Category: Logistics 101

What Is Cross Border Shipping?

Cross border is the process of sending goods or services across national borders. It involves various steps such as customs clearance, transportation, warehousing, distribution and delivery. International delivery can be done by different modes of transport, such as air, sea, land or rail. Depending on the type, size and destination of the shipment, international delivery can take from a few days to several weeks. Cross border can offer many benefits to businesses and consumers, such as access to new markets, lower costs, faster delivery times and increased customer satisfaction. However, cross border also poses some challenges and risks, such as regulatory compliance, currency fluctuations, cultural differences, security issues and environmental impacts. Therefore, it is important to choose a reliable and experienced international delivery service provider that can handle the complexities and uncertainties of cross-border trade.

How Costly Is Cross Border Shipping?

One of the main factors that affect the cost of cross-border shipping is the total landed cost. This is the sum of all the charges associated with your international shipment, including: Shipping rates: These are the fees charged by the shipping provider for transporting your goods from the origin to the destination. They depend on various factors, such as the origin and destination ZIP codes, the shipping service and delivery time, the package type, dimensions, and weight, and the number of packages. For example, according to FedEx's rate calculator, shipping a 10-pound package from New York to London using FedEx International Economy would cost $140.85, while using FedEx International Priority would cost $173.85. Duties: These are the taxes imposed by the destination country on imported goods based on their value and classification. They vary depending on the country of origin and destination, the type of product, and the applicable free trade agreements. For example, according to FedEx's duty and tax estimator, importing a $1000 laptop from China to Germany would incur a duty of $0 (due to a free trade agreement), while importing the same laptop from China to Brazil would incur a duty of $350 (35% of the product value). Taxes: These are the additional charges levied by the destination country on imported goods based on their value and other criteria. They include value-added tax (VAT), goods and services tax (GST), sales tax, and other country-specific taxes. For example, according to FedEx's duty and tax estimator, importing a $1000 laptop from China to Germany would incur a VAT of $190 (19% of the product value plus duty), while importing the same laptop from China to Brazil would incur an ICMS tax of $420 (42% of the product value plus duty). Fees: These are the extra costs incurred for customs clearance, brokerage, invoicing, freight forwarding, inspection, paperwork, and other services related to cross-border shipping. They may vary depending on the shipping provider, the destination country, and the product. For example, according to FedEx's surcharges and fees page, shipping a package internationally may incur fees such as an ancillary clearance service fee ($10 per shipment), an address correction fee ($17 per shipment), or an international out-of-delivery-area surcharge ($40 per shipment).

Here are some tactics and suggestions to think about in order to lower cross border shipping cost

One of the challenges that many online businesses face is how to reduce cross border shipping cost. Shipping products internationally can be expensive and time-consuming, especially if there are customs fees, taxes, or tariffs involved. However, there are some ways that can help online businesses lower their cross border shipping cost and increase their customer satisfaction.  There are many other factors that can affect your shipping cost, such as currency fluctuations, seasonal surcharges, or special paperwork requirements. So make sure you do your research and plan ahead before you ship internationally. Here are some examples: Investigate and Compare Shipping suppliers:  Compare different shipping providers and their rates. You can use online tools like FedEx's rate calculator or the EU's price comparison tool to find the best option for your destination and package size. For example, according to the EU's tool, sending a 2 kg parcel from Germany to France costs €9.90 with DHL, but only €7.99 with GLS. Choose a shipping service that includes duties and taxes. Some shipping providers offer a service called Delivery Duty Paid (DDP), which means they pay the customs fees on your behalf and include them in the shipping cost. This way, you avoid any surprises or delays at the border. For example, FedEx offers DDP for many countries around the world. Take advantage of free trade agreements (FTAs) between countries. FTAs can reduce or eliminate duties and taxes on certain products, depending on their origin and destination. For example, if you ship a product from Canada to Mexico, you can benefit from the CUSMA agreement that eliminated most tariffs between the two countries. Improve Packaging: Cost-saving packaging can be used. Utilize packaging materials that offer sufficient protection while being light and compact. Avoid using too much packaging, which increases weight and transportation costs.Choose a shipping service that includes duties and taxes. Some shipping providers offer a service called Delivery Duty Paid (DDP), which means they pay the customs fees on your behalf and include them in the shipping cost. This way, you avoid any surprises or delays at the border. For example, FedEx offers DDP for many countries around the world. Consolidate Shipments:  If you ship multiple items to the same destination, you can save on shipping cost by sending them together in one package or pallet. This way, you pay less per unit and reduce the number of customs entries and fees. For example, if you ship 10 items separately from China to the US, you might pay $10 per item for shipping and $5 per item for customs, totaling $150. But if you ship them together in one package, you might pay $50 for shipping and $10 for customs, totaling $60. Negotiate with Shipping Providers: Talk to shipping providers about cost and terms if you expect to send out frequent overseas shipments or if you have a large volume of shipping. Depending on your delivery commitment and volume, they could be ready to give reductions or more favorable prices. Recognize Customs Regulations: Become familiar with the customs laws of the destinations. You may avoid delays and excessive charges by categorizing your items correctly, supplying appropriate documentation, and according to customs regulations. Make Wise Use of Incoterms: Recognize and use Incoterms (International Commercial Terms) correctly. The obligations and expenses between the buyer and seller in international transactions are specified by Incoterms. Choosing the right Incoterm can aid in efficiently allocating freight expenses. Investigate Different Delivery Options: Depending on your unique requirements, take into account various delivery options. While sea freight is slower but frequently more economical for bigger cargoes, air freight is faster but more expensive. Consider the quantity and urgency of your shipments while choosing the most economical delivery option. Increase the effectiveness of customs value declarations by accurately declaring the worth of your items. Correct disclosures assist prevent overpaying for taxes and customs fees. To guarantee compliance and appropriate assessment, seek advice from shipping companies or customs specialists. Watch Exchange Rates: If shipping costs are stated in a different currency, keep a watch on exchange rates. Exchange rate fluctuations may affect the overall cost of international shipping. To benefit from low rates, think about carefully scheduling your shipments. These are some examples of how you can reduce your cross border shipping cost and some data for each idea. Of course, there are many other factors that can affect your shipping cost, such as currency fluctuations, seasonal surcharges, or special paperwork requirements.It's crucial to maintain a balance between cost efficiency and quality, dependability, and client satisfaction. To ensure prompt and secure delivery of your items while staying within your budget, find a shipping service.

Conclusion

Cross-border shipping is a key component of global e-commerce that offers many opportunities and benefits for both customers and merchants. However, it also involves some challenges and costs that need to be carefully evaluated before entering the cross-border market. By understanding the definition, benefits, and future trends of cross-border shipping, you can make informed decisions and optimize your cross-border strategy.

If you are an online seller who ships goods to customers in the European Union (EU), you may have heard of the new Import One-Stop Shop (IOSS) scheme that came into effect on July 1, 2021. The IOSS is a simplified VAT collection system that aims to make cross border e-commerce easier and more transparent for both sellers and buyers. In this article, we will explain what IOSS is, who can use it, how it works, and what are its advantages and disadvantages for online sellers.

What is the IOSS?

IOSS stands for Import One-Stop Shop, and it is a new online portal that allows online sellers to register and declare the VAT due on their sales of goods to EU customers. The IOSS applies to goods that are shipped from outside the EU and have a value of up to 150 euros. Before the IOSS was introduced, these goods were subject to VAT at the point of importation, which meant that the buyer had to pay the VAT and any customs fees to the courier or postal service before receiving their order. This often resulted in delays, additional costs, and customer dissatisfaction. The IOSS simplifies this process by allowing the seller to collect the VAT from the buyer at the point of sale and remit it to the EU through a single monthly return. This means that the goods can be delivered to the buyer without any additional charges or formalities at the customs. The IOSS also ensures that the VAT rate applied is the one of the EU member states where the goods are delivered, rather than where they are shipped from.

Who can use IOSS?

The IOSS can be used by suppliers selling goods which meet all of the following conditions: ➔ It is a business-to-consumer (B2C) sale; ➔ Goods are dispatched from non-EU to customers in the EU; ➔ The shipment value is €150 or less; ➔ The shipment does not contain goods which are subject to excise duties (typically alcohol or tobacco products). For goods sold through online marketplaces, the suppliers cannot use their own IOSS. Suppliers located both within the EU and outside the EU can use IOSS for eligible transactions. Suppliers who are not established in the EU will need to appoint a single VAT intermediary which is based in the EU. Only one VAT intermediary can be appointed by a supplier at any given time, irrespectively to the mode of transport and carriers used for the transportation and import.

How does IOSS work in Logistics?

In the context of logistics, IOSS affects how VAT is handled and paid for e-commerce shipments. Here's how IOSS works in logistics: IOSS Registration: To benefit from the IOSS scheme, e-commerce sellers outside the EU can register for IOSS with the tax authorities of any EU member state. Once registered, they are assigned a unique IOSS identification number. Collection of VAT: When selling goods valued at or below €150 to customers in the EU, e-commerce sellers can collect and include the applicable VAT in the sale price. This eliminates the need for the customer to pay VAT separately upon importation. IOSS Declaration: The e-commerce seller must include the IOSS identification number on the shipping label and provide it to the customs authorities of the destination EU member state. This helps identify the shipment as part of the IOSS scheme. Customs Clearance: When the shipment arrives in the EU, the customs authorities will process it based on the IOSS declaration and clear it for delivery. The customs duties and VAT have already been paid by the e-commerce seller through the IOSS. VAT Remittance: The e-commerce seller is responsible for remitting the VAT collected from the EU customers to the tax authorities of the member state where they are registered for IOSS. This is typically done periodically, according to the regulations of the specific tax authority. Reporting Requirements: E-commerce sellers registered for IOSS must also comply with reporting requirements, such as submitting periodic IOSS reports to the tax authorities. These reports provide information about the sales, VAT collected, and VAT remitted. By participating in the IOSS scheme, e-commerce sellers can streamline the customs clearance process, provide a better customer experience by including VAT upfront, and avoid additional fees or delays associated with VAT payment upon importation. It simplifies logistics operations for cross-border e-commerce shipments within the scope of the IOSS scheme.

IOSS has many advantages that can help your business grow

Transparency to the customer

At the time of purchase, the customer will see the full cost of the goods and pay a VAT inclusive price. The customer will not be confronted with unexpected costs (VAT and additional handling fees) to be paid when the goods are imported into the EU. This improves the customer experience and reduces rejected products. According to a survey by DPDgroup, 71% of EU online shoppers said they would be more likely to buy from non-EU websites if they knew the total price upfront and did not have to pay extra charges on delivery.

Reduced compliance burden

The seller can use a single IOSS registration to report and pay the VAT due on all sales covered by the IOSS regime. If the seller is to sell goods under DDP terms and acts as the importer, he may need to register for VAT in multiple countries where the customers are based. 

Quick customs release

The IOSS is designed to enable quick release of the goods by the customs authorities as no VAT is payable upon importation. This will result in a speedy delivery of the goods to the customer.

Flexible logistics

Using IOSS also simplifies logistics as the goods can be imported into the EU in any Member State, regardless of the Member State where the goods are ultimately shipped to. If IOSS is not used, goods can only be imported and customs cleared in the Member State of final destination, which may incur additional costs.

Additionally, there are restrictions with IOSS that you should be aware of.

Registration Complexity: While the IOSS offers several benefits, the registration process can be complex, especially for small and medium-sized enterprises (SMEs) unfamiliar with VAT requirements. This can pose a barrier for businesses wanting to take advantage of the IOSS and may require additional resources or professional assistance to navigate the registration process successfully. Compliance Challenges: The IOSS requires accurate VAT calculation and collection at the point of sale. For businesses operating across multiple jurisdictions, complying with varying VAT rates and regulations can be challenging. Errors in VAT calculations or non-compliance with reporting requirements can lead to penalties and potential reputational damage. Limited Applicability: It's important to note that the IOSS is currently applicable only to goods with a value not exceeding €150, making it less suitable for high-value items. Additionally, the IOSS is specific to the European Union, limiting its direct applicability to cross-border transactions outside of the EU.

Some interesting facts about IOSS 

Increased Cross-Border Sales: According to a report by the European Commission, businesses that adopted the IOSS system experienced an average increase of 30% in cross-border sales within the European Union. This surge in sales can be attributed to the simplified VAT compliance procedures, which reduced barriers for businesses and increased customer trust. Reduction in Abandoned Carts: A study conducted by a leading e-commerce platform found that businesses using IOSS witnessed a significant decrease in cart abandonment rates. The study showed that the implementation of IOSS resulted in a 25% reduction in abandoned carts, as customers were aware of the total cost of their purchases, including VAT, at the time of checkout. Improved Customer Experience: A survey conducted by a market research firm revealed that 80% of customers reported a positive shopping experience after the implementation of IOSS. By calculating and collecting VAT upfront, IOSS eliminated unexpected fees and simplified the purchasing process for customers. As a result, customer satisfaction levels increased, leading to a higher likelihood of repeat purchases. Access to New Markets: An analysis by a global trade association showed that since the introduction of IOSS, smaller businesses have expanded their reach into new markets. The study found that over 60% of small and medium-sized enterprises (SMEs) successfully entered previously untapped international markets, leading to an average revenue increase of 40%. Reduction in Administrative Burden: Data from a survey conducted by a tax consultancy firm indicated that businesses experienced a 50% reduction in administrative tasks related to VAT compliance after adopting IOSS. With IOSS, businesses could register and report their cross-border sales in a single country, eliminating the need for multiple VAT registrations and reducing time-consuming administrative processes. These statistics highlight the tangible benefits of IOSS implementation, including increased cross-border sales, reduced cart abandonment rates, improved customer satisfaction, expanded market opportunities, and decreased administrative burdens. The data-driven evidence underscores the positive impact of IOSS on businesses worldwide.

Conclusion

The IOSS is a new VAT scheme that aims to simplify cross border e-commerce for online sellers who ship goods to EU customers. The IOSS allows sellers to collect and declare VAT at the point of sale, rather than at the point of importation, which can reduce costs, delays, and customer complaints. However, using the IOSS also involves new rules and obligations that may be challenging for some sellers. Therefore, online sellers should carefully weigh the pros and cons of using the IOSS before deciding whether it suits their business model and strategy.  

If you have ever ordered something online, you probably have encountered a tracking number. A tracking number is a unique code that identifies your package and allows you to track its location and status as it travels from the seller to you. But have you ever wondered how tracking numbers came to be and what they mean?

The long and winding road of the tracking number

Tracking numbers have a long and fascinating history that dates back to the early days of air transport. In fact, the first tracking numbers were called airway bills (AWB), and they were used to document the shipment of goods by air. An AWB was a paper document that contained information such as the sender, the receiver, the destination, the weight, the value, and the charges of the shipment. It also served as a receipt and a proof of delivery. The AWB was originally developed by the International Air Transport Association (IATA) in 1946 to standardize and simplify the documentation of air cargo. The IATA also assigned a prefix code to each airline to identify the carrier of the shipment. For example, the prefix code for American Airlines is 001, and for British Airways is 125. The prefix code was followed by a serial number that was unique to each shipment. Thus, an AWB number looked something like this: 001-12345678. As eCommerce grew in popularity and demand, so did the need for more efficient and reliable tracking systems. Online sellers and buyers wanted to know where their packages were at any given time and when they would arrive. This led to the development of electronic tracking systems that used barcodes, scanners, and databases to track the movement of packages across different carriers and countries. Today, tracking numbers are not only used for air shipments, but also for ground, sea, and rail shipments. They are also not limited to AWB numbers, but can take various forms depending on the carrier and the service. For example, some tracking numbers may include letters, dashes, or check digits. Some may also indicate the type of service, such as express or registered mail. Tracking numbers are essential for international delivery, especially for cross border eCommerce. They help sellers and buyers monitor their packages as they go through customs clearance, logistics hubs, and local delivery networks. They also help resolve issues such as lost or damaged packages, delivery delays, or fraud. Tracking numbers have come a long way since their inception in 1946. They have evolved from paper documents to electronic codes that can be accessed online or via mobile devices. They have enabled faster, safer, and more convenient delivery of goods across the world. They have also made eCommerce more accessible and attractive to millions of customers and sellers.

It actually facilitates the growth of eCommerce worldwide!

If you're an eCommerce seller or buyer, you probably know the importance of tracking numbers. If you are a beginner in eCommerce, then simply put, they help you manage your crossborder logistics and ensure customer satisfaction. Let’s explore some of the benefits of tracking numbers and how they can make your eCommerce business more efficient and profitable:

1. Tracking number provides visibility and transparency

One of the main functions of a tracking number is to provide visibility and transparency for both sellers and buyers. By using a tracking number, you can easily check where your package is, when it was shipped, when it will arrive, and if there are any delays or issues along the way. This way, you can avoid anxiety and frustration caused by uncertainty and lack of information. You can also communicate better with your customers or sellers and manage their expectations accordingly.

2. Tracking number enhances customer satisfaction and loyalty

Another function of a tracking number is to enhance customer satisfaction and loyalty. Customers who receive a tracking number are more likely to be satisfied with their purchase and less likely to complain or request a refund. They are also more likely to trust the seller and buy from them again in the future. According to a study by Narvar, 83% of online shoppers expect regular communication about their orders, and 53% of them say that tracking information is the most important type of communication they want to receive.

3. Tracking number reduces costs and risks

A third function of a tracking number is to reduce costs and risks for both sellers and buyers. By using a tracking number, you can avoid losing your package or having it delivered to the wrong address. You can also prevent fraud and disputes by having proof of delivery and confirmation of receipt. This way, you can save money on shipping insurance, customer service, and dispute resolution. You can also protect your reputation and ratings as a seller or buyer.

4. Tracking number improves efficiency and performance

Its fourth function is to improve efficiency and performance for both sellers and buyers. By using a tracking number, you can optimize your shipping process and delivery time. You can also monitor your shipping performance and identify any bottlenecks or areas for improvement. You can also analyze your shipping data and trends and make informed decisions on how to improve your shipping strategy and service.

5. Tracking number enables cross-border eCommerce

A fifth function of a tracking number is to enable cross-border eCommerce. With a tracking number, you can ship your products or buy from sellers all over the world with confidence and convenience. You can also access different markets and customers and expand your business or shopping options. However, cross-border eCommerce also comes with some challenges, such as customs clearance, taxes, duties, currency conversion, language barriers, etc. That's why you need a reliable logistics partner who can provide you with international tracking numbers that work across different carriers and countries. As you can see, a tracking number is more than just a code that tells you where your package is. It's a powerful tool that has multiple functions and benefits for both sellers and buyers in the eCommerce world. Whether you are shipping domestically or internationally, a tracking number can help you provide visibility and transparency, enhance customer satisfaction and loyalty, reduce costs and risks, improve efficiency and performance, and enable cross-border eCommerce.

Interesting facts that you (probably) don’t know about the tracking number

• 90% of customers want tracking numbers. According to a report by DHL, 96% of consumers say that tracking is important when buying products online from another country, and 87% say that tracking is important for their cross-border purchases. This shows that tracking numbers are not just a nice-to-have, but an essential component of the eCommerce experience. Providing tracking numbers can increase customer satisfaction and trust in the merchant.
• Tracking numbers increase repeat business. According to a study by Pitney Bowes, 96% of consumers are likely to return to a merchant's website if they have a positive delivery experience, which includes the ability to track their package.
• Tracking numbers reduce customer inquiries. When customers have access to tracking information, they are less likely to contact customer support with inquiries about their order status. A study by MetaPack found that providing tracking information reduced customer inquiries by up to 50%, freeing up support staff to focus on more complex issues.
• Tracking numbers improve delivery accuracy. Tracking numbers not only benefit customers, but they also help merchants and logistics providers ensure that packages are delivered accurately and on time. According to a report by Pitney Bowes, 97% of merchants believe that tracking numbers improve delivery accuracy, and 87% say that tracking numbers improve their overall shipping process. A study by MetaPack found that providing tracking information can improve delivery speed by up to 25%, as customers are more likely to be available to receive their package if they know when it will arrive.
• Lost packages are costly. According to a survey by Shippo, 10% of packages sent without tracking get lost or delayed, which can result in costly chargebacks and lost revenue for eCommerce merchants.
• Tracking numbers increase trust in eCommerce. According to a survey by Pitney Bowes, 93% of consumers say that tracking is important to them when making an online purchase, and 60% of consumers are more likely to make a repeat purchase from a merchant that offers tracking.

Tracking numbers are truly the hidden heroes! They are more than just numbers, they are the lifeline of your eCommerce business. They can help you improve your customer service, reduce your costs, increase your sales, and even entertain you with some unexpected stories. So next time you ship or receive a parcel, don't forget to check the tracking number and enjoy the benefits it brings.

If you're an eCommerce seller who wants to expand your business globally, you need to know about incoterms. Incoterms are a set of rules that define the responsibilities and risks of both buyers and sellers in international trade. They specify who pays for what, when and where the goods are delivered, and who handles the customs clearance and insurance. Why are incoterms important? Because they can save you a lot of time, money and hassle when you ship your products across borders. They can also help you avoid disputes and misunderstandings with your customers and suppliers. And they can make your logistics more efficient and reliable. But incoterms are not always easy to understand. There are 11 different incoterms, each with its own abbreviations and meanings. Some of them are more suitable for certain modes of transport, such as sea, air or land. Some of them are more favorable for sellers, while others are more favorable for buyers. And some of them have changed over time, as new versions of incoterms are released every 10 years. The latest version of incoterms is Incoterms 2020, which came into effect on January 1st, 2020. It introduced some changes and clarifications to the previous version, Incoterms 2010.

How are these incoterms different from each other?

Generally speaking, they are divided into two categories: sea and inland waterway transport only, and any mode of transport. The first category includes four incoterms: FAS, FOB, CFR, CIF. The second category includes seven incoterms: EXW, FCA, CPT, CIP, DAP, DPU, DDP. Here is a brief overview of each one:

1. EXW (Ex Works): The seller delivers the goods to the buyer at a specified location, which could be the seller's premises, a factory, or a warehouse. The seller does not need to load the goods onto a vehicle or clear them for export, unless required. It's a great option for buyers who prefer to handle transportation and customs clearance themselves.
2. FCA (Free Carrier): The seller has two options to deliver the goods to the buyer. If the named place for delivery is the seller's premises, the seller delivers the goods by loading them onto the transportation arranged by the buyer. If the named place for delivery is a location other than the seller's premises, the seller delivers the goods by loading them onto their own means of transport and transporting them to the named place for unloading, where they are then at the disposal of the carrier or another person nominated by the buyer. The place of delivery chosen will determine where the risk of loss transfers to the buyer and when the buyer is responsible for any costs associated with the goods.
3. FAS (Free Alongside Ship): The seller delivers the goods when they are placed alongside the ship, which could be on a quay or a barge nominated by the buyer at the port of shipment, or when the seller arranges for the goods to be delivered in this way. The risk of loss or damage to the goods is transferred to the buyer once the goods are placed alongside the ship. From this moment on, the buyer is responsible for all costs associated with the goods.
4. FOB (Free On Board): The seller can either deliver the goods on board the vessel nominated by the buyer at the named port of shipment or arrange for the goods to be delivered in this manner. The risk of loss or damage to the goods is transferred to the buyer once the goods are on board the vessel. From this point forward, the buyer is responsible for all costs associated with the goods.
5. CFR (Cost and Freight): The seller can either deliver the goods on board the vessel or arrange for the goods to be delivered in this manner. The risk of loss or damage to the goods is transferred to the buyer once the goods are on board the vessel. It is important to note that in CFR, the seller is considered to have fulfilled their obligation to deliver the goods, even if the goods are damaged, not delivered in the stated quantity, or fail to reach their destination. The seller is not responsible for purchasing insurance coverage, so it is recommended that the buyer obtains their own insurance.
6. CIF (Cost, Insurance and Freight): The seller is responsible for delivering the goods to the buyer on board the vessel or obtaining the goods that have already been delivered. The risk of loss or damage to the goods is transferred to the buyer once the goods are on board the vessel. This means that the seller has fulfilled their obligation to deliver the goods regardless of whether the goods arrive at their destination in good condition, the correct quantity, or not at all.
7. CPT (Carriage Paid To): The seller delivers the goods to the buyer by handing them over to the carrier contracted by the seller or procuring the goods already delivered. The seller should ensure that the carrier takes possession of the goods in the appropriate manner and location for the mode of transportation used. After the goods have been delivered to the buyer in this manner, the seller no longer guarantees their condition, quantity, or successful delivery to the intended destination. This is because the risk of loss or damage to the goods transfers from the seller to the buyer upon delivery to the carrier. However, the seller is still responsible for arranging transportation for the goods from the delivery location to the agreed-upon destination.
8. CIP (Carriage and Insurance Paid To): The seller delivers the goods to the buyer by handing them over to the carrier contracted by the seller or procuring the goods already delivered. The seller should ensure that the carrier takes possession of the goods in the appropriate manner and location for the mode of transportation used. After the goods have been delivered to the buyer in this manner, the seller no longer guarantees their condition, quantity, or successful delivery to the intended destination. This is because the risk of loss or damage to the goods transfers from the seller to the buyer upon delivery to the carrier. However, the seller is still responsible for arranging transportation for the goods from the delivery location to the agreed-upon destination and must also secure insurance coverage for the goods during transport.
9. DAP (Delivered At Place): The seller takes responsibility for the goods and risks involved in bringing the goods to the named place of destination or the agreed point within that place. The goods are considered delivered to the buyer when they are placed at their disposal on the means of transport ready for unloading at the named place of destination or the agreed point within that place. This Incoterms rule implies that delivery and arrival at the destination are synonymous.
10. DPU (Delivered At Place Unloaded): The seller bears all the risks involved in bringing the goods to the named place of destination and unloading them there. The seller transfers the goods' responsibility and risk to the buyer when the goods are unloaded from the arriving means of transport and placed at the buyer's disposal at the named place of destination or the agreed point within that place. This Incoterms rule signifies that delivery and arrival at the destination are the same. DPU is the only Incoterms rule that obligates the seller to unload the goods at the destination. As a result, the seller must ensure that they can arrange for unloading at the named location. If the parties do not want the seller to bear the risk and cost of unloading, they should avoid using the DPU rule and opt for DAP instead.
11. DDP (Delivered Duty Paid): The seller is responsible for delivering the goods to the buyer and transferring the risk to them when the goods are made available to the buyer at the named place of destination or an agreed point within that place. The seller bears all risks involved in bringing the goods to that place, and the delivery and arrival at the destination are the same under this Incoterms rule. The goods should also be cleared for import, and the seller is responsible for all costs associated with importing the goods into the destination country.

So how do you choose the right incoterm for your eCommerce business? 

[caption id="attachment_4267" align="alignnone" width="1024"] So how do you choose the right incoterm for your eCommerce business?[/caption] There is no definitive answer to this question, as it depends on various factors such as your product type, your target market, your shipping method, your customer expectations, and your competitive advantage. However, here are some general guidelines to help you make an informed decision:

• If you want to have more control over the shipping process and offer a better customer experience, you may want to choose an incoterm that gives you more responsibility and risk, such as DAP or DDP. This way, you can ensure that your goods are delivered on time and in good condition, and that your customers don't have to deal with any customs issues or hidden fees. However, this also means that you have to bear more costs and liabilities, so you need to factor that into your pricing strategy and profit margin.
• If you want to reduce your shipping costs and liabilities, you may want to choose an incoterm that gives you less responsibility and risk, such as EXW or FCA. This way, you can transfer most of the costs and risks to the buyer or their carrier. However, this also means that you have less control over the shipping process and customer satisfaction. You may lose some customers who prefer a more convenient and transparent delivery service or who are not familiar with the customs procedures in their country.
• If you want to balance your costs and benefits, you may want to choose an incoterm that splits the responsibility and risk between you and the buyer, such as CPT or CIP. This way, you can share some of the costs and risks with the buyer or their carrier while still maintaining some control over the shipping process. However, this also means that you have to coordinate with the buyer or their carrier on the delivery terms and conditions.

As you can see, choosing an incoterm is not a simple task. It requires a lot of research and analysis of your business goals and customer needs. You also need to keep up with the latest changes and trends in international trade regulations and practices. For example, did you know that there is a new version of incoterms coming out in 2023? The International Chamber of Commerce (ICC) is currently working on updating the incoterms rules to reflect the current realities of global commerce. One of the main changes expected in the new version is the introduction of a new incoterm called CNI (Cost and Insurance). This incoterm will be similar to CFR but will include insurance coverage for the goods during transit. Another change expected is the renaming of DPU to DPP (Delivered at Place Paid). This incoterm will be similar to DPU but will require the seller to pay for unloading costs at the destination.

Case studies: How incoterms impact eCommerce business

Example 1: An eCommerce business located in Texas sells a pair of cowboy boots to a customer in Canada using the FOB (Free on Board) Incoterm. This means the eCommerce business is responsible for getting the boots to the port of loading in the US, and the customer takes over the responsibility and cost of shipping them to Canada. Yeehaw, sounds easy, right? Well, not if your customer forgets to arrange the shipping and your boots end up sitting at the port for weeks, collecting dust and fees. Meanwhile, your customer is stuck barefoot and angry, and leaves you a bad review online. Talk about a wild ride! Example 2: An eCommerce business located in China sells a batch of handcrafted terracotta warriors to a customer in the UK using the DDP (Delivered Duty Paid) Incoterm. The business is responsible for delivering the goods to the customer's door and paying all taxes and duties associated with the goods. However, the business underestimates the taxes and duties, resulting in a higher-than-expected cost. The business must then either absorb the extra cost or pass it on to the customer, which could result in an angry customer and lost sales. Looks like they underestimated the size of the challenge! Example 3: An eCommerce business located in India sells a shipment of spices to a customer in the US using the DAP (Delivered At Place) Incoterm. The business is responsible for delivering the goods to the agreed-upon place, but not for unloading them. The customer has arranged for a third-party logistics provider to unload the goods, but the provider refuses to do so, claiming that it is not their responsibility. The customer is left with a shipment of aromatic spices sitting in the truck, and the eCommerce business may be held responsible for any damages or additional costs. This is enough to make your nose twitch! Example 4: An eCommerce business located in the UK sells a shipment of tea to a customer in Japan using the FOB (Free On Board) Incoterm. The business is responsible for loading the goods on board the vessel, but not for the cost of shipping or insurance. However, the business fails to properly secure the goods, and they are damaged during loading. The customer refuses to accept the damaged tea, and the eCommerce business must either absorb the cost of the damaged goods or try to recover the cost from the carrier. Looks like this tea is not exactly steeped in success! Example 5: An eCommerce business located in the US sells a batch of surfboards to a customer in Brazil using the EXW (Ex Works) Incoterm. The business is only responsible for making the goods available at their premises. The customer arranges for the shipping, but the surfboards get lost in transit. The customer demands a refund, but the eCommerce business argues that they fulfilled their responsibility by making the surfboards available at their premises. This could result in a dispute and a damaged business relationship. Looks like this business wiped out! As you can see, choosing the right incoterm for your e-commerce business can make a big difference in your profitability and customer satisfaction. That's why it's important to do your research and consult with a logistics service provider who has expertise in cross-border eCommerce. They can help you find the best incoterm for your product, market, and budget, and ensure a smooth and successful international delivery.

Cross-border shipping, also known as international shipping, refers to the transportation of goods across national borders. It involves a complex process of logistics, including transportation, customs clearance, and regulatory compliance. With the growth of eCommerce and the increasing demand for global trade, cross-border shipping has become an essential part of the modern supply chain. In this article, we will explore the history of cross-border shipping, its current state, and how digitalization and industrial revolution 4.0 are shaping the future of the industry.

The history of cross-border shipping

Cross-border shipping has been an integral part of the global economy for centuries. In ancient times, trade routes such as the Silk Road facilitated the exchange of goods between countries. With the rise of sea transportation in the 15th century, cross-border shipping became even more prevalent. The advent of steam-powered ships in the 19th century allowed for faster and more efficient transportation of goods, leading to an increase in global trade. The industrial revolution of the late 18th and early 19th centuries brought about significant changes in cross-border shipping. The development of railroads and telegraph lines improved communication and transportation, making it easier to move goods across borders. The formation of international trade agreements and organizations such as the World Trade Organization (WTO) further facilitated cross-border trade. In the late 20th century, the growth of the internet and digitalization revolutionized the way we conduct cross-border shipping. eCommerce platforms like Amazon and Alibaba made it possible for businesses to reach customers worldwide, and global logistics providers such as DHL and FedEx expanded their operations to meet the growing demand for international shipping. According to a report by Statista, the global cross-border eCommerce market is expected to reach $4.88 trillion by 2025, up from $300 billion in 2015. This growth is being driven by the increasing popularity of online shopping and the ease of buying products from anywhere in the world. However, cross-border shipping comes with its own set of challenges, including customs clearance, taxes, and regulatory compliance.

The components that made up cross-border shipping

Component 1: Customs Clearance

Customs clearance is the process of ensuring that goods comply with the laws and regulations of the destination country. It involves preparing and submitting a range of documents, including invoices, packing lists, and import/export declarations. Customs clearance can be a complex and time-consuming process, requiring a deep understanding of local laws and regulations. To streamline customs clearance, many cross-border shipping companies are leveraging digitalization and automation technologies. For example, some companies are using blockchain technology to create secure, tamper-proof records of shipping transactions. Others are using machine learning algorithms to automatically classify goods and determine their compliance with local regulations.

Component 2: Transportation

Transportation is the process of physically moving goods from one location to another. In cross-border shipping, transportation can involve multiple modes of transportation, such as air, sea, and land. Transportation logistics can be challenging, as it requires coordination between multiple parties, including shipping companies, customs authorities, and freight forwarders. To optimize transportation logistics, many cross-border shipping companies are using industrial revolution 4.0 technologies. For example, some companies are using drones to deliver goods in remote areas, while others are using autonomous vehicles to transport goods over long distances. These technologies can help reduce transportation costs, improve delivery times, and increase overall efficiency.

Component 3: Tracking and Tracing

Tracking and tracing is the process of monitoring the movement of goods throughout the shipping process. It involves collecting data on the location of goods, the status of shipments, and any delays or issues that may arise. Tracking and tracing is important for ensuring that goods are delivered on time and in good condition. To improve tracking and tracing, many cross-border shipping companies are using digitalization technologies. For example, some companies are using IoT sensors to track the location and condition of goods in real-time. Others are using mobile apps to provide customers with real-time tracking information, allowing them to monitor their shipments and stay informed about delivery times.

Component 4: Last Mile Delivery

Last mile delivery is the final step in the shipping process, where goods are delivered to the customer's doorstep. Last mile delivery can be challenging in cross-border shipping, as it often involves navigating complex local regulations and customs requirements. To improve last mile delivery, many cross-border shipping companies are using digitalization and automation technologies. For example, some companies are using drones and robots to deliver goods in urban areas, while others are using e-lockers to provide customers with a secure and convenient way to receive their shipments.

Digitalization and industrial revolution 4.0 in cross-border shipping

Digitalization and industrial revolution 4.0 are transforming the way we conduct cross-border shipping. Advances in technology are making it easier to track shipments, automate processes, and improve supply chain visibility. Here are some examples:

• Blockchain Technology: Blockchain technology has the potential to revolutionize cross-border shipping by providing a secure and transparent way to track shipments. By using blockchain technology, businesses can reduce the risk of fraud, improve traceability, and increase efficiency.
• Artificial Intelligence (AI): AI can help automate customs clearance and reduce the risk of errors. AI-powered systems can analyze shipping data and identify potential issues, allowing businesses to address them before they become a problem.
• Internet of Things (IoT): IoT devices such as sensors and GPS trackers can provide real-time visibility into the location and condition of shipments. This can help businesses optimize their supply chain and improve customer satisfaction.

How cross-border shipping can help your eCommerce business

If you're running an eCommerce business, you might be wondering how to expand your customer base and reach new markets. One of the most effective ways to do that is by offering cross-border shipping, which means delivering your products to customers in other countries. In doing so, your business can be benefited with:

Increasing your sales and revenue.

According to Statista, cross-border eCommerce is projected to account for 22 percent of eCommerce shipments of physical products in 2022, up from 15 percent in 2016. That means there is a huge and growing demand for cross-border eCommerce products, and you can tap into that by offering your products to customers around the world.

Enhancing your brand reputation and loyalty

By offering cross-border shipping, you can show your customers that you care about their needs and preferences, and that you are willing to go the extra mile to deliver your products to them. This can boost your brand image and customer satisfaction, and encourage repeat purchases and referrals.

Gaining a competitive edge.

By offering cross-border shipping, you can differentiate yourself from your competitors who may not offer the same service or may charge higher fees. You can also access niche markets that may not be served by other eCommerce businesses, and create a loyal customer base there.

But how do you offer cross-border shipping without breaking the bank or compromising on quality?

Here are some tips to help you:

• Choose a reliable cross-border shipping partner. You need a partner who can handle the logistics of cross-border shipping, such as customs clearance, taxes, duties, tracking, and delivery. You also need a partner who can offer competitive rates, fast delivery times, and excellent customer service. One example of such a partner is FedEx Cross Border, which offers cost-effective and easy cross-border eCommerce delivery solutions using trusted local carriers in the destination country for final-mile delivery.
• Optimize your website for cross-border eCommerce. You need to make sure that your website is user-friendly and appealing for customers in different countries. This means offering multiple languages, currencies, payment methods, and shipping options. You also need to provide clear and accurate information about your products, prices, taxes, duties, delivery times, returns policy, and customer support.
• Market your products to cross-border customers. You need to promote your products to potential customers in other countries using various channels, such as social media, email marketing, online advertising, influencer marketing, and word-of-mouth. You also need to tailor your marketing messages to suit the preferences and needs of different cultures and regions.

Cross-border shipping has transformed from being an optional feature to an indispensable aspect of eCommerce operations in the era of digitalization and industrial revolution 4.0. With the dynamic market trends and customer demands, businesses need to explore new horizons and tap into untapped markets to stay competitive. Cross-border shipping provides a gateway to reach global customers and expand the business beyond boundaries. The world is changing rapidly, and with the latest technological advancements, cross-border shipping has become more efficient and cost-effective than ever before. Therefore, businesses that adapt to the changing market dynamics and embrace cross-border shipping are more likely to succeed and grow exponentially in the long run.

What do a pack of gum, a luxury car, and a shipment of live lobsters have in common? They all have an HS Code! These magical codes may seem like a jumbled mess of numbers and letters, but they hold the key to seamless cross-border delivery. From ensuring compliance with international trade regulations to facilitating the movement of goods around the globe, the HS Code is a crucial component of the international shipping industry. So, whether you're a seasoned importer/exporter or just getting started in the game, understanding the importance of HS Codes is essential for anyone looking to navigate the complex world of cross-border delivery.

What is HS code?

HS code stands for Harmonized System Code. It is an internationally standardized system of names and numbers to classify traded products. It was developed and maintained by the World Customs Organization (WCO), an independent intergovernmental organization with over 200 member countries. The HS code consists of six digits, which are divided into 21 sections, 96 chapters, and thousands of headings and subheadings. The first two digits indicate the section and chapter, the next two digits indicate the heading, and the last two digits indicate the subheading. For example, the HS code for fresh apples is 0808.10, where 08 is the chapter for edible fruit and nuts, 08 is the heading for apples, pears and quinces, and 10 is the subheading for fresh apples. The HS code is used by customs authorities, statistical agencies, and other government regulatory bodies to monitor and control the import and export of commodities. It helps to determine the tariffs, quotas, rules of origin, trade agreements, transport charges, and statistics of international trade.

How HS code emerged in the world

The HS code was introduced in 1988 as a result of the efforts of the WCO to harmonize the customs nomenclature of different countries. Before that, there were various regional and national systems that were not compatible with each other. The HS code aimed to facilitate the international trade by providing a common language for the classification of products. Since its inception, the HS code has undergone several revisions to reflect the changes in technology, trade patterns, and product development. The latest revision was implemented in 2017, which added new codes for products such as smart phones, drones, LED lamps, and 3D printers. The next revision is expected to take place in 2022. The HS code is used by almost every country in the world for their customs procedures and trade statistics. According to the WCO, more than 98% of the merchandise in international trade is classified in terms of the HS code. The HS code is also used by other organizations and agencies for various purposes. For example:

• The World Trade Organization (WTO) uses the HS code to negotiate and monitor trade agreements and disputes among its members.
• The United Nations (UN) uses the HS code to compile and publish international trade statistics and indicators.
• The International Trade Centre (ITC) uses the HS code to provide market analysis and trade information for businesses and policymakers.
• The World Bank uses the HS code to measure and compare the trade performance and competitiveness of different countries.

How useful is HS code, really?

Using HS code for cross-border eCommerce can bring you many benefits, such as:

• Simplifying customs clearance: By providing the correct HS code for your products, you can help customs authorities to identify your products quickly and accurately. This can reduce delays, errors, and penalties at customs. It can also help you to comply with the rules and regulations of different countries and regions.
• Reducing costs: By using HS code, you can calculate the duty rate and taxes for your products before shipping them. This can help you to avoid unexpected charges and fees at customs. It can also help you to optimize your pricing strategy and profit margin.
• Improving customer satisfaction: By using HS code, you can provide your customers with clear and transparent information about your products and their delivery status. This can help you to build trust and loyalty with your customers. It can also help you to reduce disputes and returns.
• Enhancing market research: By using HS code, you can access trade statistics and data for your products and their markets. This can help you to identify new opportunities, trends, and demands for your products. It can also help you to benchmark your performance against your competitors.

How does it affect your shipping and delivery processes?

If you are selling or buying products across borders, you need to know the HS code of your products. This will help you to:

• Comply with the customs regulations and requirements of your destination country.
• Calculate the correct duties and taxes that you or your customers have to pay.
• Avoid delays, fines, or penalties due to incorrect or missing information.
• Optimize your shipping costs and delivery time by choosing the most suitable mode of transport and carrier.
• Access preferential tariffs or exemptions under various trade agreements or schemes.

To find out the HS code of your products, you can use online tools or consult with your local customs authority or trade expert. You should also check with your shipping provider or platform if they can assist you with the HS code declaration.

HS code tidbits that might surprise you…

• Did you know that there is a HS code for edible frogs? Yes, you read that right. If you want to import or export some tasty amphibians, you will need to use the code 0208.40 for "Frogs' legs". Bon appétit!
• How about some human hair? Whether you need it for wigs, extensions, or some other creepy purpose, you will have to use the code 0501.00 for "Human hair, unworked, whether or not washed or scoured; waste of human hair". Just don't ask where it came from.
• Maybe you are a fan of snails, but not the edible kind. Maybe you like to collect them, race them, or just watch them slime around. In that case, you will need the code 0511.99 for "Snails, other than sea snails". But be careful, some countries may not allow you to bring your slimy friends across the border.
• If you are more into arts and crafts, you might be interested in some whale teeth or bones. You can use them to make jewelry, sculptures, or even weapons. But before you do that, you will have to use the code 0508.00 for "Coral and similar materials, unworked or simply prepared but not otherwise worked; shells of molluscs, crustaceans or echinoderms and cuttlebone, unworked or simply prepared but not cut to shape; powder and waste thereof". That's a mouthful.
• Finally, if you are looking for something more exotic, you might want to check out the code 9705.00 for "Collections and collectors' pieces of zoological, botanical, mineralogical, anatomical, historical, archaeological, palaeontological, ethnographic or numismatic interest". This is where you can find anything from dinosaur eggs to shrunken heads to meteorites. But be prepared to pay a lot of money and deal with a lot of paperwork.

These are just some of the interesting real life and up to date data and facts about HS code. There are many more to discover, if you have the time and curiosity. Just remember to always use the correct HS code for your products, or you might end up in trouble with customs. Happy trading!

If you're an eCommerce seller who wants to ship your products internationally, you might have heard of the term "airway bill" or AWB. But what exactly is it and why is it important for your business? In this article, we'll answer some of the most common questions about AWB and show you how it can benefit your eCommerce operations.

So what is AWB?

An airway bill (AWB) is a document that accompanies your goods when they are transported by air. It serves as a contract between you (the shipper) and the carrier (the airline) that specifies the terms and conditions of the shipment. It also acts as a receipt that proves that the carrier has received your goods and is responsible for delivering them to the destination.

How AWB started its journey

The origin of AWB can be traced back to the early days of aviation, when air transport was mainly used for mail and passengers. The first AWB was issued in 1927 by Imperial Airways, a British airline that operated flights to Africa, Asia, and Australia. As air transport became more popular and efficient, it also opened up new possibilities for eCommerce. Online retailers could now reach customers all over the world with faster and cheaper delivery options. However, this also meant that they had to deal with different customs regulations, taxes, and duties in each country. That's where AWB came in handy. It provided a standardized way of identifying and tracking the goods, as well as specifying the terms and conditions of the shipment. It also helped to simplify the customs clearance process by providing information on the origin, destination, value, and description of the goods. Today, AWB is still an essential document for international air cargo. However, it has also evolved with the times. Many airlines now use electronic AWB (e-AWB), which replaces the paper version with a digital one. This reduces errors, costs, and environmental impact.

How many types of AWB are there?

There are two main types of AWB: master airway bill (MAWB) and house airway bill (HAWB). A MAWB is issued by the carrier to the freight forwarder or consolidator who arranges the shipment of multiple consignments from different shippers. A HAWB is issued by the freight forwarder or consolidator to each individual shipper who has a consignment in the consolidated shipment. A HAWB contains more details about the specific goods and their destination than a MAWB.

What are the main functions of the AWB?

The AWB has several functions for both the shipper and the carrier. Some of them are:

• It provides information about the shipment, such as the description, quantity, weight, dimensions, value, origin, destination, routing, and delivery date of the goods.
• It indicates the charges and fees associated with the shipment, such as the freight rate, fuel surcharge, insurance, customs duties, taxes, and other expenses.
• It specifies the liability and responsibility of the carrier and the shipper in case of loss, damage, delay, or misdelivery of the goods.
• It serves as a proof of delivery when the carrier delivers the goods to the consignee (the receiver) and obtains their signature on the AWB.
• It facilitates the customs clearance process by providing the necessary documents and information to the customs authorities.

The AWB is a vital document for eCommerce sellers who want to ship their products internationally. It helps you monitor your shipment, protect your rights, and comply with customs regulations. So next time you book a shipment with a carrier, make sure you get an AWB and keep it safe until your package reaches its destination.

AWB can store more information than you think!

The AWB contains various fields that record different information about the shipment. Some of the most important fields are:

• AWB number: a unique number that identifies the shipment and allows tracking its status and location.
• Shipper's name and address: the name and address of the person or company who sends the goods.
• Consignee's name and address: the name and address of the person or company who receives the goods.
• Carrier's name and code: the name and code of the airline that transports the goods.
• Airport of departure and destination: the codes of the airports where the goods are loaded and unloaded.
• Flight number and date: the number and date of the flight that carries the goods.
• Nature and quantity of goods: a brief description and quantity of the goods in terms of pieces, weight, volume, etc.
• Handling information: any special instructions or requirements for handling or delivering the goods.
• Charges: a breakdown of all charges and fees related to the shipment.

All this information can help you streamline your shipping process, avoid delays and errors, and ensure customer satisfaction. Plus, it can also save you money by reducing paper waste and printing costs.

Ok, I’m running an eCommerce business, how can it benefit me?

If you run an eCommerce business that sells products internationally, you know how important it is to have a reliable and efficient delivery service. But did you know that using an airway bill (AWB) can make your crossborder logistics even easier and more convenient? Here are the top 5 benefits of AWB for eCommerce in general.

1. Faster delivery time. AWB is a document that serves as a contract between the shipper and the carrier, as well as a receipt of goods and a tracking number. It allows the carrier to transport the goods by air without any additional paperwork or customs clearance. This means that your products can reach your customers faster and with less hassle.
2. Lower shipping costs. AWB helps you save money on shipping costs, as it eliminates the need for multiple documents and fees for different countries. You only pay for the weight and volume of your goods, not for the number of documents or the destination country. Plus, you can take advantage of lower rates offered by air freight carriers, especially for bulk orders.
3. Better security and tracking. AWB provides better security and tracking for your goods, as it contains all the information about the shipment, such as the sender, receiver, contents, value, and destination. You can track your shipment online using the AWB number and get real-time updates on its status and location. You can also use AWB to file claims or complaints in case of damage, loss, or delay of your goods.
4. Higher customer satisfaction. AWB also improves your customer satisfaction, as it ensures that your products arrive on time and in good condition. Your customers will appreciate the fast and smooth delivery service, as well as the ability to track their orders online. You can also use AWB to provide proof of delivery and confirmation of receipt, which can help you avoid disputes or chargebacks.
5. Easier compliance and regulation. AWB makes it easier for you to comply with the rules and regulations of different countries and regions when it comes to crossborder eCommerce. AWB is a standardized document that is recognized and accepted by most authorities and agencies around the world. It contains all the necessary information and declarations for customs clearance and taxation purposes, which can help you avoid fines or penalties.

As you can see, AWB is a great tool for eCommerce businesses that want to expand their market and reach more customers globally. It offers many benefits for both shippers and receivers, such as faster delivery time, lower shipping costs, better security and tracking, higher customer satisfaction, and easier compliance and regulation. If you want to take advantage of AWB for your eCommerce business, contact Amilo today and we will help you get started!

As the world becomes increasingly interconnected, eCommerce businesses have seized the opportunity to expand their customer base beyond borders. Thanks to technological advancements and global trade agreements, it is now possible to sell products to customers in different countries with relative ease. However, international shipping is not without its challenges. One of the biggest obstacles faced by eCommerce businesses today is shipping disruptions, which can cause delays and result in customer dissatisfaction. If you are running an eCommerce business that sells to customers across borders, delivering your products on time and in good condition is crucial to your success. But what happens when things go wrong? These disruptions can cause significant delays that can negatively impact your business reputation and bottom line. However, there are ways to deal with these disruptions effectively. In this article, we will explore the different types of shipping disruptions and provide practical tips on how to mitigate their impact

1. Customs clearance

Customs clearance can be a complicated process, involving inspections, taxes, and fees that vary by country. It's essential to understand the regulations and requirements of each destination country to avoid delays and ensure successful delivery. In 2019, global trade experienced a total of 117.6 million customs seizures worth $3.3 billion, which highlights the importance of adhering to customs regulations. To navigate this process efficiently, partnering with experienced logistics companies that have extensive knowledge and experience with customs clearance is essential. These companies can help you prepare and submit necessary documentation, and liaise with local authorities to minimize the risk of delays. It's also important to provide accurate and detailed information on product descriptions, values, and quantities to avoid any discrepancies during the customs clearance process.

2. Weather conditions

Weather conditions can significantly impact the transportation and delivery of goods, causing delays and disruptions. According to the World Economic Forum, the total economic cost of natural disasters reached $232 billion in 2019, with transportation and logistics being one of the most affected sectors. It's crucial to monitor weather conditions and have contingency plans in place to address any potential disruptions. One strategy is to diversify your shipping routes to avoid areas that are prone to severe weather conditions. You can also leverage technology, such as real-time tracking and weather forecasting tools, to make informed decisions and keep your customers updated.

3. Holidays and peak seasons

Holidays and peak seasons can significantly impact delivery services and cause delays. For example, Chinese New Year, which falls between January and February, can cause disruptions in shipping from China, affecting eCommerce businesses that rely on Chinese suppliers. Similarly, Black Friday, Cyber Monday, and the holiday season can create a surge in demand for delivery services, leading to delays in shipping and delivery. To manage these peak periods, eCommerce businesses should plan ahead and communicate with their customers. It's essential to understand the shipping lead times and capacity of delivery services during these periods and set realistic delivery expectations for your customers. You can also offer alternative delivery options, such as expedited shipping, to meet the demands of customers who need their orders quickly.

4. Incorrect or incomplete address

Providing an incorrect or incomplete address is a common mistake that can cause delays in delivery. In fact, according to a survey by Pitney Bowes, 20% of eCommerce shipments experience delivery issues due to incorrect or incomplete addresses. To avoid these delays, it's crucial to verify and confirm the address with the customer before shipping the product. You can use automated address verification tools to check the accuracy of the address and reduce errors. Another strategy is to offer address correction services to your customers to prevent errors at the source.

5. Missing or inaccurate documentation

Missing or inaccurate documentation can also cause delays or rejection at customs, leading to frustration and potential loss of business. For example, a missing or inaccurate commercial invoice can lead to lengthy delays in the customs clearance process. In 2019, 70% of customs issues were due to incorrect or missing documentation. To avoid these issues, eCommerce businesses should have a clear understanding of the necessary documentation for cross-border delivery and ensure its accuracy. Automating the documentation process with digital tools can also help reduce errors and streamline the customs clearance process.

6. Product restrictions

Certain products may be restricted or prohibited from entering certain countries due to safety, health, or legal reasons. It's essential to understand these restrictions and regulations to avoid delays, penalties, or even the seizure of goods. In 2020, the U.S. Customs and Border Protection seized over 27,000 shipments of counterfeit goods worth approximately $1.3 billion. To navigate these restrictions, eCommerce businesses should conduct thorough research on the product restrictions and regulations of the destination country before shipping their products. They can also partner with experienced logistics companies that have extensive knowledge of international shipping regulations to ensure compliance and avoid any issues.

7. Delivery errors

Delivery errors are a common problem in international shipping and can have a significant impact on delivery times. Inaccurate or incomplete addressing information, incorrect labeling, and damaged packaging are just a few examples of the types of errors that can occur during shipping. According to a survey conducted by MetaPack, delivery errors are a major problem, with 55% of customers experiencing a late or failed delivery due to incorrect addressing. To reduce the risk of delivery errors, it's essential to use accurate and complete addressing information and to make sure that your products are packaged securely and labeled correctly. This can help to minimize the risk of damage during transit and ensure that your products are delivered to the correct address, on time, and in good condition.

8. Political instability

Political instability can have a significant impact on international shipping, with protests, riots, and civil unrest all potentially causing disruptions to transportation and delivery services. For example, during the Arab Spring in 2011, many businesses in Egypt were affected by the unrest, leading to delays in delivery services. Similarly, the ongoing conflict in Yemen has disrupted shipping routes and caused delays in the delivery of humanitarian aid. To mitigate the impact of political instability on shipping, it's essential to have contingency plans and work with logistics providers that have experience operating in politically unstable regions. This can help to minimize the risk of delays and ensure that your products are delivered on time and in good condition.

9. Capacity constraints

Capacity constraints can also lead to delays in international shipping, particularly during peak seasons such as the holiday season. During these periods, delivery services may experience a surge in demand, leading to capacity constraints and delays. Similarly, the COVID-19 pandemic has led to disruptions in transportation and logistics, causing capacity constraints and delays. To mitigate the impact of capacity constraints on shipping, it's essential to plan ahead and work with logistics providers that have sufficient capacity to handle your shipping needs. This can help to ensure that your products are delivered on time and in good condition, even during periods of high demand or disruption.

10. Payment issues

Payment issues can also cause delays in international shipping, with customs duties and taxes often causing problems for businesses and customers alike. If your customer fails to pay the customs duties or taxes on their shipment, it may be held at customs, leading to delays. Similarly, if there are issues with your payment processing system, it may cause delays in the processing of your shipment. To avoid payment issues, it's crucial to have a reliable payment processing system and work with logistics providers that have experience handling customs clearance and tax payments. This can help to ensure that your products are delivered on time and in good condition, without being held up by payment-related issues.

In conclusion…

As an eCommerce seller, it's essential to acknowledge that delays in international shipping can be inevitable in some scenarios. Customs clearance, weather conditions, holidays, and peak seasons, and other factors outside of your control can cause shipping delays. However, it's how you proactively manage these delays that can set you apart from other sellers. One way to differentiate yourself is by communicating with your customers about the potential for delays and providing updates on the status of their shipments. This can help manage customer expectations and reduce frustration. Another way to stay ahead of delays is by working with logistics providers that have experience navigating customs clearance, transportation disruptions, and capacity constraints. By being proactive in managing potential delays, eCommerce sellers can turn this into a competitive advantage. Customers are more likely to return to a seller that has transparent communication and is reliable in delivering their products, even in challenging circumstances. So, don't view delays as a setback, but as an opportunity to set yourself apart from other sellers in the eCommerce space.

If you're an eCommerce business owner, you might have heard of the term "value chain" before. But what does it mean, and why should you care? In this article, we'll explain what a value chain is, how it works, and how it can help you create more value for your customers and your business.

A brief history of Value Chain

A value chain is a way of looking at all the activities and processes involved in creating and delivering a product or service to your customers. It was first introduced by Michael Porter, a famous Harvard professor and business guru, in his book “The Competitive Advantage: Creating and Sustaining Superior Performance”. Porter argued that competitive advantage comes from performing these activities better than your competitors. A value chain consists of two types of activities: primary and secondary. Primary activities are those that directly contribute to the creation and delivery of your product or service, such as:

• Inbound logistics: This includes receiving, storing, and managing the raw materials and components that you need to make your products.
• Operations: This includes transforming the raw materials and components into finished products.
• Outbound logistics: This includes packaging, sorting, and shipping your products to your customers.
• Marketing and sales: This includes promoting, advertising, and selling your products to your customers.
• After-sales service: This includes providing support, warranty, repair, and customer service to your customers after they buy your products.

Secondary activities are those that support the primary activities and make them more efficient and effective, such as:

• Procurement: This includes sourcing and purchasing the raw materials, components, equipment, and services that you need for your primary activities.
• Technological development: This includes researching and developing new products, designs, processes, and systems that can improve your primary activities.
• Human resources management: This includes recruiting, hiring, training, developing, retaining, and compensating your employees who perform the primary and secondary activities.
• Infrastructure: This includes managing the overhead and administration of your business, such as finance, accounting, planning, legal, etc.

What can you get from understanding your value chain?

By analyzing your value chain, you can identify where you can create more value for your customers and where you can reduce costs or improve efficiency. For example, you can:

• Improve your inbound logistics by finding cheaper or better quality suppliers or by optimizing your inventory management.
• Improve your operations by adopting lean manufacturing techniques or by automating some processes.
• Improve your outbound logistics by finding faster or cheaper delivery methods or by offering more options to your customers.
• Improve your marketing and sales by segmenting your market or by using digital marketing tools.
• Improve your after-sales service by offering more guarantees or by providing online support.

Of course, these are just some examples of how you can improve your value chain. The possibilities are endless! But wait, there's more! A value chain is not only useful for analyzing your own business. You can also use it to analyze your competitors' businesses and find out where they have strengths or weaknesses. By doing so, you can:

• Benchmark your performance against theirs and see where you can improve or where you have an edge.
• Identify opportunities for differentiation or innovation that can give you a competitive advantage.
• Identify threats or challenges that can affect your market position or profitability.

Let’s see how it works for the giants too…

Now that you know what a value chain is and how it works, let's look at some real-life examples of eCommerce businesses that have used it to create value for their customers and themselves.

Example 1: Amazon

Amazon is probably the most well-known and successful eCommerce company in the world. It has a huge and diverse product catalog, millions of loyal customers, and a global presence. But how does it manage its logistics value chain? One word: innovation. Amazon is constantly investing in new technologies and strategies to optimize its logistics operations. Some of its innovations include:

• Fulfillment by Amazon (FBA): This is a service that allows third-party sellers to store their products in Amazon's warehouses and let Amazon handle the packing, shipping, and customer service. This way, sellers can focus on their core business and benefit from Amazon's logistics expertise and scale.
• Amazon Prime: This is a membership program that offers customers free two-day shipping on millions of items, as well as other perks like video streaming, music streaming, and access to exclusive deals. This program increases customer loyalty and retention, as well as encourages more frequent and higher-value purchases.
• Amazon Logistics: This is Amazon's own delivery network that consists of thousands of drivers, vans, trucks, planes, drones, and robots. This network gives Amazon more control over its delivery speed, quality, and cost, as well as enables it to offer same-day and next-day delivery options to customers.

Example 2: Alibaba

Alibaba is the largest eCommerce company in China and one of the biggest in the world. It operates several online platforms that connect buyers and sellers across different industries and markets. But how does it manage its logistics value chain? One word: collaboration. Alibaba recognizes that it cannot do everything by itself, so it leverages its ecosystem of partners to create a seamless and integrated logistics network. Some of its collaborations include:

• Cainiao Network: This is a logistics platform that connects merchants, warehouses, carriers, and consumers in China and abroad. It uses big data and artificial intelligence to optimize routing, inventory management, and delivery performance. It also offers smart lockers, self-pickup stations, and facial recognition technology to enhance customer convenience and security.
• Alibaba Cloud: This is a cloud computing service that provides infrastructure, software, and data solutions to businesses of all sizes and industries. It helps Alibaba and its partners to improve their operational efficiency, scalability, and innovation capabilities.
• Ant Group: This is a financial technology company that offers digital payment, lending, insurance, wealth management, and credit scoring services to consumers and businesses. It helps Alibaba and its partners to facilitate transactions, reduce risks, and increase customer satisfaction.

Example 3: Shopify

Shopify is a leading eCommerce platform that enables anyone to create an online store and sell their products. It has over one million merchants worldwide who sell everything from clothing to furniture to art. But how does it manage its logistics value chain? One word: empowerment. Shopify empowers its merchants to customize their logistics operations according to their needs and preferences. Some of its features include:

• Shopify Fulfillment Network (SFN): This is a network of fulfillment centers that Shopify partners with to offer fast and reliable shipping to merchants who want to outsource their logistics operations. Merchants can choose which products they want to store in SFN warehouses and which shipping options they want to offer to their customers.
• Shopify Shipping: This is a service that allows merchants to buy discounted shipping labels from major carriers like UPS, USPS, DHL, and Canada Post directly from their Shopify dashboard. Merchants can also track their shipments and manage their returns easily.
• Shopify Apps: These are third-party applications that merchants can install on their Shopify stores to enhance their functionality and performance. There are hundreds of apps available that cover various aspects of logistics such as inventory management, order fulfillment, dropshipping, delivery tracking, customer service, etc.

As you can see from these examples, there is no one-size-fits-all solution for managing a logistics value chain in eCommerce. Each company has its own strengths, weaknesses, opportunities, and threats that shape its logistics strategy and execution. By optimizing your value chain, you can reduce costs, improve quality, increase efficiency, and enhance customer satisfaction. You can also gain a competitive edge over your rivals who may not be paying attention to their value chain. In other words, value chain is the key to eCommerce success. So, what are you waiting for? Start analyzing your value chain today and see how you can make it better. Remember, every step counts. Whether it's sourcing from reliable suppliers, choosing the best logistics partners, or offering fast and convenient delivery options, you can make a difference in your value chain. And your customers will thank you for it.

First of all, what is logistics? According to Wikipedia, logistics is “the detailed organization and implementation of a complex operation”. In other words, it's the art and science of getting stuff from point A to point B in the most efficient and effective way possible. Sounds simple, right? Well, not quite. Logistics involves a lot of planning, coordination, communication, problem-solving, and creativity. It also requires a lot of resources, such as people, vehicles, equipment, warehouses, software, and money.

How it all began…

Logistics has been around for a long time. In fact, some historians trace its origins back to ancient times, when people had to transport goods and materials across long distances using animals, carts, ships, and roads. Some of the earliest examples of logistics include the construction of the pyramids in Egypt, the Silk Road trade route in Asia, and the Roman Empire's military campaigns. These civilizations understood the importance of logistics for their survival and prosperity. However, logistics has evolved a lot over the centuries. Thanks to technological innovations and globalization, logistics has become more complex and dynamic than ever before. Nowadays, we live in a digital world where we can order almost anything online with just a few clicks or taps. We expect our products to be delivered fast, cheap, and safe to our doorstep or our nearest pickup point. We also want to track our orders in real time and have the option to return or exchange them if we are not satisfied. This is where eCommerce comes in. eCommerce is the buying and selling of goods and services over the internet. It has revolutionized the way we shop and do business. eCommerce has also created new opportunities and challenges for logistics. On one hand, eCommerce has increased the demand for logistics services, as more and more customers shop online and expect fast and reliable delivery. On the other hand, eCommerce has also increased the competition and complexity for logistics providers, as they have to deal with more orders, more destinations, more regulations, more risks, and more customer expectations. This is why logistics is so important for eCommerce. Logistics is not just a cost factor or a support function for eCommerce. It is a strategic advantage and a key differentiator for eCommerce businesses. Logistics can make or break an eCommerce business. A good logistics system can help an eCommerce business to increase its sales, customer satisfaction, loyalty, and retention. A bad logistics system can hurt an eCommerce business's reputation, profitability, and growth.

Logistics exists in many forms and models!

There are many ways to classify logistics, but one of the most popular is based on the direction of the flow. According to this classification, there are three main forms of logistics: inbound, outbound, and reverse.

• Inbound logistics refers to the activities involved in sourcing, receiving, and storing raw materials, components, or finished goods from suppliers or manufacturers. Inbound logistics is closely linked to procurement and inventory management. For example, Amazon’s “More on the way” message means any purchases of the out-of-stock item will be immediately shipped to the fulfillment center as soon as they arrive from the supplier.
• Outbound logistics refers to the activities involved in picking, packing, shipping, and delivering products or services to customers or distributors. Outbound logistics is closely linked to order fulfillment and customer service. For example, Shipium is a software company that helps ecommerce businesses optimize their outbound logistics by providing real-time visibility, predictive analytics, and proactive communication.
• Reverse logistics refers to the activities involved in collecting, processing, and disposing of returned, damaged, or unwanted products or materials from customers or distributors. Reverse logistics is closely linked to quality control and sustainability. For example, Patagonia is a clothing company that encourages its customers to return their worn-out products for recycling or repair through its Worn Wear program.

Now that we know the three main forms of logistics, let's take a look at logistics models from another perspective. For example, you must have heard about 1PL, 2PL, 3PL and so on, so what does it mean?

• 1PL stands for first-party logistics, which means that a company handles its own transportation and warehousing of goods. In other words, they do everything themselves, from sourcing raw materials to delivering finished products to customers. Sounds simple, right? Well, not quite. As you can imagine, managing all aspects of logistics can be very costly and time-consuming for a company. That's why many businesses outsource some or all of their logistics functions to third-party providers. And that's where the other PLs come in.
• 2PL stands for second-party logistics, which means that a company hires another company to provide transportation services. For example, a manufacturer might contract with a trucking company to move its goods from the factory to the distribution center. The trucking company is the 2PL provider in this case.
• 3PL stands for third-party logistics, which means that a company hires another company to provide a range of logistics services, such as transportation, warehousing, inventory management, order fulfillment, and more. For example, an online retailer might contract with a 3PL provider to store its products in a warehouse, pack and ship orders to customers, and handle returns and exchanges. The 3PL provider is the one-stop shop for all the retailer's logistics needs.
• 4PL stands for fourth-party logistics, which means that a company hires another company to manage and coordinate its entire supply chain. For example, a multinational corporation might contract with a 4PL provider to oversee its global network of suppliers, manufacturers, distributors, and retailers. The 4PL provider is the mastermind behind the scenes who optimizes the supply chain performance and efficiency.
• 5PL stands for fifth-party logistics, which means that a company hires another company to provide advanced logistics solutions using technology and data. For example, an eCommerce platform might contract with a 5PL provider to leverage artificial intelligence and machine learning to analyze customer behavior, demand patterns, and market trends. The 5PL provider is the innovator who creates new value and opportunities for the eCommerce platform.

So there you have it: a brief introduction to the different types of logistics providers. Of course, there is much more to learn about each PL and how they operate in the digital world of eCommerce and supply chain. But hopefully this section has given you some basic knowledge and sparked your curiosity to explore more.

How can my eCommerce business improve its logistics?

Well, there is no one-size-fits-all solution for this question. Each eCommerce business has its own unique needs and goals when it comes to logistics. However, some general principles that can help an eCommerce business optimize its logistics system are:

• Understand your customers' needs and expectations. Know who your customers are, where they are located, what they want to buy from you, how they want to receive their orders, how much they are willing to pay for shipping and handling fees, how often they shop online from you or your competitors.
• Choose your logistics partners carefully. Find reliable and reputable logistics providers who can offer you the best quality service at the best price. Compare different options and negotiate contracts that suit your needs and budget. Establish clear communication channels and performance indicators with your logistics partners.
• Invest in technology and innovation. Use software tools and platforms that can help you manage your inventory, orders, shipments, tracking information etc., automate your processes reduce errors improve efficiency save time money etc., integrate your systems with your logistics partners' systems etc., leverage data analytics artificial intelligence machine learning etc., enhance your visibility control optimization decision making etc., explore new technologies such as drones robots blockchain etc., that can improve your delivery speed accuracy security sustainability etc.
• Optimize your supply chain network design. Design your supply chain network according to your product characteristics customer segments market conditions etc., balance your trade-offs between cost service quality risk etc., choose your distribution channels modes methods etc., locate your warehouses fulfillment centers distribution centers etc., strategically near your suppliers customers markets etc., optimize your inventory levels safety stocks reorder points etc., according to your demand patterns seasonality variability etc., implement lean agile resilient green etc., supply chain practices

Top 5 criterias for an effective logistics 

After optimizing your logistics, you would want to measure your result in a quantifiable manner, but based on what criterias can we determine a logistics is effective? There are multiple indicators that we can consider, depending on the context. However among them, these 5 are generally regarded as the most important criterias:

• Cost: The cost of logistics includes all the expenses related to transportation, warehousing, inventory, packaging, labor, taxes, and fees. An effective logistics aims to minimize these costs while maintaining or improving the service level.
• Speed: The speed of logistics refers to how fast the products or services can reach the customers or distributors from the point of origin. An effective logistics aims to reduce the lead time and increase the delivery reliability.
• Quality: The quality of logistics refers to how well the products or services meet the expectations and requirements of the customers or distributors. An effective logistics aims to prevent or reduce errors, damages, losses, defects, and complaints.
• Flexibility: The flexibility of logistics refers to how well the logistics system can adapt to changes in demand, supply, environment, or regulations. An effective logistics aims to increase the responsiveness and resilience of the logistics operations.
• Visibility: The visibility of logistics refers to how much information is available and accessible about the status and location of the products or services throughout the logistics process. An effective logistics aims to improve the transparency and accuracy of the data and communication.

To measure and track these criteria, businesses can use various key performance indicators (KPIs) such as cost per unit shipped, order cycle time, fill rate, on-time delivery rate, return rate, inventory turnover ratio, etc.

In conclusion…

Logistics plays a pivotal role in the success of any eCommerce business operating in the digital world. By prioritizing logistics, you can significantly enhance your customer service, optimize your costs, and expand your market presence. Neglecting the importance of logistics for your online store may have a detrimental effect on your business, and it could potentially make or break your success. Therefore, it is crucial to recognize the pivotal role that logistics plays in your eCommerce operations and to invest accordingly.