Shippers of all sizes understand the value of cross border shipping, meaning the transport of goods overseas and/or through hard borders. This allows them to reach new customers through entering international markets, driving revenue and business growth. However, transporting goods to other countries can be complicated. In our globalised economy, shipping logistics is subject to constantly shifting rules, regulations and other factors.
A key example is the trade relationship between the UK and the EU. Today, around 42% of UK exports head to EU markets, while 48% of the country’s imports come from the EU. Yet trade rules have undergone changes since the UK’s withdrawal from the EU’s Single Market and Customs Union.
Shippers looking to sell to international customers now need to have a strong grasp of customs arrangements and other customs requirements, as well as other best practices.
What is cross border shipping?
The term ‘cross border’ itself, when applied to shipping, simply refers to transporting goods from seller to customer over international lines. As fast, global trade has become easier with the rise of e-commerce, people often speak of cross border shipping in terms of the wider logistics process.
International e-commerce is increasingly popular. The rise of online retail and the impacts of COVID-19 pandemic has accelerated demand, pushing the industry’s value to more than $991 billion.
Countless businesses put in a lot of time and effort to make sure they properly execute cross border logistics, meaning that it is smooth, cost-effective and helps to drive growth. But what exactly does this require?
What does cross border shipping involve?
Customs clearance
Every country has its own customs procedures, and complying with these is essential. Irregularities with shipments—such as incorrect product information or missing receiver details—can affect whether it reaches its destination on time.
Since 1st January 2021, all packages sent to Europe must now pay customs and duty fees. Northern Ireland, however, still remains aligned with elements of EU trade policy, which means customs checks are now carried out for shipments moving to and from the UK.
Documentation
So that goods can quickly clear customs, both importers and exporters need to complete various paperwork shippers need to complete based on the types of items being shipped. Common documents include:
● Commercial invoice: the transaction record between shipper and end-buyer
● Export licence: certified permission for shippers to transport goods otherwise prohibited
● Customs declarations: forms that communicate product’s origin, related tariff, for authorities to determine relevant duties and restrictions
● Standard shipping note: details about consignment contents for carriers, authorities and forwarders
Read the full list of UK tax and customs documents.
Duties
Customs duties are a type of tax on cross border goods, collected by customs as government revenue and to protect local industries. Examples include trade tariffs, export duties and anti-dumping taxes. Usually, these are paid by the importer.
The amount of duty or tax levied on a shipment depends on a number of factors, including:
● Classification
● The total value of goods (including freight insurance)
● Trade terms (i.e. agreements between origin and destination countries)
Importers also typically pay taxes such as VAT and sales tax, which also contribute to the overall import and export costs of goods in cross border trade.
Other Fees
International shipping may also incur other charges, including:
● Carrier fees
● Surcharges (for dangerous goods and temporary imports)
● Broker fees
● Insurance
The challenges of cross border shipping
Customer expectations
It has become the norm for consumers to expect fast and seamless shipping from wherever they buy, even for overseas shipments, including speaking the same language. When difficulties arise from customs checks or communication breakdown between seller and customer, this can harm the brand’s reputation.
Supply chain bottlenecks
ustoms regulations are simple for business to overcome, as long as they are prepared. But although misclassified items lead to most delays, international supply chain issues can arise due to weather, force majeure events, as well as geopolitical tensions, causing friction to logistics.
Taxes and charges
Customs duties and other costs incurred from shipping overseas can discourage shippers from expanding their customer base. Unexpected fees to customers damage a brand’s reputation when they are not displayed during the sales process. In some places, this violates consumer laws.
The benefits of cross border shipping
Market access
E-commerce has been especially valuable for businesses since customers are able to buy products more easily and often regardless of their origin. Businesses capitalising on this increased demand by selling to international markets can grow their customer base, and their revenue along with it.
Cost reduction
Pursuing growth through cross border shipping is an incentive for companies to optimise their logistics, in what’s known as economies of scale. When transporting goods overseas, shipments can be consolidated, which helps to lower the cost of transport and inventory.
Supply chain efficiency
Another strength of cross border logistics is that it allows companies to diversify their supply chain. This benefits operations more generally as it reduces a business’s reliance on a sole source of materials and other supplies, building supply chain resilience against natural disasters and other trade frictions.
Best practices for cross border logistics
1. Create a clear shipping policy
Businesses should think carefully about how much to charge the end-buyer, making sure the final costs are transparent, reflect the value of the goods, and are presented in their local currency. On top of this, they should offer price and charges breakdowns for each item to give full transparency.
The price of shipping is an important factor in cart abandonment (one survey shows that extra costs lead 48% of buyers to leave checkout). A flat rate, or even free shipping deals for several items, will limit the risk of customers deciding against the purchases, and can encourage them to purchase more items.
2. Efficient warehousing
It’s important that businesses expanding into international markets have the right facilities and space to handle cross border shipping. Storing goods across borders can reduce delays, lower transportation costs, and enable more efficient delivery options. Smart warehousing also involves using management software to get real-time visibility into inventory to head off stockouts and other logistics issues.
3. Compliance preparation
Since each country has its own procedures, it may be off-putting for businesses that they need to invest time in preparing to comply with customs. But this is vital for ensuring smooth cross border logistics, and outweighed by the benefits of companies expanding their business to international markets.
Businesses should therefore make sure they research with care the specific customs and legal requirements. Most of these should be readily available on countries’ government websites, such as the EU Commission’s customs controls list.
4. Shipment tracking
Thankfully, shippers no longer need to rely on manual updates and paperwork. Real-time tracking allows them to keep an eye on the flow of their goods across the entire supply chain, and act to prevent bottlenecks. For example, businesses can use tracking to offer customers transparency over the status of their shipments, and deal with their concerns accordingly if delays occur.
Tracking data is also a valuable tool to monitor transport performance and identify patterns across the logistics network. This data-driven approach allows shippers to optimise their operations to drive efficiency and greater customer satisfaction.
5. Find the right market
It may be best for businesses to start small when deciding to expand overseas. When deciding which international region has the most value for demand, customer inquiries and e-commerce shipping requests are a good place to start from. Beginning with nearby countries will also be easier for growing production, as there is unlikely to be a huge difference in shipping costs.
Cross continent shipping with Amazon Freight
In 2024, we’re expanding our supply chain capabilities to support our partners with our new cross border programme.
UK shippers can now move cargo via sea transport from six ports with an average of 20 sailings per day. Meanwhile, our intermodal rail option lets shippers move freight across the EU, with coverage across eight terminals, 20+ lanes and servicing eight country pairs (currently CZ, DE, ES, FR, IT, NL & PL).
When using Amazon Freight as a logistics partner, shippers can get their goods transported on GPS-tracked 13.6m boxes for FTL and LTL shipments, and curtain-sided trailers (FTL only).
Find out how we can support you by emailing your query to freight-interest-uk@amazon.com.
