Transport from China, explained clearly.

Introduction

From the outside, international transport looks much simpler than it is.

A supplier prepares the goods, a freight forwarder sends a quotation, a vessel carries the container, and at some point the shipment arrives in another country.

Between those points, several companies, documents, legal responsibilities and physical operations are involved.

The process differs significantly depending on how the goods are shipped:

LCL — Less than Container Load, often called groupage or consolidation,

or

FCL — Full Container Load.

Three questions are enough to understand the chain:

1. Who physically handles the goods?
2. Who is legally or contractually responsible for each stage?
3. Who bears the cost and the risk at each stage?

The three answers are not always the same.

That is one of the keys to understanding international transport.

1. Who takes part in an export from China

The “shipping company” is rarely one company that does everything.

At destination

The destination agent, the customs broker, the terminal, the CFS, the road carrier and the importer may all be involved.

2. Before the goods leave

A serious quotation starts with a serious description of the goods.

Before a credible quotation, the following need to be known, as applicable:

• the product description;
• the number and type of packages;
• the dimensions of the cartons or pallets;
• the gross weight;
• the net weight, where it is relevant;
• the total volume;
• the pickup place;
• the port or place of destination;
• the material or composition;
• whether the goods include batteries, liquids, chemicals, magnets, dangerous goods, or other products under a special regime.

In the end, the physical goods and the documents have to tell the same story.

3. The basic documents

Commercial Invoice

It describes the commercial transaction. It normally identifies the seller, the buyer, the goods, the quantities, the unit prices, the total value, the currency, and other relevant commercial information.

It is not only a freight document. It is one of the central commercial documents of the transaction.

Packing List

It describes the physical structure of the shipment. It may include the package numbers, the number of cartons or pallets, the quantity, the dimensions, the net weight, the gross weight, the volume, and the product references.

A properly prepared packing list makes it possible to match the physical goods with the commercial and customs documents.

Contract / Purchase Order

The sales contract, the purchase order, or an equivalent agreement may form part of the supporting documents of the transaction.

The transport document

Depending on the structure, it may be a bill of lading, a sea waybill, or another applicable transport document.

Other documents

There is no universal set of documents for every product. Depending on the goods and the destination, further requirements may apply to food, dangerous goods, chemicals, certain machinery, wood products, medical products, batteries, and other regulated categories.

Proof of payment

It may be requested in certain customs, banking, or compliance procedures. It is not a document that is universally required for every export from China.

4. The booking

Once the goods have been defined, the transport can be booked. A booking usually identifies the origin, the destination, the goods, the volume or the equipment, the estimated departure, and the sea service.

For FCL, a container is booked. For LCL, space is booked in a consolidated container.

Common types of FCL equipment:

• 20' General Purpose;
• 40' General Purpose;
• 40' High Cube;
• reefer or special equipment, if the goods require it.

Cut-offs

5. LCL — Less than Container Load

LCL: your goods share the container with other shipments.

Collection

The goods may be delivered by the supplier to the CFS or warehouse, or collected by the forwarder. If there are several suppliers, the consignments can be collected from several places and brought together in the same warehouse.

Warehouse receiving may check the number of packages, the weight, the dimensions, and the visible condition of the packing.

Measurement

The LCL cost is strongly affected by the space occupied. If the real measurements differ from the preliminary figures, the transport cost can change. An initial quotation may be calculated on estimated dimensions and adjusted after the real measurement.

Export customs

The goods must complete the Chinese export formalities. The declaration must match the real goods. Some products may require licences, inspections, quarantine, or other approvals.

There is no credible rule of the type “Customs clearance always takes one day.”

Consolidation

Several compatible consignments are placed in the same container. For example:

• Shipment A — 2 CBM
• Shipment B — 5 CBM
• Shipment C — 7 CBM
• Shipment D — 4 CBM

These consignments can travel in the same consolidated container. After consolidation, the container is closed and sealed. From that moment, the carrier carries a full container, even if there are several commercial shipments inside.

House B/L and Master B/L

HBL — House Bill of Lading. It can represent the relationship between the forwarder or NVOCC and the customer.

MBL — Master Bill of Lading. It can represent the relationship between the forwarder or NVOCC and the ocean carrier.

One master shipment can contain several house shipments. This structure is common, but it is not universal.

VGM

VGM means Verified Gross Mass. Before a container is loaded onto a vessel, its verified gross mass must be known under the applicable SOLAS rules. In LCL, each customer provides the correct weight of their own consignment, but the final VGM refers to the fully consolidated container.

CFS and CY

An LCL shipment starts as an individual consignment in the CFS and enters the sea leg inside a container handled through the CY.

Loading onto the vessel

The presence of the container in the terminal does not guarantee that it will be loaded. The customs status, the documentation, the VGM, the booking, the carrier’s requirements and the terminal’s requirements all have to be met.

Sea carriage

The vessel may sail direct, or through one or more transshipments. Transshipment means moving the container from one vessel to another during the route. An LCL container is not normally opened at each transshipment. The sealed container is moved.

ETD — Estimated Time of Departure. ETA — Estimated Time of Arrival. These are estimates, not absolute guarantees. Weather, congestion, vessel rotations, schedule changes and transshipment can change the actual transit.

Information before destination

Some jurisdictions require cargo information before arrival. Examples: the European Union — ICS2 / Entry Summary Declaration; the United States — ISF / 10+2.

International documentation continues after the vessel leaves China.

Arrival and deconsolidation

1. The container is discharged.
2. It enters the CY.
3. It is transferred for deconsolidation.
4. The CFS opens it.
5. The individual consignments are separated.

Only after this stage can an LCL consignment be handled on its own. This is why LCL involves more handling than FCL.

6. FCL — Full Container Load

FCL: the container is reserved for a single shipment.

FCL does not necessarily mean one supplier. An FCL container can hold products from several suppliers if those products are deliberately brought together in the same shipment. The difference is that the container is not sold as LCL space shared between independent shipments.

Booking

The container is booked, and the equipment type, origin, destination, vessel and voyage, ETD and cut-offs are set.

The empty container

The container is picked up from the depot and taken to the loading place. That place may be the factory, the supplier’s warehouse, a third-party warehouse, or a consolidation warehouse.

Checking the container

Before stuffing, the following are checked visually: the doors, the door gaskets, the floor, holes or cracks, leaks, smell, contamination, and obvious structural damage.

Stuffing

Loading the container has to take account of the weight, the weight distribution, stacking strength, moisture, securing, and the possibility of movement at sea. After loading, a numbered seal is applied. The container number and the seal number become important references for the shipment.

VGM

The loaded FCL container must have a verified gross mass.

Method 1: weighing the fully loaded container.

Method 2: weighing the goods, the packing, the pallets and the securing materials, then adding the container’s tare weight, under the approved method that applies.

Customs

The declaration must match the goods. The physical goods and the documents must tell the same story.

Gate-in

The loaded container enters the container yard. Gate-in must be done within the accepted window and before the cut-off. Being in the terminal does not yet mean that the container is on the vessel.

Shipping instructions

The usual information: shipper, consignee, notify party, cargo description, number of packages, gross weight, container number, seal number, destination. A draft bill of lading or sea waybill is normally checked before the final issue.

An HBL does not automatically mean LCL, and FCL does not automatically mean a single bill of lading.

Departure and destination

Once the operational conditions are met, the container is loaded according to the vessel’s stowage plan. At destination, the FCL container remains the physical unit of the shipment. It does not require the deconsolidation of independent consignments, as a conventional LCL does. Import clearance, carrier release, port release and inland transport belong to the destination stages.

7. LCL or FCL — the difference in brief

8. Who performs an operation and who answers for it are not the same thing

• A forwarder can book a truck without owning the truck.
• A carrier can carry the container without having loaded the goods.
• A customs broker can file the declaration without owning the goods.
• A CFS can measure the cartons without checking the products inside.
• A supplier can produce the goods, while another entity acts as the exporter.

The chain is easier to understand as a coordination of responsibilities than as one company that does everything.

9. Who pays?

There is no universal answer.

The company that physically performs an operation is not automatically the party that bears the final cost. Costs depend on the sales contract, the Incoterm, the contract of carriage, the carrier’s tariff, terminal charges, CFS charges, customs rules and tax rules.

10. Incoterms® 2020

Incoterms® say who does what. They do not say everything about the contract.

Incoterms® are standardised commercial rules published by the International Chamber of Commerce. The edition used in this guide is Incoterms® 2020, with 11 rules.

They allocate responsibilities for delivery, carriage, risk, export, import, costs and, in some cases, insurance.

They do not, however, set the payment terms, the product specifications, the transfer of ownership, the remedies for breach of contract, the applicable law, force majeure, the settlement of disputes, or the entire legal relationship between the parties.

11. The 11 Incoterms® 2020 rules

For any mode of transport

EXW, FCA, CPT, CIP, DAP, DPU, DDP.

For sea and inland waterway transport

FAS, FOB, CFR, CIF.

12. Incoterms® comparison table

* Under EXW, the seller has no obligation within the rule to carry out export clearance. In international trade this can create practical difficulties, which is why FCA often needs to be considered.

13. Cost is not the same thing as risk

Paying for the carriage and bearing the risk of the carriage are two different things.

The confusion often appears with CPT, CIP, CFR and CIF. Under these rules, the seller may go on paying for carriage to the destination even after the contractual risk has already transferred to the buyer.

Under CPT and CIP, the risk transfers on handover to the carrier. Under CFR and CIF, the risk transfers on board the vessel at the port of origin.

This is not a contradiction. Incoterms® deliberately separate cost from risk.

14. LCL/FCL and Incoterms® are not the same thing

LCL and FCL describe the transport. Incoterms® describe the commercial responsibilities.

An FCL can operate under different Incoterms® rules. An LCL can also operate under different rules. The physical mode of transport does not, by itself, decide who pays or who bears the risk. The commercial contract and the agreed rule make that allocation.

Example

The same container can move physically: factory → truck → Shenzhen terminal → vessel → Rotterdam terminal. The commercial structure can be different:

• FCA Shenzhen Terminal. The seller hands the goods, cleared for export, to the carrier; the buyer controls the main carriage.
• CPT Rotterdam. The seller pays for carriage to Rotterdam, but the risk transfers earlier.
• CIP Rotterdam. A structure similar to CPT, plus the insurance required by the rule.
• DAP Amsterdam Warehouse. The seller bears the cost and the risk much further, up to the named place, while import clearance remains with the buyer.

The physical route can be the same. What changes is who contracts, who pays, and who bears the risk.

15. Why “How much is the shipping?” is not enough

The ocean freight price is not always the price of the transport.

Depending on the shipment, there may be: pickup, warehouse receiving, CFS handling, consolidation, the customs declaration, documentation, terminal handling, ocean freight, security filings, destination terminal charges, deconsolidation, document release, the customs broker, storage, demurrage, detention, and local delivery.

The right question is not only “What is the freight?”, but “What is included, where does the quotation end, and what still has to be paid?”

16. Summary of the flows

The two processes share the sea leg. The main differences are before it and after it.

17. The final view

Transport from China is not one service performed by one company.

It is a coordinated chain in which suppliers, exporters, freight forwarders, customs specialists, warehouses, consolidators, road carriers, terminals, shipping lines and destination operators may all be involved.

LCL adds consolidation and deconsolidation because several shipments share the same container. FCL removes that sharing, but it requires the handling of a complete unit.

Incoterms® set how many responsibilities, costs and risks are divided between seller and buyer, but they do not replace the sales contract, or the operational contracts with forwarders or carriers.

A well-built shipment does not start from the smallest number written next to “freight”.

It starts from a correct description of the goods, the party responsible for each stage, the documents required, the point at which risk transfers, the costs included, and the exact place where the quoted service ends.

18. Frequently asked questions

19. Editorial note

Note. This guide describes the usual commercial and operational structure of international container transport. The exact procedures can vary with the goods, Chinese export requirements, the carrier, the port, the country of destination, the contract, and local regulations.

Incoterms® is a registered trademark of the International Chamber of Commerce. The descriptions on this page are practical summaries. They do not reproduce, and do not replace, the official ICC rules.

20. Sources and references

• International Chamber of Commerce — Incoterms® 2020
• ICC — Rules for any mode or modes of transport
• ICC — Rules for sea and inland waterway transport
• China Customs — Cargo declaration guidance
• International Maritime Organization — Verified Gross Mass of packed containers
• European Commission — Import Control System 2
• U.S. Customs and Border Protection — Importer Security Filing / ISF 10+2
• Maersk — CFS and CY logistics
• Maersk — FCL
• Maersk — SOLAS VGM requirement