How to Calculate the Total Cost of Importing Furniture Hardware

The ongoing global COVID-19 pandemic has severely affected the global economy. For many industries, a broken supply chain has become an urgent issue to settle. A stable and sustainable supply chain is the solid basis for companies.

As a global manufacturing center for furniture hardware, China has become the top choice for many companies to build the supply chains. Are you considering moving your supply chain to China for more competitive prices and more sustainable and stable development? Do you know how to import from China? How should you calculate your total costs when importing from China.

This article will help you to understand the process and the costs involved in importing furniture hardware from China. Let’s get started.

What are Incoterms?

Incoterms or International Commercial Terms are a series of terms of sale published by the International Chamber of Commerce. They are widely used in international trade, which defines the respective obligations, risks, and costs involved in the delivery of goods from the seller to the buyer.

Incoterms for Any Mode of Transport

• EXW (Ex Works)
• FCA (Free Carrier)
• CPT (Carriage Paid To)
• CIP (Carriage and Insurance Paid To)
• DAP (Delivered at Place)
• DPU (Delivered at Place Unloaded)
• DDP (Delivered Duty Paid)

Incoterms for Sea and Inland Waterway Transport

• FAS (Free Alongside Ship)
• FOB (Free on Board)
• CFR (Cost and Freight)
• CIF (Cost, Insurance and Freight)

Incoterms 2020 Quick Reference Guide

When signing the contract, make sure that the chosen Incoterms rule is clear in the contract.

FOB – The Most Common Incoterm When Importing Furniture Hardware From China

FOB is the most common Incoterm when importing furniture hardware from China. This term is only used in non-containerized sea freight or inland waterway transport.

Furniture hardware is mostly transported by sea due to its heavyweight, large size, and low unit value. Most furniture hardware manufacturers in China use FOB when exporting the products. The seller is responsible for the delivery of the goods on board the vessel nominated by the buyer at the named port of shipment and export clearance. They should bear all the costs to get the goods loaded on board the vessel ready for export.

Once the goods are placed on board, the risk transfers to the buyer, who bears all costs thereafter. To calculate the remaining costs, it will be a wise idea to turn to your import agent or freight forwarder.

How to Calculate the Total Cost of Imports?

The total cost of imports includes the final cost of products, shipping costs, customs duties, taxes, currency conversion, and dozens of additional charges. The following section will give you an idea of the costs that may be incurred at various stages in the delivery of goods from the seller (typically seller’s warehouse) to the buyer (typically buyer’s warehouse).

While we can’t provide you with specific amounts, knowing some of the key costs may help a lot before you make the business decisions.

Delivery of goods from the seller to the buyer

Export Packaging

• Packaging Fees

With the exception of a few goods which are packed naked or in bulk, the vast majority of goods require appropriate packaging.

Packaging of exports must:

– protect the goods from damage and corrosion

– easy to transport

– cost effective: stacking, pallet, etc.

– comply with laws and regulations. For example, wooden pallets from China must be treated before they are allowed to enter the USA.

In all Incoterms rules, the seller is responsible for the packaging for exporting the cargo, usually at the seller’s warehouse. The cost of export packaging is also borne by the seller. The requirements and responsibility for packaging should be specified in the contract of sales.

Pre-Carriage

Pre-carriage is the inland movement before the container is loaded at the port of shipment.

The costs involved include (but are not limited to)

• Loading Charges: any charges incurred in loading the goods at the seller’s warehouse.
• Delivery Fees to Port of Shipment: the cost of delivering the goods from the seller’s warehouse to the port of shipment.

Delivery at the Port of Shipment & Loading Alongside Vessel

The costs involved include (but are not limited to)

• Origin Terminal Handling Charge (OTHC): the fees charged by the terminal operatorfor the storage and movement of containers before they are loaded on a vessel. The charges usually include the fees involved in the unloading of the container, stacking and crane service, stevedoring transfer of the container from the consignor’s vehicle, and goods handling, etc.
•  Wharfage Charge: the fee charged by the terminal operator to use the facilities and services in the ports.
• Documentation Charges

Export Customs Clearance, Duty & Taxes

• Customs Duty
• Export Taxes

Main Carriage 

Carriage is the transportation of the cargo by sea from the port of shipment to the port of destination.

The main costs of the shipment cover:

• Freight costs from port of loading to port of discharge

Discharge and Delivery at Port of Destination

• Destination Terminal Handling Charge (DTHC)

• Documentation Charges
• Warehousing Charges

Import Customs Clearance

• Import Customs Clearance Charges
• Customs Duty
• Import Taxes eg. Value-Added Tax (VAT)

On-Carriage 

On-carriage is the transportation that takes place after the container is discharged from the vessel at port of destination.

The costs involved include (but are not limited to)

• Delivery Fees to Destination: the cost of delivering the goods from the port of destination to the buyer’s premise (usually warehouse)
• Unloading Charges: any charges incurred in unloading the goods at the buyer’s premise (usually warehouse).

Considerations When Importing Furniture Hardware

Packaging for export

As a metal product, furniture hardware including wholesale kitchen accessories is generally not damaged by bumps and crushes during transport. This is why we usually use stacking to deliver furniture hardware.Although the loading and unloading of containers increases labour costs, the advantage of stacking is that you can make full use of container and load the goods as much as possible.

Another common packaging method is pallet, which is more efficient and less expensive and low volume of loaded goods though.

Freight ton (weight or measurement)

Freight rates for export goods are usually based on the weight or measurement (W/M) of the goods. Lighter goods are charged by size, while heavier goods are charged by weight. Generally speaking, the most economical method of loading a shipment is to keep a weight ton and a measurement ton close to 1:1. In other words, the total weight in tonnes ÷ (volume cm3 /5000) ≈ 1

Therefore, when you purchase furniture hardware from China, you need to take the shipping tons into account. It is recommended that you order heavy goods such as hinges, drawer slides, gas springs with a certain amount of light goods such as cabinet pullout. The heavy goods are placed on the lower side and the light goods on the upper side in the container.

How to Calculate Landed Cost in a Formula

To help you calculate the total cost of the imported furniture hardware (FOB terms assumed), here is a simple formula to use:

Total cost= FOB price + Shipping+ Customs + Risk+ Overhead

• Product cost:the cost you buy the products from manufacturers or suppliers.
• Shipping:the shipping costs including freight charges and domestic delivery.
• Customs:import fees such as duties, brokerage fees, harbor fees, taxes, Value-added-tax(VAT), etc.
• Risk:insurance expenses, quality assurance or compliance fees (determined by your needs)
• Overhead:the cost related to daily business operations, including due diligence cost, inventory costs, staff salaries, payment processing fees, exchange rates, etc.

Now you may briefly know how to import hardware from China and calculate the total cost. But please note that a one-size-fits-all approach does not exist. Finding a simple formula to calculate the price directly is impractical. There may be hidden costs waiting for you at various stages of import. And there may be additional expenses under specific legal requirements in your country. Our advice is that you can seek a professional import agency or freight forwarder to help you save effort and unnecessary expenses, especially if you are importing for the first time.

Venace – A Professional OEM Furniture Hardware Supplier

If you plan to import furniture hardware such as wholesale kitchen accessories, then choosing professional furniture hardware manufacturers in China is of the utmost importance.

As a professional OEM furniture hardware manufacturer in china with a history of more than 10 years, Venace has served customers in more than 100 countries and regions. We sell wholesale kitchen accessories, furniture hardware, kitchen storage, etc.

We can offer you:

• Sustainable and stable supply chain
• Competitive prices
• Digital marketing support
• Guaranteed quality

Our products have been exported to all corners of the world and are well accepted by buyers. If you have any doubts about how to import from china, we will be happy to provide you with professional guidance and assistance.

Contact us now to get started!

   

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