process of freight shipping can be really complicated. There are
terms you don't understand, companies you don't know (but really need
to trust), quantities of work you never expected, and dollar amounts
that can dramatically inflate your Funding Goal.
start with a detailed overview of Freight, and in our next Article
we'll discuss Fulfillment (Self & Others).
companies love pictures like this!
(rather synonymously called "Logistics") refers to the process of
shipping your games en-bulk from your Manufacturer's printing/assembly
factory to the destinations around the globe that you need them
delivered to (usually your distributor, your fulfillment center(s), and
yourself.) Let's define all those scary terms, easy and hard.
- Can be used to refer to both the objects themselves (cartons full of
games/etc), and the process of shipping the pallets full of them around
- More specifically the figuring out of how to freight (verb) your
goods from Point A to Point B. A "Logistics Firm" can be hired to
handle your "freight" and imports. And no, you don't want to do
- The process of taking goods into a country that it was not made in.
If you create in the USA and ship to a USA location, there's no
import. If you ship from China to the USA or Germany, that's an
- A wood or plastic platform roughly a meter square that holds cartons
full of your stuff. A "pallet of goods" or simply "pallet" is more
commonly used to describe 1 pallet full
of cartons. Usually stacked about 3-4ft high.
- The heavy duty cardboard box your games/etc are bulk packed
into before being put
on a pallet. A big box game (TKA)
will have 4-5 games per carton, a card game will have about 36-72 games
per carton (ADAPT /
ADAPT Tuckbox Expansion),
and smaller items can have as many as 200+ (Halfsies
Dice Sets). A carton will be about 14x13x10inches
(sized to your item), and limited to a weight of about 30-35lbs
(14-15kg). Don't worry about sizing this, your manufacturer
orders them to suit your product.
Lane(s)-How many places you are shipping to.
If you produce in China, and want to fulfill from (and thus ship some
cartons to) the EU and the USA, plus send some to your distributor,
then you have 3 shipping lanes. If you want to fulfill from
inside Canada too... 4 lanes. From within AUS? 5 lanes.
& VAT-In the USA there is no technical VAT, though your state may
have a "use tax" that works remotely similarly, and you will pay some
taxes period, but in other countries there are often Duties and/or VAT;
both are basically taxes on imports. These
can range from 0% to 27% of the value of the items, and varies by item
type (game/tool/book/food/etc.), material (wood/paper/plastic/banana),
and value (over/under a certain threshold). If
the country/region that you're importing to has these costs you'll need
to pay them to customs when they enter the country. (All of the
EU is 20% for Board Games.) If you pay it this way they are paid
based on your MANUFACTURING price (ie: $2.00 each x 20%); if you don't
but ship to customers directly from the USA the customer then pays
based on the SALE price (ie: the $10 MSRP x 20%). Yes, that saves
YOU money, but lowers the number of sales you have (would you buy
a $70 game + shipping that you'd then have to pay $14 more to take from
the hands of the postman?). VAT, honestly, doesn't add up very
high when you pay it in advance for your customers so it's a great
service you can provide your backers. Read herefor
more on prepaying VAT.
- Insurance -
When your logistics company says "Would like insurance?", say "Yes!".
It's very inexpensive and without it, when your boat sinks, you're up a
creek without a product.
of Record-The business entity in the country (usually in the EU) that
says to the government "Yeah, that's our stuff, we're paying the
taxes." They claim it if there's an issue (which a government wants),
and they pay the taxes for you (which a government wants). You of
course reimburse them for this and pay for the service. Most
fulfillment companies in the EU will do this service for you, often for
free, since you're hiring them to ship stuff; and is frankly reason
enough to hire an EU based fulfillment company.
Company-The company that actually ships individual orders to
individual customers/backers. Discussed in detail in the next KSAC here.
Bond-To get more than $2,500 worth of commercial goods into the USA
you need a bond. A bond is a guarantee between the govt, your freight
guys, and yourself (yes 3 parties) that the government will get paid
taxes and fees. Your freight people will prepare it, you sign and
pay for it.
Use Bond-If you're only importing once in a 12 month period (ie: 1
Kickstarter) this is cheaper.
Use Bond-If you're importing more than once in a 12 month period (ie:
2-5 Kickstarters), get this one. (It's a really simple choice).
Terms-The 'terms' upon which you agree with your manufacturer and
possible 3rd party
freight company to handle freight shipping. Your options...
- "Delivery Duty Paid"-This option means that your
manufacturer/supplier is responsible for basically everything: freight
shipping, all fees (including import duties like VAT), and is liable
for the safety of the goods, until the goods reach the agreed upon
destination(s). You'll be billed and pay these fees back to them,
depending on arrangement. Short: They handle everything.
- "Delivery Duty Unpaid"-As DDP except import fees & duties are notcovered
by the shipper. Short: They handle everything except import
duties and VAT.
- "Free On Board"-This option means that your manufacturer only
delivers the goods to your freight forwarder (ie: the company you hired
to do the freight for you.) So the manufacturer preps the
shipment at the factory, delivers to the truck or ship, and then is
free of liability at that moment, at which point the hired freight
company takes over. Short: Gives you more control over your costs, and
is usually cheaper but a bit more work (you gotta hire a company to do
the rest for you). You'll incur an "FOB" fee from the
manufacturer, often one for each shipping lane, plus a bill from the
hired logistics company.
- "EX-Works"-This option means that your manufacturer only prepares
the goods for pickup at
their factory. Therefore, your hired freight service picks up the goods
at the factory and then does all the rest too (import Duties can be
handled in various ways). Short: Gives you the most control, the
lowest cost, but the most work (albeit not much more than FOB).
Freight vs. Air Freight.
Freight-Takes about 40-45 days from Eastern Port (China, etc) to
Western Port (USA-40 or Europe-45+). West Coast USA ports are about 7
days faster than East Coast (as the ships come Eastward across the
Pacific and stop there before going on to other locations); inland USA
(ie: Kansas) may take longer (and cost more) as they need a train after
the boat. Europe takes even longer as there are many stops
Westward around the huge continent of Africa. Sea Freight is by
far, without question, the cheapest.
Freight-Takes about 7-9 days total from
Manufacturer to doorstep. Port not required as they fly it to your
local airport and put it in a truck from there. You can see the
advantage, but the cost is WAY higher. Ask for a quote.
Freight-This is always a part of each shipping lane regardless. Get it to the
port, and then from the
port. It's already included in your Sea/Air quote as required by
shipping lane and distance from port.
from my experience:
a Logistics Company and use EXW (instead of FOB) when you can because
freight companies quote MUCH faster and ship a BIT cheaper than my
manufacturer (I use OTX).
If I didn't hire my own Logistics Company, and had my manufacturer
handle freight, I'd do DDP to get the VAT taxes out of the way as early
as possible as it can delay an import considerably. (Ask your
account manager if FOB is included in the price of your manufacturing
quote, and if so, for how many lanes. You'll want to do FOB if
it's already included/paid for and can't be recovered.)
one shipment I had our importer of record pay VAT for us and that was a
disaster since they paid 40+ days late delaying everything and
accumulating storage fees at customs that then resulted in expensive
safety testing. I could have
had OTX pay it for us in advance, next time I will. I'd suggest
the same. Get VAT out of the way ASAP!
this: Your manufacturer specializes in manufacturing (not shipping
& imports), so let them manufacture. Your logistics team is the
opposite, so let them handle as much shipping & import stuff as
they can (including VAT).
Sea Freight for most and factor that 45 day time into your estimated
delivery date. You may want to Air Freight just a small special portion
to yourself if the 45 day boat will make them too late for an important
event (like a convention). Talk to your manufacturer to get that
shipment prepared correctly.
more you ship at once the less you pay per
item. I was once fortunate enough that 2 projects finished
within 2 weeks of each other. We delayed the first, and combined
it with the 2nd for
freight and the net cost came down by about 25% as all the set-up fees
were combined into one! I spent the savings on upgrading to Air
Freight as a gift to backers and nearly netted out!
the end of the freight shipping your goods arrive at your fulfillment
centers where they can be shipped out to your customers.
all that? Need a summary?
a Logistics Firm
them to do all the freight, bond, insurance, and tax work
EXW (or FOB if already included in the manufacturing quote)
VAT paid ASAP
you're squared away and ready to have your stuff sitting on pallets in
multiple regions including your company warehouse (yes,
I mean your living room), then you're ready for Article #19 -
always, comments and suggestions highly encouraged.