If you’re looking for a guide on how to import goods from China to Australia, this is the right article to read. We’ll start with the basics, from choosing the right supplier and getting your documentation in order to booking your freight and paying the right duties and tax. Prior to reading, we suggest you look at our blog on our free trade agreement with China, and also look at our article on how you can make money shipping from China.
1. Choose your Supplier
The first step is researching and then choosing the right supplier in China for you.
Make sure you select a supplier who offers a cost effective and quality product that suits both you and your clients.
There is a swathe of considerations for you to take into account when choosing the right supplier. These can include factors such as whether:
- the supplier has a return policy allowing you to return damaged goods;
- the terms and conditions are acceptable to you;
- the time period for goods to be delivered is not too long; and
- the supplier has references to demonstrate that their products and service levels are reputable.
2. Understand the cost of importing goods
After you choose your supplier, it’s important to consider the costs of importing goods from China by looking at the Chinese Free Trade Agreement and any applicable tariff concessions.
The implementation of the ChAFTA has provided Australian businesses a range of benefits, including significantly reduced and even eliminated tariffs on many goods. If you’ve been paying duties since December 2015, you may also be able to claim a duty refund.
We recommend that, at this stage, you:
- check the HS Code for the goods you seek to import;
- identify how they are treated under CHAFTA;
- confirm the goods originate from China – check if the goods are ‘originating’ goods that qualify for reduced tariffs under ChAFTA. Only goods ‘originating’ in Australia or China are eligible; and
- certify the origin of your goods with a certificate of origin, which you can read about here.
Please read our ChAFTA Guide for Importers and Exporters for further information.
It is also vital to ensure you select the right Incoterm for your shipment and understand how that impacts your responsibilities and liabilities over the course of the shipping process.
3. Select air or sea freight as the preferred shipping method
The differences between air and sea freight can have a large impact on your shipping process.
Sea freight may be cheaper, but it will certainly take longer. There are also other considerations such as your current stockholding, the reliability of the shipping methods and whether or not you have any contractual obligations to a customer. There are a range of considerations to assess when choosing one method of shipping freight over another, which you can read about here.
4. Get your documentation in order
If there is one thing you must comply with when shipping across the globe, it is ensuring that the correct documentation accompanies your shipment.
This includes documents such as the Commercial Invoice, Packing List, Packing Declaration and Certificate of Origin. Check out our blog on the 5 Types of Shipping Documents You Need for Import or Export – you do not want to get this bit wrong!
You can also download our Shipping Document Checklist.
5. Choose your Freight Forwarder
You’ll also need to select a freight forwarder who can handle the shipping process on your behalf and whose customs brokers can clear your cargo.
Freight forwarders are experts in international trade and can support you on your shipping journey from start to finish. Part of their role will be to ensure that your documentation is in order and advise on shipping options that suit your business needs.
There are a range of factors to consider when choosing the right freight forwarder. At ICE, we have customer focused staff with over 30 years’ experience in the industry and employ our own brokerage team in house (unlike other forwarders), providing you with a one stop shop solution for all your freight queries.
6. Book your freight
Once you have chosen your forwarding partner, you’ll then need to book your freight. We suggest you do this well in advance so ensure that there is enough space on a vessel for your cargo to move without delay.
A failure to book in advance can lead to delays, extra unexpected fees and difficulties in delivering your cargo. At ICE, we want to ensure your process is as seamless as possible, placing orders early allows us to provide the best option (and often the most cost-effective).
7. Pay for Your Goods
Prior to your supplier shipping the goods, you’ll typically have to pay for those goods.
A very common way for importers to pay their supplier is to obtain a letter of credit. This is a secure payment method whereby a bank will secure payment so that the delivery occurs seamlessly.
8. Track your shipment and provide all documentation to your broker
Once your goods are paid for and shipping schedule received, you can track your shipment until it arrives at your door. At ICE, we offer bespoke reporting direct to your inbox or the ability to track your shipment directly through our website.
You should also provide all documentation to your customs broker, including the Commercial Invoice, Packing List, Packing Declaration and a certificate of origin if you are looking to benefit from free trade.
9. Pay your duties, tax and shipping costs
Duties, tax and costs are unavoidable when you engage in international shipping.
Costs you will need to consider include duties and GST, as well as unforeseen costs such as storage charges, demurrage, detention charges and any inspection fees. Let’s cover them below.
Duties and GST
The most crucial charges that must be factored into your shipping are duties and GST. These are government taxes that will be passed on to you to cover the cost of importing or exporting your product. As a general rule taxes for importers in Australia are charged as follows:
- Duty 5 % of the FOB Value
- GST 10% of the CIF plus Duty value
- Processing AUD 85.00 up to AUD 200.00 based on the FOB value
GST can be reduced under Free Trade Agreements, as long as you provide a Certificate of Origin with your shipment prior to arrival to benefit from these.
Once your goods arrive, the wharf or airport will only hold your shipment on site for free for around 3 days. If your goods need to be held longer than this you could run into storage charges. Storage at the wharf or airport is extremely expensive and should be avoided where possible.
Where possible your forwarder may move your goods “underbond” to a bonded location. This will reduce storage charges whilst any issues get resolved.
By being prepared and providing commercial documents in advance of a shipment arrival, you reduce your risk of paying storage.
Demurrage charges are raised when the full container is not moved out of the port/terminal for unpacking within the allowed free days offered by the shipping line. The charge is levied by the shipping line to the importer.
Demurrage charges can vary country to country as well as by carrier. To complicate matters further, fees are applied per container as well as per day after a designated free time which varies from carrier to carrier. If for some reason your cargo gets held up at the terminal for more than a week, chances are the daily fees will increase. The longer your cargo sits in a port, the more you’ll end up paying per day.
If you are importing Full Container Loads (FCLs) you have a fixed amount of free time to keep the container following its arrival. Free time is usually 7 days, however, you can apply for more time in advance. The 7 days allows your forwarder to collect the goods and deliver them to site, for you to unload the cargo and for the container to be returned to the wharf.
Charges after the 7 days free time can vary by shipping line. As a general rule, you can expect charges of $150-300 per container per day.
Australia has strict biosecurity regulations and will at times request random inspections of goods. Unfortunately, as an importer, you are liable to pay any costs associated with inspection activity. If your goods have been selected at random and your consignment complies with all biosecurity requirements you will not usually be charged. If your goods are directed for treatment you will need to accept any associated costs.
Common forms of biosecurity control are inspection, treatment, isolation, hold pending further information or insect identification.
Transport for container and LCL (Less than Container Load) shipments will normally be subject to a certain amount of free time. This means the transport company has allowed for waiting time at the wharf and at the unloading point. Most truck drivers will allow for 1-2 free hours of waiting to pick up the full container and 1-2 hours to unload the full container. After the free time expires, they will begin charging for additional time on a prorated hourly rate — the trucking wait fee.
By communicating with your forwarder regarding arrival times and ensuring your staff are prepared, you can avoid costs associated with waiting time. With FCLs, you also have the option to choose a drop and return service if it will take you more than an hour to unload your goods.
Remember, various circumstances related to your shipment will determine which costs you have to pay (considering delays, type of goods you are transporting, correct documentation, etc). It is important that you talk to your forwarder for a door to door quote in order to know precisely how much you have to pay.
10. Receive your goods
Once all duties and costs are paid, you’ll be able to receive your cargo. Delivery is arranged depending on the incoterm you have selected for your shipment. For example, if goods are organised on DDP terms then the shipment will be delivered direct to your nominated location and arranged by your supplier. If you are importing on CFR or EXW terms, you will be responsible for arranging your delivery with your nominated forwarder.
At ICE, this is where our skilled cartage team come in. They will contact you prior to delivery to understand your facility and how your cargo needs to be received. At this stage, it is important to specify your opening hours and any difficulties with access to your site to ensure our team can deliver your cargo with ease.
It is important that prior to importing, you have an understanding of the broader shipping process and how it works.
Please read our step-by-step guide, which features a flow chart that outlines the entire shipping process.
If you have any further questions about importing from China, please feel free to get in contact with our friendly team at ICE or leave a comment below.