going to be you as the buyer. And the seller is usually a supplier that's overseas. It's stating who is responsible for the risk or the cost at different stages in the shipping process. So I've got a couple of terms that are listed down here, Exworks, which is the very first one you'll see on the column that's furthest to the left on the image that I've got over here. X Works has a very small amount of responsibility with the seller that all they do is take care of packaging. And the rest of the responsibility goes with the buyer, which would be the importer. So what this means is that all the seller has to do is make sure that the shipments are Ready to go. They are not moving anything to the port. It's staying at the door, which means that you as the buyer, you're taking care of the full move from door to door. You're picking it up from them, you've hired somebody, your forwarders taking care of it. So you have the most control. But it might not be the most cost effective as you are looking at giving more responsibility to your seller. So looking at FOB terms, looking at CIF terms, more responsibility you're giving to your seller, the less control you're going to have over your shipment, because there's more and more that you're letting your seller dictate in terms of those transit times. So let's move over to FOB real quick as I think that might help to make this a bit more understandable. So FOB is a good mix between being cost effective and having good control. With that, it means that your seller. So we're about four rows over here where it says FOB free on board. Your seller is taking care of not only packaging, but the export clearance and getting the goods moved to the port. So they're taking care of the move from their door to the port. So if you're taking care of the X works means that you're taking care of the move from the door to the port. You get to dictate how quickly your trucker is going to get there to pick up from your supplier to get it to the port. If the supplier is taking care of that portion, you can work with them, but depending on your relationship with them and the resources that they have available, it may take them more than seven to ten days to get something to the port. For something like that, it may take them an extra five to ten days for that to get to the port. And then we're looking at which shipment can it go on next? And have we missed our time frame? So FOB is usually good if you've got a good supplier that you're working with and that can be coordinated with the agent that you're using as your forwarder and your supplier overseas. But as we continue down this chain of what more can I have my supplier handle? What less can I do if you're having your supplier take care of the ocean or the air shipment? So that main part of the shipment, we actually call it main carriage. If you look at the incoterms here, if you have them take care of that, they're going to dictate when that transit time is going to be. They're going to say, instead of 15 days to the west coast, we're going to have it be 25 days to the west coast. We're going to have it take a slower route to where it's going to get to because it's going to be cheaper. And that's what we lured our customer care with, was that cheaper rate. And when you give it to the seller entirely, you're looking at those DDP terms, so the seller gets to dictate everything about the shipment. You really don't have any control on what those transit times are going to be unless you have a very, very good relationship with your supplier. That comes with many asterisk disclaimers. By the way, you may feel like you have a good relationship with supplier, and I really hope that you do that. You've done your due diligence in your vetting, but I always caution against taking things out of your control and giving that to someone else. But the last thing that I have here might actually help you in terms of making sure that your arms, whatever possibilities coming your way. That is data. Data is your best friend. No matter who you're using to ship your product, you should be collecting data about your supply chain and your transit times. So what this means is when a forwarder or whoever you're having handled the shipment, when they're giving you data, they're going to be giving you estimated times. We estimate that it's going to get onto the vessel next Tuesday. We estimate that it's going to get into the US in a couple of a week, let's say in 15 days. Those aren't actual times. And it's going to be difficult to pin something down on somebody until that shipment has moved past that milestone. So I'll say from my experience, if I have an estimated time of your shipment is going to leave on Friday, and you're like, well, did it leave on Friday? I'm like, well, no, I can't say that because it's not Friday yet. I can't say whether or not it's left. But once it is Friday, let's say it hasn't left for some reason, the forwarder should be coming to you saying, you know, there's this weather delay, you know, there's this export clearance, like, you know, there's this thing happening, or yes, it's left, that becomes your actual time. So you should be looking at what your estimated times are versus what your actual times are. If your forwarder says it's going to take 15 days to get to the US but it actually takes 20. You want to assess the data and see what's going on. There's a couple of things that you can identify as issues with your timeline by looking at the data. One of the main ones is the customs release in the US I'm going to focus just in the US for this one. So customs release can be done 5 days in advance of the shipment coming into the port for the US Meaning that you can have a customs clearance before the vessels even hit land. Let's say that your broker says the estimated time for the customs clearance is going to be. I'm going to stick with Friday because I like Fridays. It's going to be on Friday. And then you, over the weekend, you have a great weekend. You come back, you see that the customs clearance was not actually sent on Friday. And you're like, what is going on? So you go back, you talk to them, they give you some kind of answer. All right? You wait. It happens a couple days later, you find out that your supplier gave the documents that your broker needed for clearance late. So your broker wasn't actually able to do it on Friday. So then you can go back to your supplier and say, hey, I need you to tighten up this timeline for me because I've got to hit this milestone. Next shipment comes around, broker says it's going to be done on Friday. Suppliers already got the documentation in. Entry goes in on Friday. You get clearance in advance, and you're all set to go. So using those estimated versus actuals and seeing what that data can tell you about the narrative of your shipment, about the different pieces that go into making the shipment run smoothly, is very important. What we do at Shapiro is that we've got a tracking system called Shapiro 360 that lets you see everything, but it also gives report cards. One of my favorite things that I see us doing and some other freight forwarders doing is that we're giving report cards about how are we doing in terms of hitting these estimated times versus these actual times. If your forwarder is able to do something like that for you, I highly recommend looking after it and looking into what this data is. Because at the end of the day, if the data can't lie, you can have a good phone call, conversation with somebody and understand what's going on, but that data is going to tell you the real story. The last bit is make sure that when you're looking at this data that you're using it to anticipate future time hurdles. So all of what we're doing is planning for stuff in advance. If your shipment is going to be moving sometime around, let's say November, when Thanksgiving happens, rail is going to shut down during Thanksgiving air shipments, they're going to still be moving, but the areas that will be handling their clearance or their moving. So the airport, they might be on holiday or you can't get ahold of somebody because of the holidays. You want to have that time frame anticipated early to add in some extra buffer time around that. As soon as you get anywhere close to the holidays, you should be adding in some more time to take in mind. So we've got our door to door, we've got our port to port. We know what we're looking for for our quotes in terms of that transit time. We're planning to make sure that we've also included the onboarding process and the delivery process with that, we're also making sure that we've got good incoterms that are going to give us control over our shipments. We can control our transit times and using that data that we're getting from our freight forwarders to make sure that we're hitting all of those timeline milestones that we want to to make sure that our shipment is going where we need it to go, when we need it to go. All right, if you got any questions, you know where to find me. I'm@ecommapiro.com it has been great talking with you all today. I hope that you've all learned something and that you've had a great time learning more about transit times and eco terms.

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