What Is Alibaba?
Alibaba is an ecommerce giant that enables buyers and sellers to carryout business activities more efficiently. The services provided by Alibaba are experienced by people globally. It acts as an intermediary between the buyers and the sellers and facilitates the entire process.
Though the website is running successfully and many people are reaping benefits from it, it comes as no surprise that there is still room for ambiguity. Many people globally find the process of import/export to be tiring and cumbersome.
One of the reasons is the shipping costs associated with moving goods across the border. Alibaba is based in China (Asia), so people residing in the USA or Europe find it difficult to source goods from China.
This article aims to eradicate ambiguity attached to Alibaba to USA shipping costs and give a clearer picture to the readers regarding the shipping process.
Why Is Alibaba to the USA Shipping So Expensive?
Before scrutinizing the shipping costs that will incur when shipping products to the USA, it is important to understand the factors that make Alibaba shipping so costly compared to other shipping methods/avenues from the same country.
- To begin with, the most important factors are safety, security, quality, and time sensitivity. The numbers of orders shipped from Alibaba on singles’ day were 2.32 billion in 2020; most of these packages not only arrived on time but were also safely packaged and quality assured.
This statistic signifies how rapidly the e-commerce platform has grown and multiplied its sales.
- Secondly, on websites where there is only one seller, a person can add all the products that he desires to purchase in the shopping cart and pay shipping charges only one time on the complete order, but on Alibaba’s website, there are various sellers trading, therefore, if a person is purchasing from more than one seller, he will have to pay shipping charges separately on each order.
- Certain factors increase the cost of doing business for the suppliers, such as paying for the insurance and freight charges. These charges increase the seller’s cost, which he would adjust by increasing the prices of the goods.
It is important to understand all the incoterms related to the import and export business.
- Finally, the distance matters a lot when it comes to shipping. China is quite far from the USA; this is why shipping from Alibaba to the USA is expensive.
Cost Breakdown for Alibaba to the USA Shipping
There are many costs other than the cost of production that may incur when a product travels from home country to host country for trading purposes. The reason why running an export business is not everybody’s cup of tea is that the formalities and paperwork is not only time consuming to complete but also costly.
Following are the steps through which products have to pass through to reach their destination.
1. Document Delivery
Firstly, a supplier/seller of goods sends a proforma invoice to the buyer. A Proforma invoice is just a formal document to ensure that the buyer is willing to purchase and agrees with the terms transaction.
The buyer will have to pay for these documents. Suppliers mostly seek either FedEx or DHL to send the documents, and it would cost around $40-50
2. Transporting the Product to the Port from the Warehouse
Your products are ready to be dispatched from the factory/warehouse, and the buyer in the USA has confirmed his intention to purchase. Now the supplier has to arrange a commute for the goods to reach the port of embarkation.
This may cost somewhere between $50-400 depending on the type of transportation, weight, and distance from the warehouse to the port.
- Customs Clearance in China
When the goods reach the port of embarkation and are about to leave, they have to go through customs clearance to be verified. There are rules one needs to adhere to; if the goods have any fault, they maybe get prohibited to be transported by the customs officers.
This step is handled by the seller/supplier and the cost is approximately $100-400
Custom duties are categorized into five different types.
- Flat Duty
- Additional Customs Duty
- Countervailing Duty
- Anti-dumping Duty
- Safeguard Duty
Many countries indulge in free trade agreements according to which custom duties are waived to make the product less expensive and more affordable in the foreign market.
- Freight Charges
Freight shipping charges are the charges incurred while transporting goods, cargo from the port of embarkation to the port of destination. Freight shipping is done by means of rail, road, air, and sea.
Freight shipping charges are ridiculously high, and they can go as high as $1000 or even higher.
The variables that impact the freight charges are time, distance, weight, and special services.
Insurance is also an important aspect of the export business, and the cost of insurance adds up to the total shipping cost. If a person is sourcing goods from Alibaba to the USA and applies for insurance of the products, then the insurance company will pay for any unforeseen accident happening during the shipping.
CIF (cost, freight, Insurance) is an agreement according to which the supplier of the goods will pay if any unprecedented situation arises. Typically the insurance cost is around $50-150
The formula to calculate insurance is 0.2×1.1× the value of cargo.
6. Customs clearance in the USA
When the product reaches the port of destination, it has to go through the customs clearance process once again. According to the US trade custom policy, any additional customs duty will be waived if a product’s worth is less than $800.
Therefore, the amount of customs duty may vary with the nature of goods and their quantity.
If an importer is looking forward to importing goods from the USA, they have to get a surety bond as it is compulsory. When the value of goods exceeds the mark of $2500, then the custom clearance will be covered by the surety bond. Such imports are called formal entries.
Entries are informal when the value of goods is less than $2500. In this case, the clearance will not be covered by surety bonds.
7. Transportation of Goods from the Port of Destination to the Importer’s Address in the USA
This is the final step in importing from China to the USA. The costs incurred in this step may vary depending on the distance from the port to the warehouse and the vehicle chosen for the purpose.
The costs may vary from $50-500 maximum, as the goods are being transported domestically; the costs are not too high.
|Items added in the shipping cost||Amount ($)|
|1. Document delivery |
2. Transporting the product to the port (port of embarkation)
3. Customs clearance in China
4. Freight Charges
6. Customs clearance in the USA
7. Charges at the port of destination
8. Transporting the product from the port to the warehouse
1000 or above
Shipping Methods: Alibaba to the USA
Many people who plan to import goods from China to the US find shipping costs the biggest pet peeve. It is not only a costly process but also contains many steps that need to be followed thoroughly. One needs to research the perfect shipping method for their business type to avoid trouble.
Following are some shipping methods and their costs that may help a new business shipping from Alibaba to the USA.
1) Express Shipping from Alibaba to the USA
Express delivery is the fastest and most efficient type of delivery system out there. If an importer wishes to bring a particularly small quantity of goods to the USA, then the Express delivery system is a better option than sea and air freight, and it is cost-effective too.
Some of the most famous Express delivery service providers are:
FedEx is the most efficient option out of all; because it is technologically innovative and has better infrastructure.
Just to give an idea of the shipping costs through FedEx express shipping, the shipping costs for one kg are $1.5-4.5.
2) Air Freight Shipping
Airfreight system is used when the weight of the product exceeds the marks of 300 kg; in this case, one should resort to air freight to ensure the safe delivery of goods, but if the weight of the goods is less than 300kg, then express delivery is a better option, as it is cost-effective.
When the weight of the goods exceeds 300kg, they come under the category of imports and have many legal obligations that need to be fulfilled.
3) Sea Freight Shipping
Sea freight refers to having your products shipped to another country through the sea. This is more complex than air freight and express delivery because the legal formalities and port charges are involved.
Sea freight should only be used when no other means of transportation is available. Though the shipping costs are usually low, the shipment takes longer to reach the destination.
Also, sea freight should be used if the quantity of goods is more than 2 cubic meters. There are many ports in the USA, and they all charge differently, but the major ports charge $300-400.
The formula to calculate sea freight charges is: number of products× dimensions of the product.
What Information Is Needed to Get a Shipping Quotation?
Shipping quotation is provided by the freight forwarder that one is consulting. To get a quotation, you need to provide the following information.
- Cargo volume
- total weight of the goods
- Port of embarkation
- port of destination
- CIF (cost, insurance, freight)
- supplier incoterms
- delivery incoterms
How Can One Save Shipping Costs from China to the USA?
One way to reduce the cost is by choosing sea freight to transport goods. Sea freight shipping does take longer to deliver, but it is comparatively reasonable.
FCL sea freight is more cost-effective than LCL. FCL refers to full container load, and LCL means less than container load.
When your goods are less in quantity, and there is some capacity in the container, then it can share the container with other goods. FCL means your goods have occupied the entire container, and there is no space for any other goods.
Also, while sourcing goods, every ounce of detail matters or else your supply chain will bleed. Packaging should be done mindfully, if you notice any empty spaces in the boxes, then it means you are paying for the vacant space too.
Doing packaging properly will help you reduce the total shipping cost.
Does Alibaba Offer Free Shipping from China to the USA?
Some suppliers claim to offer free shipping on all the orders to lure customers into buying their goods, but this does not mean that they pay for the shipping themselves. Suppliers charged the shipping cost mostly by increasing the price of goods and adjusting the shipping costs.
Though, free shipping may be offered by websites like Aliexpress or DHgate.
How to Select Best Shipping Method for Your Business (Air and Sea Freight)
Trading internationally involves international shipping of goods; to choose a freight shipping solution for your business it is important to understand the nature of goods. For instance, FMCG (fast-moving consumer goods) goods are goods that we use in our daily routine; therefore, they need to reach the destination on time to avoid expiration.
The table provided below will help you understand which shipping mode is better for your business.
|Air Freight||Sea Freight|
|Airfreight means Air cargo. It refers to sending goods by plane. Air freight is fast and reliable. The risk of an unprecedented situation is pretty low, and the goods are much safer. One can always track goods in air freight while the goods are on their way.||Sea freight means sending goods to another country by sea. Sea freight is a better option for goods that are heavy. The delivery time is comparatively prolonged. Sea freight is relatively more reasonable.|
The process of choosing one method for your business will require you to weigh the pros and cons of all the shipping options at your disposal.
Alibaba is the largest eCommerce platform that is used by buyers and sellers globally, especially in the USA. Although the shipping process may sound unmanageable and tiring, it can be dealt with easily if one follows all the guidelines.
It is important to calculate the shipping costs accurately to avoid any unprecedented loss, and one can always consult a freight forwarder for a shipping quotation.