Excessive charges for LCL UK handling and deliveries
27th February 2023
It’s essential to know your FOB from your CIF & all other INCO terms when ordering from overseas to help avoid unwanted surprises in the form of unforeseen costs.
Why organising your freight through a UK forwarder can save more than stress
If you purchase from an overseas supplier and they give you a price including Freight charges to the country of destination under CIF / C&F Incoterms, then you need to understand the potential pitfalls on arrival at the discharge port. Typically using these terms an overseas seller undertakes to organise the export shipping arrangements which along with the cost of goods purchased, can seem a much more attractive & convenient option to the buyer versus the imagined hassle of finding your own forwarder with whom to make separate transport arrangements. In many cases the all-in CIF / C&F cost can make the freight transport cost element seem almost inconsequential, a genuine no-brainer!
But if it looks too good to be true....
Many first time importers can however fall into this apparent trouble-free comfort, basing purchasing decisions on the cost of goods and how much to get them to the UK alone, job done or so you’d possibly believe. Use of CIF / C&F Terms however do not include 'to the door’ delivery, handling & customs charges which will also be due following the goods arrival at Port.
Whilst the deal to get the goods to the UK seemed very competitive, once your goods are offloaded from the vessel a series of other events are required prior to your being able to take receipt of the goods. CIF / C&F Shipments are generally consigned to an agent nominated by your supplier’s freight company & the first you usually hear is a notification of pending arrival (NOA) around 7 to 10 days in advance of the vessel docking at port. The NOA is usually accompanied by an invoice for the UK charge element along with a request for instructions to your customs clearance requirements. It’s around this point that you learn that the competitive deal to get the goods to the UK may now not be the bargain you’d envisaged after all. Often prepaid (inclusive) freight rates are quoted ridiculously low albeit usually with reason, in that they’re used for the sole purpose of closing the sale. But you as the consignee have no idea until the shipment is generally dispatched (shipped on board) as to which port the goods will arrive, nor to how or whom they’re consigned. Beware, destination landed costs can be charged at inflated levels & often include non-standard & indescript items that you will be required to cover before goods are released.
It pays to get expert advice
As Freight Manager here at Spatial Global, I often receive calls from businesses who import and are seeking advice on unexpected charges they’d received from third parties. Unfortunately, delivery to the UK under CIF / C&F Incoterms can catch many people out. It may be beneficial to change your purchasing arrangements, use alternative shipping terms or to understand what you can do to mitigate unanticipated costs, either way by consulting with & organising your freight requirements through a reputable UK forwarder you’ll have more control of your shipping.
Trade can be complex, Incoterms are not a mandatory requirement to be included in a sales contract. If a rule is applied it is important that it is used correctly and both parties understand their obligations, costs and risks.