PLH 66 | Incoterms And Transit Times

The biggest thing to know about transit time is the different pieces in the entire timeline chain that we’re looking at. Abby Duffield of Shapiro, a customs brokers and freight forwarder company, says sometimes when you’re looking at a quote, more often than not, when it hits the transit time, it’s talking about the port to port transit time. If you’re looking at a transit time for the sea and air shipment, that transit time is going to be from one port to the other. It might say two to three days. That doesn’t mean that your entire shipment is going to take two to three days, it’s going to take longer than that. You want to make sure that you’re planning out fully what the entire scope of this time is going to bring. Learn more about Incoterms and transit times as Abby breaks it down a little bit more.

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This is Abby Duffield. I am with a company called Shapiro, which is a customs brokers and freight forwarder, and we’re going to talk about Inco terms and transit times, what to know about Inco terms and transit times. 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 eCommerce solutions are handled. 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 the transit time on there, it is talking about the port to port transit time. We have the loading port of Sydney, Australia. We have the unloading port of Chicago, Illinois in the US. If you’re looking at a transit time for the sea and air shipment, that transit time is going to be from one port to the other. It might say two to three days. That doesn’t mean that your entire shipment is going to take two to three days, it’s going to take longer than that. You want to make sure that you’re planning out fully what the entire scope of this time is going to bring.

We’re going to keep breaking this down a little bit more. This first process here is called the onboarding process. That onboarding process for air takes about three to five days and for ocean, it takes about seven to ten days. What that includes is picking up from your supplier’s door and taking it to the port for loading. If it’s going to go on to an ocean vessel, it’s going to be picked up on a truck, taken to a warehouse there in 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 error. It can depend. You’re looking at there are slow, medium and fast transit times. Fast, being usually the most expensive and has the quickest transit in the air, about a day. Slow, being it’s going to take a stop over here and it’s going to take a stop over here. It’s going to be more cost effective but it’s going to take longer. Air tends to be more expensive than ocean anyway, if you want it to get there fast. You want to make sure you’re looking at the best timeframe for the cost. Ocean, it depends. West Coast usually from Asia, you’re looking at about fifteen 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 is just that port to port time. This isn’t including the onboarding section. On the last section we’re going to talk about delivery. If you’re looking to get something very quickly, make sure you’re letting your forwarder know, “These are my windows, this is my timeframe,” and they’ll try to work with you to get that solution.

PLH 69 | Incoterms And Transit Times

Incoterms And Transit Times: Delivery depends on what you need.

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 eCommerce shipments, especially stuff going to Amazon. 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’s handling the rework, what they have availability for, how quickly they can do it and then ended up appointment going to the eCommerce facility. Doors of the supplier, port of loading, port of unloading, door for delivery. We’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’s 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 see, the vessels been delayed two days. That has happened. Keep in mind for weather delays. There are congestion delays as well. When a trucker goes to the port, this happened a couple of years ago in LA, LA is completely backed up because there’s a strike that’s going on with the longshoreman. Trucker can’t pick up the container. It takes weeks to pick something up. That’s a delay. That’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 USB have their own holidays. You could experience supply chain issues in terms of who can handle what service depending on if they’re open or close or not because of the 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 it can take a variety of time. Taking from a day to a couple of weeks, depending on how severe it is. Things to keep in mind for delays. 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 of when you want to get something in. In order to do that and know what that buffer time is, you need to make sure you’re telling your freight forwarder, what you’re looking for with your timelines and expectations.

It is so crucial to make sure that they know that information. Let’s say 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. You say, “I want my shipment to get into where I want it to go by December first, no later.” You let your forwarder know that and they’re giving you options for the quote. They might come back and say, “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.” Your forwarders should be willing to work with you about what those timelines are, what their expectations should be, for when things should get in.

Adding in buffer time will help you when you're making a plan. Share on X

Keep in mind that extra services take time. If you need something like rework, labeling, if something’s got to be opened up and process 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 keep 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 with the more money it’s going to cost. It’s better to plan in advance the way you can have the most cost-effective option. While the timeframe 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 is not going to hurt you. Incoterms matter. We’ve talked about the different parts of the door, port to port and then back to the door, on for the delivery.

The reason that I bring that up is that who is handling what in your shipment comes down to the Inco terms or who is handling the move from the door to the port can define different pieces about your shipment and what that timeframe is going to be. Incoterms or international shipping terms that define who the buyer and the seller. 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 there is. It’s stating who is responsible for the risk or the cost at different stages in the shipping process. I’ve got a couple of terms that are listed. Ex works has a very small amount of responsibility with the seller. What they all have to do is take care of packaging and the rest of the responsibility goes with the buyer, which would be the importer. 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 forwarder is 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, the more responsibility you’re giving to your seller is 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.

PLH 69 | Incoterms And Transit Times

Incoterms And Transit Times: FOB is a good mix between being cost effective and having good control.

Let’s move over to FOB as that might help to make this a bit more understandable. FOB is a good mix between being cost effective and having good control. It means that your seller is taking care of not only the packaging but the export clearance and getting the goods moved to the port. They’re taking care of the move from their door to the port. If you’re taking care of the Ex 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 taken 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 into the port for something like that, it may take them an extra five to ten days for that to get to the port.

Then we’re looking at which shipment it can go on next and have we missed our timeframe. 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. 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, that main part of the shipment, we 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 fifteen days to the West Coast, we’re going to have it be 25 days to the West Coast. We’re going to 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 here with was that cheaper rate.”

When you give it to the seller entirely, you’re looking at those DDP terms where the seller gets to dictate everything about the shipment. You don’t have any control on what those transit times are going to be unless you have a very good relationship with your supplier. That comes with many asterisk disclaimers. You may feel like you have a good relationship with a supplier and I hope that you do, that you’ve done your due diligence and you’re vetting, but I always caution against taking things out of your control and giving that to someone else.

The last thing that I have here might help you in terms of making sure that you’re armed for 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. 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 weeks, let’s say in fifteen 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.

You should be looking at what your estimated times are versus what your actual times are. Share on X

From my experience, if I have an estimated time of your shipment is going to leave on Friday and you’re like, “Did it leave on Friday?” I’m like, “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, “There’s this weather delay, there’s this export clearance delay, there’s this thing happening, or yes, it’s left.” That becomes your actual time. You should be looking at what’s your estimated times are versus what your actual times are. If your forwarder says it’s going to take fifteen days to get to the US but it actually takes twenty, you want to assess the data and see what’s going on. There are 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. We’re going to focus just in the US for this one. Customer’s release can be done five 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 customs clearance is going to be on Friday and then you, over the weekend and you have a great week and you come back, you see that the customs clearance was not sent on Friday and you’re like, “What is going on?” You go back, you talked to them, they give you some answer. It happens a couple of days later. You find out that your supplier gave the document that your broker needed for clearance late, so your broker wasn’t able to do it on Friday. Then you can go back to your supplier and say, “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 and entry goes in on Friday. You get clearance in advance and you’re all set to go. Using those estimates versus actuals and see what that data can tell you about the narrative of your shipment, about the different pieces that go into making the shipment runs smoothly is very important.

What we do at Shapiro is we’ve got a tracking system called Shapiro 360 that let you see everything, but it also gives report cards. One of my favorite things that I see us doing and some other freight forwarders do it, we’re giving report cards about how are we doing in terms of hitting these estimated times versus the 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 that data can’t lie. You can have a good phone call conversation with somebody and understand what’s going on, but that data’s going to tell you the real story.

The last bit is make sure that when you’re looking at this data, you’re using it to anticipate future time hurdles. All of what we’re doing is planning for stuff in advance. If your shipment’s going to be moving some time around, let’s say November when Thanksgiving happens, rail’s going to shut down during Thanksgiving. Air shipments. They’re going to be moving but the areas that will be handling their clearance or they’re moving, that’s the airport. They might be on holiday or you can’t get hold of somebody because of the holidays. You want to have that timeframe anticipated early to add in some extra buffer time around that.

PLH 69 | Incoterms And Transit Times

Incoterms And Transit Times: As soon as you get anywhere close to the holidays, you should be adding in some more time to take in mind.

As soon as you get anywhere close to the holidays, you should be adding in some more time to take in mind. We’ve got our door to door, we’ve got our port to port. We know what we’re looking for in our quotes in terms of that transit time and we’re planning to make sure that we’ve also included the onboarding process and the delivery process. We’re also making sure that we’ve got good Inco terms 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.

If you’ve got any questions, you know where to find me. I’m at Ecom@Shapiro.com. It’s been great talking with you all. I hope that you’ve all learned something and that you’ve had a great time learning more about transit times and Inco terms. Thanks so much.

Tune in to Abby Duffield next Office Hours. Connect with and find out more about Abby Duffield in our Experts Directory.

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