Let's start with a brief intro... shall we?
Moving cargo from China to the UAE can be an expensive and cumbersome process for any company regardless of volumes, industry or clout. With the Covid-19 triggered supply chain crunch in full swing since late 2020, mid-market enterprises and SMEs in particular have had to succumb to some additional burden. Prices have skyrocketed, capacity is constrained, optionality is in short supply and delays are all too common these days. Regular shippers - from online retailers to direct-to-consumer brands to consumer goods businesses - have struggled to manage the complex, interdependent yet highly fragmented web that is the supply chain, especially when importing goods from China. As your Pals in freight, we thought it would be a good idea to lay out some considerations to make when planning and managing shipments from the world’s largest exporter. Here are the top considerations we’ll be digging into in a nutshell:
- Pricing
- Origin & Destination ports
- Transit times
- Departure dates and times
- Customs clearance
- Importer on record
Now, let’s dive in shall we? Plus, who knows, we might even help you unravel some benefits along the way. 🚀
1. Finding competitive prices
For the better part of the 2010’s, freight markets were in a bit of a rut… the industry refers to such an environment as a “soft market”. Essentially, this means that supply or capacity in freight markets is high and demand for goods and/or cross-border trade is low, resulting in cheap or moderate freight prices as providers compete for scarce volumes. For traders, retailers and consumers, soft freight markets are a time of elation and relaxation, as moving cargo bears a lesser burden on the budgets and wallets of these shippers.
In 2020, the pandemic and the outcomes that ensued shifted the balance from shippers to providers, bringing about what is known as a “tight market” - a low supply, high demand environment. With container capacity constrained and misplaced, port backlog ominous all over the world, and consumers shifting their share of wallet from services to goods, freight prices skyrocketed. This put a substantial financial burden particularly on small-to-medium and mid-market enterprise shippers, resulting in widespread price sensitivity across the market.
Shippers moving goods from China to the UAE have been particularly affected by these sapping circumstances. Freight rates have more than quadrupled since late 2019 and remain stubbornly and obscenely high. So, how can shippers manage these tight market conditions? Here are 3 simple, but indispensable hacks:
- Plan ahead: Now, while we live in the age of just-in-time supply chains, we, at PalletPal, wholeheartedly believe in the power of planning shipments ahead of time. Similar to booking flights or a hotel room, the earlier you plan your shipments the more flexible your options, ample the availability, and affordable the rates. While drops may occasionally happen closer to the sailing date, such situations are incredibly unlikely when freight markets are this tight, especially considering the popularity of the China-UAE trade lane.
- Maximize on volume: Making 2 large shipments are typically cheaper and more efficient than making 10 smaller ones carrying the same goods. If you can afford to compile your goods into a smaller number of shipments, you can generate savings. Alternatively, you can also work with providers such as PalletPal to optimize less-than container load (LCL) shipments by sea. Since this is one of our priority trade lanes, we can help a lot of shippers move LCL goods to the UAE from China by compiling them at origin which can also help drive down freight costs.
- Leverage optionality: Digital freight solutions such as those offered by PalletPal provide shippers with multiple curated freight options from a broad pool of vetted carriers, allowing them to make decisions that could result in cheaper and more effective movement of goods. As you’ll see below, the “things to consider when shipping from China to the UAE” are not mutually exclusive… different origin or destination ports, alternative transit routes can all impact price, transit duration and procurement time.
2. Selecting your optimal origin & destination ports
When shipping from China to the UAE, selecting the right ports can have major implications on your shipping experience. Being the largest exporter, China has a plethora of trade ports and airports where goods can be shipped from. The most popular origin seaports include Shanghai, Ningbo, Shenzhen, Guangzhou and Xiamen, among numerous others. Since a number of the popular trade ports are within the same or nearby provinces, it can often be wise to evaluate different options to see if benefits can be reaped from a transit time, pricing or even carbon footprint perspective.
The same goes for ports in the UAE. Despite a population size that is less than 1% of that of China, the UAE has nearly 20 cargo ports (for air and seaborn transportation) across its Emirates. Oftentimes, it can benefit shippers to evaluate price and transit time differences across these ports. In a market as tight and volatile as the current one, looking into both air and sea rates can also yield some gains.
Ideally, it’s best for shippers to employ trusted freight partners to help them navigate this complex procurement challenge. For instance, when making a request on PalletPal you can choose to leave the preferred port options when filling out the shipment request form to receive a variety of options for your upcoming freight movement.
3. To prioritize or not to prioritize transit time?
A little while ago we spoke about planning ahead to reduce the financial burden on moving your freight. While it’s rarely achievable 100% of the time, this principle can also help shippers eliminate the burden of having to think about the transit route and its duration. In a number of cases, particularly when making urgent requests on the spot market, shippers may have to decide between paying a premium either by having to choose between air and sea, or more recently by having to select the option that is least likely to incur a delay on your shipment’s ETA.
One of the greatest things about the rise of digital freight forwarders is that shippers can now compare and contrast different freight options across the most important variables, including transit time and route. At PalletPal, we provide our customers with the ability to do just that across a multitude of options particularly for the China-UAE trade lane, allowing you to make the most informed decision for yourself.
4. Watching out for departure dates & times
A crucial but often overlooked feature by most shippers when considering freight options. Being a high volume shipping route between two nations with an ever strong trade relationship, the China-UAE freight corridor is subject to volatility particularly under current market conditions. That means that flexibility in exploring and selecting departure dates can be highly rewarding for shippers. In some cases, it could lead to discounted rates while in others it could significantly reduce the likelihood of a departure delay.
The unfortunate reality is that, in today’s market at least, delays in sailing dates and rollovers - when a carrier moves a load from an initially scheduled vessel to the following departure date due to a backlog - are all too common. With prices so extravagant and demand so abundant, carriers have all but abandoned customer care duties in exchange for high margins. Lucky for you, digital platforms such as PalletPal are all about putting the customer first. Such companies leverage the data collected via their applications to provide users with the utmost transparency and access to valuable information. For instance, ratings would allow shippers to identify whether a carrier is reliable and timely.
5. Considering customs clearance options
Depending on your Incoterms, you may have the responsibility to clear your goods at the origin port in China and/or at the destination port in the UAE. Sometimes, customers will consider leveraging their supplier’s customs broker - even if that’s not obligated under Incoterms - as they may have the ability to provide cheaper or even subsidized rates for clearing goods at origin. In the UAE, some Emirates’ port authorities provide subsidized customs duties for certain goods to incentivize shippers to pass their goods through alternative, often underutilized ports. Furthermore, clearance agencies may attempt to overcharge shippers that are new to freight and don’t have ample understanding of the general fee structure.
The best freight solutions in the market leverage relationships with partners and agents in China and deep knowledge of the local landscape across the Emirates, providing customers with honest and transparent customs brokerage advice and services.
6. Finding an Importer of Record
In a number of cases, Chinese or international shippers may need to move goods from China to the UAE. Oftentimes, these companies may not have a local trade license and would thereby require an Importer of Record (IoR). This piece is particularly crucial for shippers not located in the UAE or those that have yet to find an Importer of Record. Depending on the goods brought in, shippers could leverage a number of options when it comes to selecting an IoR and look to work with a forwarder that provides an IoR service.
By doing so, shippers minimize the risk of trading their products in a new market and avoid any complications with legal entities. Furthermore, customs duties processes and compliance to regulations are handled by the IoR service provider. This in turn will allow the shipper to expand their footprint in new markets. At PalletPal, we provide our customers with the IoR service, ensuring a smooth introduction into a new market.
A trustworthy and reliable freight partner solution for all market conditions
Freight markets will always have their ups and downs… they will be soft and shippers will be happy. They will be tight and shippers will be distraught. That is simply the nature of this industry and the product of its economics. If each of the above considerations broken down in this blog have had one thing in common, it’s how important it is to have a trustworthy and reliable freight partner. While there are a few good ones out there, if you’re looking for a digitally-enabled partner with a proven track record in moving freight from China to the UAE, PalletPal is always prepared to help. Sign up today or reach out to one of our experts… we’ve got you covered. 📦
