A Guide to International Sea and Air Shipping from China

Air freight, the speediest mode of international transportation, is the go-to option for time-sensitive cargo or high-value goods. Compared to ocean freight, air freight offers faster transit times, enhanced security, and greater flexibility in routing. However, it comes at a premium cost.

The air freight shipping process involves several key players:

• Exporter (Seller): The party responsible for preparing the goods for shipment, obtaining export clearances, and delivering the cargo to the airport as per the agreed incoterm.
• Importer (Buyer): The party receiving the goods at the destination airport, handling import customs clearance, duties, and inland transportation.
• Airline: The carrier responsible for transporting the cargo from origin to destination airport.
• Freight Forwarder: A logistics expert who acts as an intermediary, handling documentation, customs brokerage, cargo consolidation, and shipment tracking.

What are Incoterms and Why are They Important in Air Freight Shipping?

Incoterms (International Commercial Terms) are a standardized set of rules published by the International Chamber of Commerce (ICC). These terms define the responsibilities of buyers and sellers in an international trade transaction, including:

• Cost allocation: Who pays for what – transportation costs, insurance, loading/unloading, customs clearance?
• Risk transfer: At what point does the risk of loss or damage to the cargo shift from the seller to the buyer?
• Delivery obligations: Where and how does the seller deliver the goods?

Using incoterms fosters clear communication, minimizes misunderstandings, and helps manage risks for both parties involved in air freight from China.

Different Types of Incoterms Used in Air Freight Shipping from China

Several incoterms are commonly used in air freight shipments from China. Here's a breakdown of the most relevant ones:

• EXW (Ex Works): The seller makes the goods available at their origin warehouse or factory. The buyer assumes all responsibility for transportation, costs, and risks from that point onward. This is the most buyer-centric incoterm.
• FCA (Free Carrier): The seller delivers the cargo to a designated carrier at a specified location, typically the airport terminal. The buyer is responsible for all transportation costs and risks from that point.
• CFR (Cost and Freight): The seller covers the cost of transporting the cargo to the destination airport but does not assume responsibility for insurance or import clearance.
• CPT (Carriage Paid To): Similar to CFR, the seller pays for transportation to the destination airport, but risk transfers to the buyer upon arrival.
• CIP (Carriage and Insurance Paid To): The seller arranges and pays for transportation and minimum insurance coverage for the goods until they reach the destination airport.
• DAP (Delivered At Place): The seller assumes responsibility for delivering the cargo to the agreed-upon place at the destination, typically the buyer's warehouse or terminal. However, the buyer remains liable for import duties and taxes.
• DDP (Delivered Duty Paid): The seller handles the entire transportation process, including import clearance, duties, and taxes, and delivers the goods to the agreed-upon destination. This is the most seller-centric incoterm.

Key Considerations When Choosing the Right Incoterm for Your Air Freight Shipment

The choice of incoterm depends on several factors, including:

• Your level of control: Do you prefer to manage the entire transportation process yourself (EXW, FCA) or have the seller handle some aspects (DAP, DDP)?
• Cost considerations: Are you willing to pay a premium for the seller to handle more responsibilities (DAP, DDP)?
• Customs expertise: Do you have the necessary expertise to handle import clearance yourself (EXW, FCA), or do you need the seller's assistance (DDP)?
• Risk tolerance: Are you comfortable assuming risk for the cargo earlier in the transit process (EXW) or prefer the seller to bear the risk until later (CIP)?

The Role of the Buyer and Seller in Air Freight Shipping with Different Incoterms

The specific responsibilities of the buyer and seller vary depending on the chosen incoterm. Here's a simplified breakdown:

Incoterm	Seller's Responsibilities	Buyer's Responsibilities
EXW	Prepares goods, export clearance	Transportation, costs, risk from origin
FCA	Delivers goods to designated carrier	Transportation, costs, risk from airport terminal

Incoterm	Seller's Responsibilities	Buyer's Responsibilities
CFR (Cost and Freight)	Transportation to destination airport, export clearance	Import clearance, duties, taxes, risk upon arrival
CPT (Carriage Paid To)	Transportation to destination airport, export clearance	Import clearance, duties, taxes, risk upon arrival
CIP (Carriage and Insurance Paid To)	Transportation to destination airport, export clearance, minimum insurance	Import clearance, duties, taxes, risk upon arrival
DAP (Delivered At Place)	Transportation to agreed location, export clearance	Import clearance, duties, taxes
DDP (Delivered Duty Paid)	Entire transportation process, import clearance, duties, taxes	Risk upon delivery

Common Challenges and Risks Associated with Air Freight Incoterms from China

While incoterms offer clarity, navigating air freight from China can present some challenges:

• Incoterm Misunderstandings: Ensure both parties clearly understand the chosen incoterm and their respective obligations. Ambiguity can lead to disputes over costs and risk.
• Hidden Costs: Factor in potential hidden costs beyond the quoted price, such as terminal handling fees, customs inspections, and storage charges.
• Documentation Errors: Incomplete or inaccurate documentation can delay shipments and incur penalties. Double-check all paperwork for accuracy.
• Currency Fluctuations: Lock in exchange rates or consider incoterms that shift currency risk (CFR, CPT).
• Unforeseen Delays: Be prepared for potential delays due to weather, customs clearance issues, or airline disruptions. Build in buffer time and consider insurance.

Tips for Successful Air Freight Shipping with Incoterms from China

Here are some practical tips to ensure a smooth air freight import process from China:

• Clearly communicate your incoterm preference: Explicitly state the chosen incoterm in your sales contract and ensure both parties understand its implications.
• Work with a reputable freight forwarder: A freight forwarder can guide you on incoterm selection, handle complex documentation, and navigate customs procedures.
• Obtain comprehensive insurance: Secure adequate cargo insurance to protect your goods against loss or damage during air transit.
• Track your shipment closely: Utilize real-time tracking tools provided by the airline or freight forwarder to monitor the progress of your shipment.
• Maintain clear communication: Maintain open communication with your seller and freight forwarder throughout the entire shipping process.

Working with a Freight Forwarder to Navigate Incoterms in Air Freight Shipping

A freight forwarder acts as your logistics partner, simplifying the complexities of air freight shipping from China. They can assist you with:

• Incoterm selection: Freight forwarders can advise you on the most suitable incoterm based on your specific needs and risk tolerance.
• Customs brokerage: They handle the intricacies of import customs clearance, ensuring your shipment complies with regulations.
• Documentation management: Freight forwarders ensure all necessary documentation is accurate and complete to avoid delays.
• Cost negotiation: They can leverage their network to negotiate competitive rates with airlines and other service providers.
• Shipment tracking and coordination: Freight forwarders provide real-time tracking and manage communication between all parties involved.

By partnering with a reliable freight forwarder, you can navigate the intricacies of air freight incoterms from China with greater confidence and efficiency, ensuring a smooth and successful import experience.