When buying products from the other side of the world one of the first things to consider is how to get them to your door. There are two main options; Air freight or Sea Freight.
The choice all depends on what your needs are. If you are looking for the quickest service, the best option is of course air freight. If you are trying to keep your costs down, the sky high prices of air freight may not be for you.
There is a chance that the products you’re purchasing will force your hand one way or the other. If your cargo is being sold at an event in 2-3 weeks you won’t be able to wait for a delivery via sea freight. If, on the other hand, the products are large and the RRP is relatively low then importing your cargo by air freight will mean the cost to import the product will be higher than the price you can sell them for.
If your decision is not so clear cut then hopefully our guide will give you a bit of extra assistance:
Sea freight is generally between 4-6 times cheaper than air freight. If you are concerned with keeping your costs down, sea freight will appeal to you. When establishing the costs for a sea freight shipment, 1 cbm is equal to 1000kg, for air freight 6 cbm is equal to 1000kg. If you increase the weight of your cargo in sea freight, the likelihood of the price going up is low. If you are importing heavier cargo via air freight the cost difference between the two options will widen to much more than usual 4-6 fold.
When importing goods from China to the UK, time is often a factor. If you’ve got urgent stock requirements and you need your goods immediately air freight is the best option for you. On the other hand, if you order stock in advance and can wait up to 6 weeks then sea freight may be your choice. As shown in our Infographic, air freight can be as quick as 4 days from anywhere in China to anywhere in the UK, while Sea freight can be a much longer process.
If your business is concerned with the carbon footprint that your products leave then sea freight is probably the option for you. While sea freight accounts for 3% of the globes total greenhouse gas emissions, it is certainly still a long way more environmentally friendly than air freight. In fact, as shown in our graphical representation, sea freight emits 15g of CO2 per tonne of cargo moved a km, whilst air freight emits a massive 545g per tonne moved a km.
Duty & VAT are higher when importing via Air
Sea freight is an extremely cost effective option for importing goods to the UK, and this isn’t only due to the low prices on offer for the freight. Your UK Duty and VAT bill will be affected by the mode of transport you decide to use to ship your goods too.
Duty is calculated at an allocated percentage (depending on the commodity) of the cost of goods + the shipping cost. Therefore, if you have purchased 10,000 plastic phone cases for £5000 and the sea freight bill is £310.00 – You would pay the relevant percentage (6.5%… if you’re asking!) of £5310.00.
On the other hand, if you had the same scenario, but your air freight bill was £1200.00 – You may notice a substantial difference in the duty you pay.
VAT may not be an issue, if you are registered and can re-claim…. However, for those who aren’t an increase in VAT could seriously impact their bottom line. VAT is calculated at 20% of the cost of goods, shipping and Duty! So, as for our earlier example… let’s see it compared with air:
|Sea Freight||Air Freight|
|Goods : £5000||Goods : £5000|
|Freight : £310||Freight : £1200|
|UK Duty : (6.5% of £5310) = £345||UK Duty : (6.5% of £6120) = £403|
|Import VAT :|
20% of (£5000 + £310 + £345)
= 20% of £5655
|Import VAT :|
20% of (£5000 + £1200 + £403)
= 20% of £6603
|TOTAL DUTY & VAT : £1476||TOTAL DUTY & VAT : £1724|
So, if you are concerned at fluctuations in the UK Duty & VAT paid, don’t forget to take into account the mode of transport. If you are concerned with keeping these costs at a minimum, we suggest planning ahead and going for the sea freight option.
See our infographic – click here.
For more information, or if you’ve made your mind up and want to book a shipment by sea or by air.. Contact us at firstname.lastname@example.org or call us on 0203 384 0498