International trade is the way to expand your business further, but after you have made the sales, there is delivery to do. Getting your products across swiftly is essential for customer satisfaction, and getting them across inexpensively is essential for your financial results. So choosing the right mode of transportation is key to an efficient and cost-effective international arrangement.
Take a closer look at the cost of the size and weight of your goods. Also take into account the quickness of the delivery service, distance and destination of the goods. Small high-value goods can have a different approach than large low-value products.
Type of goods and international transport costs
Your choice of transport is heavily dependent on your type of goods and the business requirements needed for the venture. You should match the transport mode with your goods to balance service, quality, cost, organization and time.
Transporting fresh goods (e.g. fruits, vegetable, fresh meat) will require speed and time. Refrigeration should also be considered in transporting these products.
If your business involves transporting of animals, you must adhere to specific rules and regulations. There are guidelines and clearances to follow safe and successful animal transport. If your goods are considered dangerous, then you must follow the rigid procedures that entail when moving them.
Modes of transportation in international trade
The four main modes of international transport are road, sea, rail and air. Each mode has its perks, drawbacks and conditions pertaining to the type of goods being exported or imported. Sometimes, there’s a need to use more than one mode of transport, or you may contact freight forwarders to deal with logistics.
Cost of road transport
Road transport is more flexible than the other three modes. It is relatively easier to track your goods, secure consignments, schedule the transport and pay the relevant fees. On the other hand, long distances are not time-efficient especially if traffic is involved. Some countries may have high toll fee charges and the possibility of getting your goods damaged is high as well.
Where it comes to large quantities, road transportation costs around 3 to 7 US dollarcents per ton per kilometer. If you want to own your own trucks, the costs of having such a truck may be around 1300 to 1900 USD per day, excluding driver. If you just want to send a package of 50 kg over a distance of 300 km then in the US that may cost around 200 USD.
Cost of sea container transport
Transport by sea allows you to ship large volumes with lesser cost than the other three modes. Shipping containers could also be used when transporting goods by land. However, international transportation could be delayed due to the slow pace, weather shifts and inflexible routes and schedules. Typical rates for transport by sea container are:
|Route||20 ft container||40 ft container|
|USA-Canada||600-800 USD||900-1100 USD|
|USA-China||1600-1800 USD||2400-2700 USD|
|UK-Spain||700-900 USD||1100-1300 USD|
|UK-Australia||2500-2800 USD||4000-4500 USD|
Please note that these are the costs from port to port. There may be additional costs for land transportation. Rates for destinations with civil wars may also be much higher.
Cost of rail transport
This mode of transport is environmental friendly and is often used in prosperous continents like Europe. However, rail transport has inflexible schedules and may be delayed due to mechanical malfunctions. Not all regions all over the globe have a respectable rail system, which is a huge setback for remote regions.
The costs for rail transportation vary from 2 to 6 US dollarcents per ton per kilometer. This makes rail the cheaper alternative for road transportation, if a railway is available.
Cost of air transport
Using air transport for international trade is the quickest way to ensure product delivery and distribution. It is also the safest methods of transport, and you could export or import a variety of goods through this mode.
Costs for air transportation are mainly determined by the weight and partly by the distance. Single packages of 1 kg will cost around 30 to 50 USD to ship, 10 kg may be 70 to 90 USD and 100 kg may be over 400 USD, if you take the rates of carriers like Fedex and UPS. If volumes grow and especially if you can guarantee a daily stream of packages to keep the aircraft of these carriers occupied, then prices may drop drastically.
You must also equip your goods with proper labeling and documents for legal purposes. Key is to classify your products with the right HS code, which determines the way customs handles it an also the import tariffs. Custom procedures and the number of forms needed vary per country: to get your goods into Singapore 4 documents will do, for Thailand you will need 10.
Having a local agent or distributor who also take care of the import can be essential for smooths business operations.
Suggestions for further reading
- Difference between an agent, distributor and a franchise
- International distribution strategy: managing your foreign distribution channels
- What is a reasonable margin for your distributor?
- Your international sales agent: what margin or percentage to pay as fee?
- Selling in China: how to do international business with the Chinese?
- How to find your agent or distributor for export to Japan?
- Best tips on export to Germany