I almost couldn’t sleep the night before I loaded out my first cargo container here in Spain. For a small businessman, a container represents a lot of work and there are a lot of details involved.
It is a culmination of 6 months of work. Preparing a shipment involves visiting factories, developing designs, selecting items and quantity, developing and ordering cardboard boxes, developing and printing labels, and of course paying for everything. The process becomes simpler with subsequent containers, but there are always, always a lot of details that need attention.
I live and work in Spain and my company sells in the United States. So, all of the pottery and extra virgin olive oil products I offer to customers in the United States are made in Spain and imported into the States. Many companies in the US buy their product overseas and import - China is the best example. I have never shipped from China, but I have the idea the infrastructure is a little more stream-lined there.
Types and Sizes of Containers
There are many types of containers, including containers for logs, refrigerated items and large, heavy items. Most standard merchandise is shipped in 20ft or 40ft "Dry Containers". Another version is the "High Cube (HC) 40ft, which is one foot taller than a standard 40ft. In many cases, shipping companies will provide a 40ft HC container at the same price as a standard 40ft. This depends upon their current stock of containers. There usually is not a lot of difference in price between 40ft normal and HC containers, which helps reduce shipping costs for companies that can stack their product high on pallets, or where weight bearing on the lower levels is not an issue.
Packing a Container
Most containers are packed using prepared pallets. There are several reasons that pallets are used. Chief among them is that pallets are easily placed inside and also removed at the destination warehouse.
There are many types and sizes of pallets. In Spain (and Europe), the standard pallet is a "European" pallet, which measures 100X80cm. The other size used extensively is the "US" pallet, which measures 100x120cm. Most of the commerce within Europe is trucked, and the European pallet is ideal for loading trucks. The pallets can be placed back to back and don't hang over the sides of the truck (where as a US pallet would).
To fully utilize the space of a container, whether it be a 20ft or 40ft container, it is necessary to use US pallets. And, the best method is to load the pallets with one facing forward, and one facing sideways, with the next ones opposite - alternating until the container is full. So with every four pallets entered in the container, the wall of product is even.
A 20ft container will allow 11 US pallets and a 40ft container will allow 21 pallets. Depending upon how the pallets are prepared, and snugged together in the container, a European size pallet can be handy to fit into the final spot more easily. After placing the pallets in the container, there will be a small empty space in both 20 and 40ft containers, which is always useful for loading the last packages or providing samples to customers.
For shipping into the States, the pallets must be certified if they are made of wood. Certified pallets are fumigated during the wood curing process so that wood beetles and other bugs can't hide out in the pallets and move from one country to another. Certified US pallets cost no more than $25 each, and usually less. Plastic pallets are a good option, but they are more expensive (usually no more than $30).
The alternative to pallets for loading a container is to stack the merchandise without pallets from the floor to ceiling. This is more labor intensive during load out, as well as unloading. Trucks carrying the containers for loading usually allow a 2 hour window, and if it takes longer than that they charge a per hour rate for waiting (usually around $60/hour).
Importing Food Items to the US
Having imported premium quality, Spanish extra virgin olive oil, I have learned that there are several special regulations and procedures that pertain to importing food items.
First, both the Spanish source/producer of the food and the US company warehousing the food items must register with the Food and Drug Administration (FDA) as a "Food Facility" and get a registration number. I am sure that it is because if any problems developed with the food items, the FDA would want to be able to identify where the products are warehoused in the States, and also where it was produced.
The Food Facility Registration number needs to be clearly indicated on factory/commercial invoices used for the importing into the US. The invoice address of the importer must match that of the Food Facility Registration. The Harmonized Tariff Schedule (HTS) codes must be clear for each type of product, and the packing list must detail the bottle type, size, quantity, etc. The FDA also has strict regulations concerning food labeling, which have recently been changed.
Finally, it is worth noting that the FDA requires a "Prior Notice" of imported food, and for ocean shipments the deadline is no later than 8 hours prior to the vessel’s arrival in the first U.S. port.
If you do internet searches regarding the Registration of a Food Facility and the filing of Prior Notice, you will find many companies that suggest they do it for you. I think they will do it for approximately $250. As the owner/operator of a small business, I decided to do these things myself and did not have any trouble. There were a couple of wrinkles on how to register my food facility, but a help line at FDA sorted out the confusion very rapidly.
Paperwork for a Spanish Container
The procedure for sending a container includes:
1. Shipping Quote and Booking a Container: There are hundreds of shipping companies. I have worked with at least six different companies in the past 10 years. There are difficulties with shipping containers so it is very important (and difficult) to find a company you have confidence in. Requesting a quote is easily done via email. There is a international lingo regarding the terms of shipment. I wrote a blog article about INCOTERMS, which you can find here. Suffice to say, that I now do most of my shipments FOB (Free on Board) or CFR (Cost and Freight). Once you determine the terms and settle on a shipping company (and quote) it is necessary to book a container. To do this you confirm the load out date, time, merchandise type, estimated gross kgs and loading address with your shipping agent.
2. Load Out Slip: Once the container is loaded out at the factory(s), a load out slip is provided to each factory that registers the pickup, the container number and the seal number. I usually take pictures of the container number and seal number. I have had documentation prepared by a shipping agent that included the wrong container number, and the only way the confusion was cleared up is that I had a photo of the container and number.
3. Factory/Commercial Invoice and Packing Lists: are required from each factory (or exporter). The best policy on this is to have the invoice and packing list very similar in how the merchandise is listed. You have to understand that people with very little time will be looking at these documents and the clearer you can make it, the better things go. A packing list will have to include the number of boxes (or pallets/bultos), the total net weight (kgs), the total gross weight (kgs) as well as the total cubic meters of merchandise inside the container. Again, the more understandable you can make the better. As well as making sure the numbers square between each invoice and related packing list. Finally, I always make sure I put the container and seal number clearly on both the packing list. And when I am shipping extra virgin olive oil, I make sure the FDA Food Facility Registration Number is on both the invoice and packing list.
4. The shipping agent: takes over once the container is loaded out and on it's way to the Spanish port. With the factory/commercial invoice and packing list, the shipping agent manages Spanish Aduanas (equivalent of US Customs) which results in a tax document registering the export for the factory (DUA).
5. A Dispatch Authorization (Autorizacion de Despacho) is necessary so that the merchandise can be passed through Spanish Aduanas (Customs) as an export. As a small business, I have found it best to use the shipping company's Aduanas Agent. It stream lines the process because they have better communications with the shipping agent. There are a couple ways the authorization can be provided by the factory to the Aduanas Agent. The first is via the internet, but the factory must have a "digital signature" so that they can digitally and legally provide the power to the Agent through a web page. This digital "authorization" can be given to an Aduanas Agent (agency) for up to 1 year. This is the most common method in 2018. Only a couple of years ago it was paper based. Each time an export was processed, a separate and new authorization was necessary - provided on a form letter, signed, dated and sealed at each factory. This "paper" method is used less often, but still in use in some cases.
6. Sometimes, other pre-shipping documents are required by the Aduanas Agent. For example, a "No Double Use" (carta de no doble uso), is required. For some reasons, the factories that sell me garden pots, have to sign a letter saying the pots won't be used for building weapons, consumed as drugs etc. That there is not a secondary or double use for the garden pots. This has only been necessary for the garden pot factories.
7. Import Security Filing (ISF): For importing into the United States, an ISF is required for each factory prior to the container boarding the container ship. The ISF registers the manufacturer, the importer, the notify party, what is being shipped, what the container boat number is, and some other information. The ISF filing has been in effect now for about 4 years or so. This is something that is required in the US, but not other destinations, so it can slip through the cracks with Spanish shipping agents.
8. Bill of Laden (BOL): With aduanas transacted and all the documentation straightened out, the shipping agent will register the shipment with the overseas shipping company and a "Bill of Laden" will be issued for the load. There are two methods that a Bill of Laden can be conducted. One is by paper and courier, which must be a huge hassle and result in several courier charges. The second is a digital "BOL" (or Seaway Bill). Usually the shipping agent asks if you want a physical BOL or prefer to do it digitally. I think it may be very similar to the idea of buying stocks where you can purchase online and archive the purchase in a online digital account, never receiving a physical stock certificate, or you can actually request a stock certificate paper to put in a safe. That is my overview only. I am sure I can be corrected on many details regarding this.
9. Informing the US Customs and Shipping Agent: Once the shipment is on the high seas, a "transmission" occurs pass the container from the Spanish company to a US based shipping company. This is done with the same documents, invoice and packing lists.
I have found it best to use a Spanish company for the container booking, loading, aduanas and overseas shipping. For US Customs and Stateside delivery, I employ a different, US company. I have found that this works best because the Spanish company is more efficient and cost effective with the Spanish side of things (and the ocean shipping). And the US based company is more effective and efficient getting the merchandise through Customs and delivered via truck to the destination. Every company will say they go door to door, but usually there is a huge disconnect between a shipping company in one country and another. They seem to work as sub-contractors for each other in many instances.
Time wise, it takes approximately 15-20 days to the US east coast ports and approximately 35 days to west coast ports. Of course this depends upon several variables so it is never exact and usually takes longer than planned. I have had containers that have "disappeared" for two weeks before they were loaded on a US bound container ship. It is really hard to manage this aspect and I recommend developing a good relationship with a capable shipping agent. But,.... there are so many variables that everyone can blame everybody else in this process. You should ship one month earlier than you would think necessary, so that the delays do not generate stomach pains. "Just in time" inventory management is not possible from Spain.
9. US Customs and Final Delivery: It is important to have an estimated time of arrival (ETA) of the container to the US port. A lot of times the arrival to the US port can slip through the crack for a couple of days. I always make sure I am in email contact with both the Spanish agent and the US agent, so that the transmission happens smoothly. The US Customs agent takes the factory/commercial invoices and packing lists and conducts the Customs entry, paying the tariffs on each of the product types. This is registered and provided to the client upon payment. It is very helpful to list the HTS code on the packing list, which can provide guidance to the Customs agent to correctly categorize the product (and associated tariff).
10. Inspections: Dreaded inspections. What can I say. My containers have been inspected up the ying-yang. I have imported six containers to the port of Seattle and only the most recent passed through without some sort of inspection. I have had several other inspections in New York, but Seattle has been the challenge.
There are three different types of inspections that are conducted. The first is an X-Ray inspection which is fairly rapid and straight forward. The container is pulled and sent through an x-ray machine where they determine if there is anything suspicious. The second type is an "open door" inspection. Again this is fairly straight forward, though less rapid. Just as you would suspect, the inspection involves opening the door and peering around to see if everything looks legit. The third and most serious type of inspection is the dreaded "Full Monty". The Full Monty requires the container to be pulled, sent to a sub-contractor's yard, where the container is opened and everything is removed. Then the inspectors arrive, open boxes looks at the merchandise and afterward, everything is again placed into the container.
Each of the inspections carries an associated cost. You must remember that containers are expected to be cleared from the port within a 3 to 4 days after arrival (I think). There is a limited time, and if for any reason the container gets hung up because of paper work, wrong hitch on a truck, or whatever, the owner of the merchandise in the container is charged for storage, transport, etc. This amounts to important sums of money. Usually, an x-ray or open gate inspection costs $500-600, if everything goes well. A Full Monty can run into thousands of dollars. I had one experience with multiple issues (including a truck showing up for container trailer on a Friday evening - without the correct hitch!), that resulted in a total fee of approximately $5500 (this is a ball park - I am running with what I remember - not reviewing invoices).
Several different US governmental agencies can call for an inspection. Most of my inspections (or all) have been called for by the FDA (Food and Drug Administration). My hand painted Spanish pottery imports have been inspected regularly. And, my extra virgin olive oil has also been inspected and tested to see if it meets FDA requirements for "organic".
Seattle is the closest port to our GringoCool/Cactus Canyon Ceramics warehouse. I have to believe that the FDA and other agencies have and share a database regarding importers and inspections (I have to believe, though it may not be true). Hundreds of thousands of containers enter the US each year, with a small portion being flagged for inspection. Somehow, as a small businessman importing from Spain, my containers are continually selected. I dread inspections and the time delay and cost associated. I am determined to develop a clean track record with the US governmental organizations, and hopefully my containers are not continually flagged for inspection. This is really frustrating, mostly because of the time delay and cost associated with the inspections.
It is worth emphasizing, that the importer is responsible for all costs generated at a US port. And there are port contractors and sub-contractors that make money with every additional service provided (including inspections). So you have the importer interested in an efficient low cost delivery, and you have port authorities that make money with "additional services provided" with no urgency of action. It makes for a scary environment to enter into.
11. Costs: There are many variables that determine the final cost of a container delivery from a Spanish factory, to a US warehouse. A formula might look like the following:
Loading & local delivery to Spanish port + Spanish port handling fees + Ocean transport + US Customs tariffs + US port handling fees + local transport & delivery = more $$$$ than you thought.
All in, the last 40ft container delivered from Spain to Oregon (west coast) cost approximately $8,000. The last 20ft container delivered from Spain to Pennsylvania (east coast) cost approximately $5,500. Neither was inspected.
There is not a great deal of difference between the shipping cost of a 20ft and 40ft container. Of course the Customs tariff total will be different due to the volume of merchandise. As you can imagine, the Spanish local costs, port costs and US local costs don't change for either size of a container. And the space utilized on a container ship doesn't change a lot between a 20 and 40 footer either.
Final Thoughts
This blog post sort of started to degenerate into a customer complaint register. Sort of like an onion, with each layer removed the writing has a little more bite and pungency. The intent is to provide some insight into container shipping from Spain to the US.
It is not rocket science and there are many ways to handle this. As a small business person, I am in the micro-manage category of shipping. My final thought is that for stomach pain free international shipping of merchandise, it is best to ship with extra time and have a comfortable cost cushion in the merchandise mark up for the final delivery costs.
Thanks for reading. Comments and questions are always welcome. - Steve
