Shipping

To/From Asia
What you need to know

Includes Covid-19 Advice

OMING U
Introduction 01

Shipping Transit Times 03

Main Ports In China, India & Vietnam 07

Recommended Incoterms 13
Exports To Asia

Imports From Asia

Ocean Freight Documents 23

Standard Documents

Country-Specific Documents

Customs Duties 29

Covid-19 Impact on Ocean Freight 38

Advice for Shippers

Conclusion 43
Introduction

As a commercial gold mine, there’s much that importers and

exporters worldwide can benefit from when conducting trade with Asia.

For starters, the region’s high productivity rate offers importers cost efficiency
and provides a level of commercial competitiveness that’s unbeatable.

Plus, the pace of exports to China and India, the two most populous nations,
has been growing in parallel with the increasing demand and consumption in
these markets.

But trading with Asia does not come without risks.

There are certain aspects that importers and exporters must pay extra attention
to so that the process is smooth and complication-free.

In other words, it’s to ensure your international sale is as profitable as possible

by preventing delays and any resulting extra fees.

Despite the logistical complexities involved, there are countless benefits

that can be reaped from doing trade with Asia.

In this guide, we will equip you with essential knowledge needed to manage
your ocean freight to and from Asia with specific focus on shipments to and
from the US.

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More specifically, we’ll dive deep into the following aspects:

Shipping transit times to and from Asia

Main ports in China, India, and Vietnam

Recommended Incoterms

Ocean freight documents

Customs Duties

Impact of the coronavirus on ocean freight shipments

2
Transit Times

3
One of the most important factors to consider when planning an ocean freight
shipment to and from Asia is the shipping transit time.

These are the average shipping times for shipments to countries in the Far East
and Southeast Asia such as China, India, and Vietnam.

From US West Coast: 34 days

From US East Coast: 2 days

While these are estimations you can use to plan your shipment between the US
and Asia, keep in mind that actual shipping times may differ depending on the
number of transits, the ports of origin and destination, the shipping line,
and whether it’s an export or import.

Transit time from US to asia

Origin Destination Avg. Transit Time

(Days)

Los Angeles Shanghai 21

New York Shanghai 44

Los Angeles Chennai 42

New York Chennai 53

Los Angeles Da Nang 39

New York Da Nang 58

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Transit time from asia to us

Origin Destination Avg. Transit Time

(Days)

Shanghai Los Angeles 21

Shanghai New York 44

Chennai Los Angeles 42

Chennai New York 53

Da Nang Los Angeles 39

Da Nang New York 58

5
Main Ports
In China,
India &
Vietnam

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Though it may seem more straightforward to ship your merchandise to the port
closest to the cargo’s final destination, that may not always be the
most convenient option.

Be it for financial or logistical reasons or maybe you prefer to go with a carrier

that offers shorter transit times, other ports may be more attractive.

Here are some of the main ports in China, India, and Vietnam.

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1. Port in Shanghai

Currently the biggest port in China and the world, developments at the port of
Shanghai in recent years have been astounding.

In 2020, the port reorderd 43.5 million TEUs mark, which is

staggering considering that the port had a handling capacity of less than
8,000 TEUs when it first started operations around 40 years ago.

As a gateway port for the Yangtze River Delta, the Port of Shanghai is also
home to the largest automated container terminal in the world.

2. Port in Shenzhen

Known as the gateway to the Pearl River Delta and Hong Kong, the Port of
Shenzhen connects China’s southern hinterland to pretty much the rest of the
world.

It’s located in Guangdong Province and spreads out over 260km of

the coastline. Approximately 560 ships call at the port every month, covering
over 130 international container routes.

3. Port in Ningbo-Zhoushan

The Port of Shanghai may be the first to handle more than 40 million TEUs per
year, but it’s the Port of Ningbo-Zhoushan that holds the crown for being the
first port to handle one billion tonnes in cargo throughput in a calendar year.

It lies at the crossroads of the Silk Road Economic Belt and the 21st Century
Maritime Silk Road, making it one of the busiest ports in China. Additionally, its
242 sea routes link to over 600 harbors globally.

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Main Ports In india

1. Port in Nhava Sheva

Also known as Jawaharlal Nehru Port, the Port of Nhava Sheva is located to
the east of Mumbai. It is currently the largest seaport in India, measuring 680
meters and has three berths. It handles more than 10 million TEUs per year,
which is 55.81% of all the total container traffic in India.

2. Chennai Port

The Port of Chennai is the second largest commercial seaport in India. Formerly
the Port of Madras, it is aspiring to become a hub on the east coast of India.
Besides being a stop for cruises, it is also home to three container terminals
and its own rail facilities to service more than 60 million annual tons of cargo
that run through its premises.

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Main Ports In vietnam

1. Port in Da Nang

Da Nang Port is located at the mouth of the Han River on the South China Sea
and is currently the third-largest port system in Vietnam.

Despite the coronavirus pandemic, the port has grown to handle

approximately 11.4 million tons of cargo in 2020. This represents a 15%
increase over 2019.

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2. Port in Haiphong

The Port of Hai Phong is the leading sea port in northern Vietnam and consists
of a port group in Haiphong City. It currently offers cargo handling, tallying,
and warehousing, among other services.

The port system will be able to handle ships of up to 30,000-40,000 DWT

when future development is complete.

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Recommended
incoterms

12
Recommended incoterms

For Exports to Asia

Incoterms are three-letter trade terms established by the International Chamber

of Commerce (ICC) that determine the responsibilities of the importer and

exporter during cross-border trade.

Of the 11 Incoterms established in the latest edition (Incoterms 2020), not all

are equally competitive in costs and neither do all offer the same risks for the

exporter.

Here’s a summary of the main recommended Incoterms for your exports to

China, India, and Vietnam.

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CPT Incoterm (Carriage Paid To)

The CPT Incoterm states that the exporter is responsible for delivering the
goods to the carrier and must bear the transportation costs of the goods to the
agreed upon destination. However, insurance costs fall under the responsibility
of the buyer.

Under CPT, risk is transferred when the goods are surrendered to the carrier at
origin.

Exporter's obligations under CPT

Delivery of goods and documents required

Packaging and wrapping

Inland transport in the country of origin

Customs at origin

Exit charge

Internation freight

Pros and cons of CPT

Very cost competitive

Low risk for exporters

Recommended for payments with the Letter of Credit

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CIP Incoterm (Carriage and Insurance Paid to)

The CIP Incoterm indicates that the exporter is responsible for the cost and
freight of bringing the goods to the carrier. Unlike CPT, the exporter is
responsible for providing insurance. Under CIP, risk is transferred when the
goods are surrendered to the carrier at origin.

Exporter's obligations under CIP

Delivery of goods and documents required

Packaging and wrapping

Inland transport in the country of origin

Customs at origin

Exit charge

International Freight

Insurance

Pros and cons of CIP

Very cost competitive

Low risk for exporters

Recommended for payments with the Letter of Credit

Because the seller provides insurance, this makes CIP cost competitive for
the buyer and gives the seller the upper hand when negotiating

You may find more information about CIP here.

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DDP Incoterm (Delivered Duty Paid)

Under DDP, the seller bears full responsibility for all costs and risks until the

goods are unloaded at the agreed-upon location.

Exporter's obligations under DDP

Delivery of goods and documents required

Packaging and wrapping

Inland transport in the country of origin

Customs at origin

Exit charge

International Freight

Insurance

Arrival expenditures

Customs on arrival

Payment of fees

Inland transport at the destination country (depending on agreed location)

Pros and cons of DDP

Very cost competitive

Inland transport at the destination country (depending on agreed location)

You may find more information about DDP here.

16 4.
DAP Incoterm (Delivered at Place)

Under DAP, the seller must make the goods available to the buyer at the
buyer’s chosen location.

However, the seller is not responsible for unloading the goods from the carrier
at the destination location, or for any customs duties, tariffs, or taxes that may
apply during the delivery

Exporter's obligations under DAP

Delivery of goods and documents required

Packaging and wrapping

Inland transport in the country of origin

Customs at origin

Exit charge

International Freight

Insurance

Arrival expenditures

Inland transport at the destination country (depending on agreed location)

Pros and cons of DAP

Very cost competitive

Inland transport at the destination country (depending on agreed location)

You may find more information about DAP here.

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Recommended incoterms

For Imports From Asia

Importers and exporters will always want to select the Incoterm that offers

more control and less risk.

However, the way Incoterms work is that they pit the exporter and importer

against each other because whatever Incoterm is competitive for one means

it’s less so for the other.

That’s why it’s very important to know what Incoterms to use when importing

from Asia. For instance, while the CIP Incoterm is a very safe Incoterm

for exports, it is very risky for imports from Asia. More on this later in this

section.

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FCA Incoterm (Free Carrier)

Under FCA, the exporter delivers the cargo to the carrier at origin, ready for
international transport with all formalities taken care of.

As the importer, you are in charge of hiring the international shipping services.
This gives you absolute control over all related expenses and coordination of
delivery to your storage or warehouse at destination.

Importer's obligations under FCA

Cost of the goods

International freight

Insurance

Arrival expenditures

Customs upon arrival

Inland transportation in the destination country

Payment of fees

Pros and cons of DAP

Very cost competitive

Low risk

You may find more information about FCA here.

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EXW Incoterm (Ex Works)

When importing under EXW, you are in charge of picking up the merchandise
from the seller's warehouse (or another agreed upon location). From then on,
you are responsible for all costs.

Importer's obligations under EXW

Payment of goods

Inland transportation in the country of origin

Customs at origin

Exit charge

International freight

Insurance

Arrival expenditures

Customs on arrival

Inland transportation at the destination country

Payment of fees

Pros and cons of EXW

Very cost competitive

High level of risk and responsibility

You may find more information about EXW here.

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IMPLICATIONS OF IMPORTING FROM CHINA UNDER CIP

FCA and CIP have become very popular Incoterms for imports and many
first-timers importing from China often favor the latter.

Under CIP, importers only take control of the cargo at destination and from an
agent. Many novice importers find this option advantageous because they are
relatively free of responsibility. Furthermore, suppliers in China often offer
lower prices if buyers agree to CIP.

However, there’s a hidden catch that can result in complications and much
higher costs for the importer.

Prior to the handover, destination agents often request for the importer to pay
destination fees.

While this is common practice, what we’ve seen with certain CIP shipments is
that some destination agents take the opportunity to charge and inflate their
own fees (handling fees, exit fees, entry fees, etc.) and refuse to release the
cargo until payment is made.

This can result in importers paying as much as five times the market rate of
these fees.

Because the agents are listed as the consignees on the Bills of Lading,
they have legal control over the cargo and most importers end up having
to comply to retrieve their cargo.

As a rule of thumb, unless you are dealing with a seller or agent you can trust
or have an agreement that allows you to list yourself as the consignee, it is best
to avoid importing from China under CIP and go with FCA instead.

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Ocean
Freight
Documents

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Shipping an ocean freight shipment from one point to another may, in concept,
appear straightforward. In reality, it’s anything but.

Many often say ocean freight is synonymous to documentation. From cargo

handlers on the ground, be it at the warehouse or port, to those processing the
shipment such as freight forwarders and customs officers, there are numerous
players involved in sending an international shipment.

To further complicate matters, each of them has its own processes

and protocols, which means a mesh of different types of forms
and documents.

In this section, we’ll go through the most important shipping documents you’ll
need for your ocean freight shipment to and from Asia.

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Bill of Lading

By and far, the Bill of Lading is the most important in ocean freight shipping. It
acts as a contract of carriage between the shipping company and the cargo
owner and is issued by the shipping line to confirm that it has received the
cargo and will be transporting it on board its vessel.

Pay special attention to the Bill of Lading as even a minor mistake can cause
lengthy delays and hefty fines. We recommend reading our in-depth guide on
the Bill of Lading to understand its different types and how to fill it out properly.

Power of Attorney (POA)

This is a document that authorizes your customs broker to handle customs

proceedings such as payments and forms on your behalf.

Your freight forwarder will provide you with this document, which you will have
to complete and return together with a copy of your identification.

Note:

The POA must be signed by an authorized representative of the company.

For more information, check out our article on the power of attorney.

Packing List

The packing list is a clear and detailed inventory of the merchandise you are
shipping. Its objective is for those handling the cargo, which is everyone from
your freight forwarder and trucking company to customs agent and carrier, to
know the nature of the goods they’re dealing with without having to physically
verify them.

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Packing List (Contd.)

Getting your packing list right is absolutely vital because the information may
be used to generate the Bill of Lading.

For more information, check out our article on the packing list

Commercial Invoice

The commercial invoice is a legal document that details the merchandise being
transported and the sale price agreed upon between the buyer and the seller.

The information listed on a commercial invoice is very similar to that on a

packing list but they serve different purposes and both need to be submitted.
When preparing these documents, make sure that all information on them
correspond.

COUNTRY-SPECIFIC DOCUMENTS

Aside from the Bill of Lading, packing list, and commercial invoice, additional
shipping documents may be required depending on many factors, two of
which include the nature and the destination of your goods.

In this section, we’ll briefly talk about some of the specific import documents
needed when shipping to the US, and Asia’s biggest two countries, China and
India.

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United States
Importer Security Filing (ISF)

Also known as a “10+2”, the ISF is required by the US Customs Border and
Protection (CBP) for all goods entering the US. The cargo owner is the party
responsible for submitting this document and must do so at least 24 hours
before cargo arrival or face a $5,000 fine.

China
China Compulsory Certification (CCC)

The China Compulsory Certification is a document that ensures that contents of

the shipment conforms with the safety and quality guidelines set out by the
Chinese government.

It is mandatory for products in over 132 categories that China imports.

Approximately 20% of US exports to China require this.

Note: CCC applications can take up to 90 days to process so verify whether

it’s required for your shipment as soon as possible.

India
No Objection Certificate (NOC)

If you’re shipping used electronics to India, a No Objection Certificate (NOC)

must be obtained from the Ministry of Environment and Forest. Note that this
falls under the responsibility of the importer.

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Pre-Shipment Inspection Certificate

This certificate is required for all imports of metal scraps into India.

Vietnam
Certificate of Origin (COO)

The Certificate of Origin identifies the country in which the merchandise is

produced. The exporter is in charge of preparing this document and it needs to
be certified by a government authority for it to be valid. The COO also plays a
role in calculating customs duties and taxes and also determines whether taxes
are exempt.

Pro tip:

The shipping documents listed above are general guidelines.

We recommend getting in touch with your destination agent for
more destination- and cargo-specific information regarding
documentation. If you don’t have one, let us know and we will
put you in touch with one of our trusted destination agents

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Customs
Duties

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Customs duties are part and parcel of all international shipments. In this
section, we’ll take a look at how they’re determined and calculated.

DETERMINING CUSTOMS DUTIES

The two most common ways to determine customs duties are ad valorem and
specific.

Ad valorem: Duties are calculated as a percentage of the value of the goods.

E.g. 5% of the total value of imported metal parts

Specific: Duties are calculated based on the weight or quantity of the goods.

E.g. $0.15 per gallon of gasoline

Applicable Customs Duties Rate

The amount of duties that applies to a shipment depends on the category of

your goods. This is determined by the Harmonized System (HS), a
multipurpose and global nomenclature developed by the World Customs
Organization that classifies products into codes.

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The HS code of each product determines the applicable customs duty
rate.

HS codes are used worldwide and though some countries and regions may
have their own versions, they are always based on and adapted from the
original six-digit HS codes.

For instance, the US uses the HTS (Harmonized Tariff Schedule) code and the
European Union uses the TARIC code, both of which have the same initial six
digits as the HS code.

For EU imports, you may look up the TARIC code of your product on the
EU’s TARIC consultation page.

For US imports, you may look up the HTS code of your product on the
USITC’s HTS search page.

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Calculatting US Customs Duties

For most countries, the amount of customs duty levied on imports is based on
the customs value of the merchandise, which is the amount the buyer pays the
seller for the acquisition of the goods*.

This includes not just the commercial value of the goods, but also
all transportation and packaging costs, commissions, insurance, proceeds,
and other associated fees.

*This value may vary depending on the Incoterm agreed upon by the importer
and seller

Duty rates for shipments to the US are an exception to the above rule.
Instead of basing duty rates on the goods’ customs value, the US calculates its
custom duties based only on the commercial value of the goods.

Here’s how to determine and calculate the amount of customs duties due when
shipping to the US:

Obtain your product’s duty rate (using its HTS code)

Multiply the duty rate by the commercial value of your cargo

Duties exceptions: Certain exceptions may apply to customs duties, such as

special trade arrangements and import threshold levels under which duties
may not be applicable.

Note that there are no US export duties.

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Practical Example: Calculating Customs Duties for Spain

Determining customs duties may seem complicated. Here’s an example of a

shipment of baskets from China to Spain to help guide you.

Importing: From China to Spain Ocean freight: $1189

TARIC code: 4602900000 THC: $214
Goods’ commercial value: $11897 T3: $53
Incoterm: FCA Insurance: $59

Step 1: Calculate CIF Value

Add the commercial value of the cargo, ocean freight cost, and insurance.

$11897 (goods’ commercial value) + $1189 (ocean freight) $59(insurance) =

$13146 (CIF value)

Step 2: Determine applicable duty rate

Enter the TARIC code of the product and its origin into the
European Commission’s TARIC search page to get the duty rate. In this case,
it’s 4.7%.

Step 3: Calculate customs duties due

Multiply the CIF value with the customs duty rate.

$13146.63 (CIF value) X 4.7% (applicable duty rate) = $617.89(customs

duties due)

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China Customs Duties

In 2020, the US exported $124 billion worth of products to China and

imported $435 billion.

All goods entering China are subject to a value-added tax of either 13% or
17%, depending on the nature of the merchandise. When shipping from China
to the US, note that China imposes export duties on a small number of goods.

Aside from the trade agreements we’ve previously mentioned, there are two
more important factors to pay special attention to when calculating China
customs duties.

1. Economic Development Zones (EDZs)

There are various types of Economic Development Zones in China that provide
financial incentives to imports and exports carried out to and from the area.

For instance, zones that have been specially designated for trade and export
purposes can enjoy exceptions to import duties and export rebates.

2. US-China trade war

The US-China trade war is a relatively recent development but nevertheless

one that can have wide-ranging implications for trade movements across the
world.

Even though they have now signed an agreement to ease the trade war, both
countries have applied $735 billion worth of tariffs on each other’s goods in
tit-for-tat measures over the past couple of years. Today, many uncertainties
remain.

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To better understand how you can benefit from China’s EDZs and for the latest
development on US-China trade relations and how it affects your shipment,
speak to your freight forwarder or a destination agent in China

India Customs Duties

India’s customs duties can be hard to navigate due to its complexity and
tendency to change tariff rates with no notice period.

When exporting to India, aside from the basic import customs

duties, additional charges apply, including a social welfare surcharge and
an integrated goods and services tax.

It’s important to note that India has been increasing import customs duties on
various types of goods such as electronics over the past few years in an effort
to stimulate local manufacturing.

For more information on India customs duties, visit its official customs portal,
ICEGATE, or speak to a local customs agent.

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Vietnam Customs Duties

Tariff rates in Vietnam have been falling ever since it joined the World Trade
Organization (WTO) in 2007. Today, most US exports to Vietnam face rates of
15% or lower.

Duty rates can vary significantly depending on the type of merchandise being
imported. Consumer goods usually face higher import duties, particularly for
luxury items, whereas merchandise like production supplies, raw materials,
and machinery are subject to lower duties.

Most goods being shipped from Vietnam are exempt from export duties with
the exception of certain items including minerals and scrap metal.

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Covid -19
Impact on
Ocean
Freight

35
With ocean freight responsible for 90% of world trade, any impact on logistics
is bound to also have an equally significant effect on the world economy.

Because of the COVID-19 pandemic, 2020 has been an unprecedented year

for all industries and sectors, not least of all logistics. As countries announced
lockdown measures and closed their borders to all movement save essential
goods in a bid to limit the spread of the virus, trade is set to be hit hard.

In fact, according to the World Trade Organization, world trade is expected to

plunge by between 13% and 32% this year, possibly exceeding even the fall
brought on by the 2008 financial crisis in the worst case scenario

Source: WTO

The world’s largest economy, the US, is definitely no exception to this.

Economists expect its logistics sector to contract by as much as 12.4% this
year.

36
Effect On Shippers and Shipping Lines

The impact of COVID-19 and subsequent fall in demand has affected every
single player in the logistics industry and is proving extremely challenging for
shippers. The uncertainty and the high number of blank sailing announcements
by carriers in response to sinking demand have made it difficult to schedule
their exports.

By June, shipping carriers announced more than a hundred blanked sailings,

which will last through to the end of the third quarter of the year.

According to Ports America, transpacific cancellations, usually at 15%, hit

40% in the final week of April.

At one point, up to 11.6% of the world’s container shipping fleet was idle.

Source: IHS Markit, Sea-Intelligence

37
Even though demand will eventually return, experts have predicted a 20% to
25% reduction in global shipping volumes in the second quarter of the year,
which will be the biggest fall in history.

To increase their chances of securing a sailing and preventing their

shipments from getting rolled, many shippers have resorted to booking with
more than one shipping line.

This is sending cancellations and no-shows skyrocketing.

One of the effects of this is reduced work times for logistics workers, which
includes truckers.

This results in not only logistical but also financial consequences for importers
and exporters, who are left facing rising demurrage and detention charges as
they’re unable to neither retrieve shipments sitting at ports nor
return equipment.

43
ADVICE FOR SHIPPERS

If you run into demurrage and detention as a result of COVID-19, speak to

your carrier about the possibility of suspending or even waiving these
charges.

Requests will be reviewed on a case by case basis and there’s no guarantee

that they will be granted, but it’s worth giving it a shot.

Even as countries start to loosen lockdown restrictions and trade and life in
general slowly return to normal, the world finds itself in uncharted waters.

There’s no telling how the rest of the year will play out, with some analysts even
holding back on providing recovery estimates for 2021.

“These numbers are ugly – there is no getting around that.

But a rapid, vigorous rebound is possible. Decisions taken
now will determine the future shape of the recovery and
global growth prospects.”
— WTO Director-General Roberto Azev  do

Due to the fluidity and uncertainty of the situation, we recommend getting in

touch with your freight forwarder for the latest ocean freight
updates surrounding COVID-19.

Many shipping lines are also providing COVID-19 updates and advisories on
their websites, including any changes to sailing routes:

39
Many shipping lines are also providing COVID-19 updates and advisories on
their websites, including any changes to sailings and routes:

Maersk

COSCO

CMA CGM

Hapag-Llyod

CONCLUSION

International trade plays a crucial role in keeping the world economy running.
It is an extremely complex topic to understand and there are many factors that
can affect how trade is conducted between any two countries.

Note that the information here only serves as a guide and may change at any
given time. For detailed information regarding shipping to and from Asia, we
recommend that you contact your freight forwarder or local agent.

For more shipping tips and resources, you may also check out our blog and
help center.

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