Shipping Out of China: A Guide for Board Game Publishers
So we sell a lot of our games/products to distributors around the world. We try to ship those directly from the factory to the international distributor rather than shipping out from China to the USA and then from the USA to say Belgium. Better to ship from China to Belgium and cut out the extra expense of coming to our warehouse, right? Better for the environment, and our bottom line as a small (but growing!) game publisher.
Here is a quick explanation of the different shipping options you can offer:
So there are several different shipping ways we ship products to customers. Let me break them down for you since you will probably see them as we grow. Here they are in order from cheapest to most expensive for us.
Note these terms apply to boat shipping and not trucks.
1) Ex-Works: This means the price is based on the shipment being produced and packaged at the factory only, all other charges, even getting from our factory to the port, are borne by the buyer. This is how we quote about ½ of our game print runs when we co-produce with sublicensed people and this is also our pricing for games we license from others when co-producing at their factories. Think of this as manufactured costs only.
2) FOB Port (China): This means “Free On Board” or in other words Mayday pays for the shipping to the Chinese port. This is how we do most of our games from many of our factories. The factory imputes the cost of shipping to the Port in China. When we ship a large shipment of product via boat we typically offer FOB Port (China) as the shipping option. In the case of some larger distributors, they have a freight forwarder somewhere in China, this agent will get shipments from us and other companies, put them together and ship them on one single boat shipment to them in Germany or elsewhere. In this case the distributor gets free shipping to the agent and then they pay for all shipping from there.
3) FOB Port (Destination): Some of our larger clients offer FOB Port (Destination). We ship our goods from the factory all the way to say Seville Spain or some other port and we bear all the costs. The client has to clear customs, pay entry and processing fees and inland delivery fees. This costs us about $80 per cubic meter for just the shipping and is pretty cheap. We usually do this for our larger customers.
4) CIF (Destination): Some clients notice that our bulk rates quoted out of China are cheaper than they can get and so they request CIF (Destination) which means: “Cost, insurance and freight (CIF) is a trade term requiring the seller to arrange for the carriage of goods by sea to a port of destination, and provide the buyer with the documents necessary to obtain the goods from the carrier.” In other words we pay more of the costs to get the goods to their port, but they still pay all the inland charges. Typically we will only do this IF the client requests it and even then we get our agent (Lanny) to quote us the cost of FOB Port (China) and then CIF (DESTINATION) and bill the client for the difference. It is usually cheaper for the client to pay us this incremental difference than to arrange those costs on their end, usually because they are in Europe and we are getting pricing from China.
5) DAP (Destination): This is similar to CIF but can include inland charges right to the door of the client as well. By definition: “DAP (Delivered at Place) is an Incoterm that replaced the former term DDU (Delivered Duty Unpaid). DAP transactions require the seller to arrange and pay for the transportation of the goods to a place designated by the buyer, and the buyer to pay import duties and taxes on arrival of the goods.” DDU is still used by some clients but DAP is almost always used in its place now. We don’t pay the duties but we pay everything else Similar to CIF but up to door service too. We only do this when requested by the client and always bill the client for the incremental charges for DAP vs. FOB (China). A recent shipment of about 850 KG of product from China to the customer’s door in Spain resulted in incremental extra charges of $662 USD for the full delivery DAP Seville rather than FOB Port (China) and we billed them for that.
I hope some of you find this helpful :)
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