Beware prepaid freight and shipments from China

Recently, I have joined an interesting discussion in LinkedIn concerning the “Chinese system of prepaid LCL Shipments”

I am sure the majority of you have experience with this system which cannot be called Chinese at all because it is also applied in India and all over the world where there is no transparency of cost.

Regrettably none of the participants of the discussion has spoken about one very important point.

Chinese freight market is in principle FOB market – which means driven by the consignees not the shippers.

Normally the deals in China are made on FOB terms.  If any other terms of delivery are used – be careful.

If the Chinese supplier provides you and EXW rate for the products that they want to export that, in most of the cases, means that they do not have proper export license so when it comes to the export you need to “buy” such a license – which cost between 100-200 dollars.  This is the easier part because normally the consignee gets the proposal from their forwarder and knows in front all the costs involved – from warehouse where the goods are loaded up to the warehouse where the goods need to be finally delivered.

The difficulties come with the CPT, CIF, C&F quotations.  Than the buyer must be very aware of all the costs related to the delivery of the freight to them.  And here the system of hidden costs come in full power.  Chinese shipper goes to the forwarder and negotiates with them a very low rate – FCL, LCL, air – no matter the system is the same.  This rate is under priced – 15 usd w/m obviously can not cover the cost of LCL filled 40′ container and is very very low rate which does not cover the service.  The rate is normally to port or CFS and – now beware – “all local costs are for the account of consignee” The moment the buyer sees such a definition they should know that most probably the overall cost for getting the goods to their warehouse will be twice as high as the cost if the shipment has been moved FOB. Unless, the buyer has a clear quotation from his Chinese colleagues on DDU charges – my recommendation is – do not buy that “cheap” rate.  Because it is not “cheap” at all.

Rarely, it appears, and we should admit this, that the shipper and consignee have agreed to split the transportation terms – this is done only between longterm partners who trust each other and who know – both sides – how much the cost is from door-to-door.  But this situation has nothing to do with the unethical system of hidden costs.

How to avoid it.  It is simple. Whenever you buy from China and India – never ask local forwarders for a quotation. Turn to a forwarder at your end and ask for proposal which includes not only the ocean freight or airfreight cost to the nearest destination port or airport. Ask them to quote you to your door. Then you will  have a clear picture of what how much the delivery of the purchased goods costs.

For shipments into Bulgaria please do not hesitate to contact us for a airfreight  price or ocean freight quotation.

6 thoughts on “Beware prepaid freight and shipments from China

  1. Dear Georgi,
    I was discussing yr artivle on LINKEDIN and just now read yr full article here. It seems me that u are somewhat confused of LCL or FCL shipments from China. I’m fr the last 10 yrs specially dealing from CHINA, India, Vietnam and Thailand and other South East Asian Countries to Russia via Finland.According to u the problem is with Chinese forwarder, but the main problem is the European LCL consolidators who has started the rebate system. If u need any help frm Suth East ASIAN COUNTRIES we’ll try to help u.

  2. Dear Krishnan,

    no confusion at all. This corrupted practice is valid for both LCL, airfreight and FCL freight from Far East into Europe. That was the idea of the article.

  3. Dear Sir / Madam,

    Thanks for your mail we Master air Express is a one of the leading International Express Freight & Courier company in Bangladesh since 1983, we are looking a company who are interested to handle our express shipment to and from Bangladesh, we saw your details in your website and are interested to setup business relationship with your esteemed company as our counterpart /Agent in your delivery aria, we have our won warehouse at Dhaka airport Express Bonded area and Chittagong sea port non Bonded area . also note we have good business with your Country.

    Our service is Express outbound and Import inbound Air freight, Ocean freight, and courier, express Clearing and delivery all over Bangladesh (Door to door + Air port
    to airport and sea port to sea port and sea port to door), if you could co-operate with us as our Counter part / agent for handling our traffic to and from Bangladesh we will be grateful to you.

    We have 20 years experience trained 35 staffs, Our own transport and own house clearing at Dhaka Air port, our clearing system Dhaka airport 8-24 hrs require and our delivery within Dhaka city same day, Chittagong next day Bangladesh others 5 working days. please provide your terms and conditions details.

    If you have require more information about our company and service don’t hesitate to contact us.

    We hope and sincerely believe that you will consider our request and
    extend your kind co-operation to us for our mutual benefit.

    Happy New year to you all.

    Thanking you

    Very B’rgds
    A.M.Rafiqul Hoque
    Masterair Express (Member International Air Express Association of Bangladesh. House#13,Ground floor, Road#35,Sector#7,
    Uttara,Dhaka,
    Bangladesh.
    Tel:880 28958879
    Cell#88 01819203558
    Website:www.masterair.net

  4. And my question is: Why the hell is English so poor in freight forwarding???
    It is one of the basic tools, the cornerstone of global communication and freight forwarding is global communication.
    There should be severe restrictions on the level of fluency.

  5. Beware of GLOBELINK shipping company!
    Is a well know company but they use this scam method to get hold of huge amount of money from Buyer that choose CIF from china.
    Destination Country globelink price list, is not used. They follow directions from china. And charge your overcharge values
    Crazy values. Like 100€ CBM for warehouse. When offical globelink from destination country is charge as 45€ CBM.
    They keep add extra cost from china origin.

    I pay over 5000€ to globelink only to move my cargo from sea port to warehouse, nothing more.
    BeWARE!

    They use this kind of scam. I will not ever ever deal with globelink shipping company again.

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