6 Stages of Logistics When Sourcing Internationally
By Mary Iannuzzi on August 8, 2019
While outsourcing eliminates a manufacturing burden and offers cost savings, it introduces the often complicated strain of logistics. A supplier will quote either Free On Board (FOB) or, more commonly, Ex-Works (EXW).
FOB: Including delivery without charge to a specified destination. Often designated FOB[destination where the buyer takes responsibility].
Ex-Works: Price for the product not including any shipping or handling responsibility from the seller.
This article explains the general steps an internationally sourced order will take from seller to buyer and addresses some common costs and problems encountered at each stage of logistics when sourcing internationally.
1. At Your Supplier’s door
Post-production, your parts have to make an inland journey to the port of origin closest to your supplier. If you’re buying EXW, you’ll be responsible for arranging this transportation through a freight forwarder. The supplier is free of any liability from this point on as your parts move to the nearest cargo port.
2. Port of Origin
At its port of origin, your shipment will be subject to outgoing customs, as well as any cargo dues. It will likely spend some time in a warehouse near the port while it is grouped into a container with other shipments. Be sure to understand which of the many fees are already included in your freight forwarder’s quote to avoid costly surprises.
3. On The Open Seas or in The Air
The standard shipping time on a freight-liner from Asia is about 45 days. While you’re waiting in your air-conditioned office, your parts are being subjected to the natural elements in the middle of the Atlantic. What was a perfect powder coat when it left the supplier’s door may be a rusty surprise when it gets to yours. Always factor in transportation conditions when specifying finish and packing requirements.
4. At The Border
Once your parts reach the port of landing, they’ll be subject to governmental regulations, such as tariffs and customs searches. These are handled by a customs broker. US Customs and Border Patrol has the right to hold your parts for extra examination at will. This is rare but can delay your shipment anywhere from 2 days to over a week (and you’ll have to foot the bill).
5. Inland Transport
Once your parts are off the boat, they will need to be picked up by a truck for inland shipping to your location. If you are coordinating this transfer, be sure to stay on top of the timeline as there are fees associated with late pick-ups. The grace period is usually 3-4 days. When expediting shipments via airfreight, coordination between landing and truck pickup can be even more crucial, as unloading and customs delays can keep trucks waiting at the airport for significant and costly periods of time.
6. At Your Warehouse
Be ready to receive the shipment as soon as it gets to your warehouse. Know if unloading is included in your trucking company’s quote. You may have to pay for any unexpected time the truck is out of commission if they have to wait for you to unload your own product.
Michigan Manufacturing International partners with American companies to source custom mechanical components and assemblies. Our supply managers live and work in five low-cost regions, maintaining decade-long partnerships and ensuring quality before parts leave the supplier. Logistics, warehousing, and engineering are handled in the USA. Our business model offers a single partner solution to sourcing abroad, providing the cost savings of purchasing internationally with the ease of buying from an American supplier.