Exporting goods from Australia can be an effective way of doing business, if done properly. There are many twists and turns when shipping cargo overseas so it’s important to be across the detail to ensure your transaction ‘sails’ smoothly. From the process of negotiation all the way up until payment and arrival, ICE is here to support with all your shipping needs.
Below, we’ve put together an easy-to-understand 7-step guide to understand the process of exporting your goods. If you’re in the business of exporting goods, this article is essential reading.
#1: Agree Incoterms with a buyer
Before signing the dotted line with a buyer overseas, you’ll need to understand who is paying for what. An important part of this is properly allocate the risk between buyer and supplier when engaging in shipping.
This is settled by determining the Incoterm that governs your commercial agreement. Incoterms are an internationally recognised set of terms that underpin the international sale of goods. For some background as to how they operate and the different types of terms, read our Beginner’s Guide to the Incoterms.
For example, if your overseas buyer purchases your goods under the “Ex Works” (EXW) Incoterm, you’ll have the least obligation with regards to costs and liabilities. As an exporter, you will need to make the goods available at a particular location, but the buyer will be responsible for everything else thereafter, such as freight, delivery and taxes. However, an EXW term may not be practical for you or your customer, so you’ll need to negotiate the right term at the start of your agreement.
#2: Get a quote and choose your route
Once you understand the incoterm you are operating under, it’s time to negotiate quotes for shipping. Let’s say you’re responsible for paying for all cargo unloaded at a specific destination. In this case, there will be a few things you need to know:
Your preferred method of shipping: air or sea?
There are many advantages and disadvantages of choosing shipping freight by air or by the ocean. Ocean freight will typically cost less, but air freight generally offers faster transit times. The best choice for you will depend on how much you’re willing to pay and how urgent your shipment is.
However, you’ll need to take into account more than just time and price. Other considerations will include whether you have contractual obligations to your buyer, the stock you have on hand as well as what your competitors are offering. We set out the details in our blog on air freight vs sea freight.
Weight and dimensions: how big is your shipment?
The size of your shipment will be very important when requesting a quote and determining your route. It will also be important when it comes to deciding what equipment you need to ship your goods – for example, if you want to ship your goods in a reefer, you’ll need to make sure your shipment can fit within the container specification.
Commodity: what are you shipping?
Are you shipping dangerous goods that may require a permit to ship? Are you shipping lithium batteries, in which particular packaging requirements may apply? Do your goods need to be treated or fumigated? Are you exporting your goods on timber pallets or using timber or bamboo dunnage that require a wooden compliant packaging certification? Knowing the full specification of the commodity you are shipping is critical to ensure your export goes to plan.
These details will impact on any quote you may receive. They’ll also be important down the track, as anything aside from shipping general cargo can give rise to unexpected costs.
Collection and delivery address
You’ll also need to specify exactly where your goods will be shipped to. This will determine the length of your route (including whether any transhipment will be required) and, consequentially, any quote you receive.
#3: Prepare your consignment
Once you have received a quote from a shipper and have agreed on pricing, you’ll need to prepare your consignment and ensure your cargo is securely packed.
Depending on the nature of your cargo, this may involve a number of steps such as:
- as stated above, ensuring the correct packaging is utilised if you are shipping items such as dangerous goods;
- Understanding the import requirements of your intended destination. For example, when importing into Australia manufacturers must ensure goods do not contain asbestos for the purposes of signing an Asbestos Declaration;
- selecting the containers in which to ship your goods – for example, if your goods need to be refrigerated, you would need to utilise a reefer; or
- considering if your cargo is too big to fit in a standard container – also known as break bulk or Out of Gauge (OOG) cargo – will require Open Top or Flat Rack Containers.
Each detail is critical at this stage, as you’ll avoid delays and extra costs if this is managed correctly.
#4: Prepare your documentation
As with most things in international business, the devil is in the document. You will need to ensure you have all documentation ready for export including a:
- Commercial Invoice – this document states precisely who is buying from whom and the terms agreed upon;
- Packing Declaration – this document informs customs what kind of material is used to pack your goods; and
- Any country-specific free trade agreements or declarations – you’ll want to ensure you take advantage of the terms in any free trade agreement between Australia and the country to which you are exporting goods.
We’ve put together a handy list of the five shipping documents you need for import or export.
#5: Complete your Shipper’s Letter of Instruction
A Shipper’s Letter of Instruction (SLI) is mandatory for all exports and details the precise requirements of your shipment from beginning to end.
It formalises how your shipment should be handled, and grants authority to your freight forwarder to act as the authorised agent to deal with customs. It is essential to complete this document so that misunderstandings about the shipment do not occur.
You can read further information about this in our SLI blog, where you can also download SLI templates for shipments by air and by sea.
#6: Pay for your cargo
Once your booking has been placed, you’ll then typically be invoiced for the shipment.
It is important to pay for your shipping to ensure goods are not held up on arrival.
#7: Track your goods
And you’re off! Once instructions are given to your forwarder they will organise the movement of your cargo to meet cut off times and security requirements of carriers. From here, you can track your cargo online to see when goods will arrive at their intended destination.
At International Cargo Express, we’re able to track our clients’ shipments through ICE Tracking where we can monitor your export throughout its journey.
Understand the stages of shipping by downloading our shipping timeline quick chart:
Engage an expert freight forwarder
Exporting your goods overseas may appear difficult and complicated, but with the right guidance, you do not have to worry. Expert freight forwarders understand all the complexities and documentation that comes with exporting cargo overseas.
Things can go wrong – shipment delays, lost documentation, damaged goods, customs clearance issues and so on. Having an expert overlooking the process is always a good idea so that can you can focus on running your own business knowing you are in safe hands.
At International Cargo Express, we have over 30 yers of experience helping clients export goods around the world. We can assist exporters to prepare all the relevant documentation, streamline their supply chain so that it’s cost-effective for their business and take advantage of Australia’s many free trade agreements.
Please contact one of our export specialists for a chat or leave a comment below.