We recently received an email from a potential customer inquiring about the Fiscal Representation service as part of the inbound shipping service CAPLINQ offers for order fulfillment. The question was so typical of many of the requests we get that it made sense for me to post both the question and our reply here. Hope this helps others as well that are contemplating CAPLINQ’s order fulfillment service.
“I’d like to run some numbers to compare CAPLINQ’s order fulfillment inbound shipping service using the COGS (production value) compared to using a regular freight forwarding company such as DHL, FedEx or UPS. Excluding the shipping cost itself for now, say we have product ABC123 with the following details:
- Harmonization code: 8473.30.0002
- List price (sales price): $200.00
- COGS (Cost of Goods Sold or production value): $100.00
Aside from CAPLINQ’s warehousing and fulfillment fees, what would be the costs (tariffs, other duties, and costs I may not be aware of) associated with importing using CAPLINQ? What would be the costs (tariffs, other duties and costs I may not be aware of) associated with using simply a freight forwarding company?
Basically I’m trying to get a feel for total costs associated with importing at COGS vs not, so please also include any governmental or other tariffs and fees (outside of standard CAPLINQ warehouse and fulfillment fees) that may be charged when an item leaves the warehouse as well.”
Thanks for this great question, as it is one we get quite frequently. As a commercial enterprise ourselves, we are also always looking at the most cost-efficient way to service our customers without sacrificing on quality
These is the calculation used by most freight forwarding companies:
- Duty is paid on the value of the goods entering Europe
- Freight forwarding companies always request the “commercial invoice” to determine the value (it’s the easiest to ask)
- Typically the duty on most items coming into Europe is 6.5%
- If the list price is $200 then the duty rate typically paid (using a freight forwarding company) would be $13 (6.5% of $200)
- On top of this, the freight forwarder typically charges an administration rate of 2–3% with a minimum fixed administration fee of $25
- This brings the total to $238 ($200 + $13 + $25)
The awful part (as if this isn’t awful enough), is that the supplier (you) rarely ever see this. This brokerage charge is billed to the end customer, who:
- Never expects this charge and
- Is left with a bad “I feel cheated” feeling afterwards
- Blames you for it
Looking at the way CAPLINQ handles the situation, it’s actually quite different, and you will recognize the market partner aspect as opposed to simply a freight forwarder.
If CAPLINQ handles the import:
- The duty RATE would be the same 6.5%… BUT
- We import against the COGS of $100 instead of $200 so the duty is $6.50
- We charge no administration fees ($0)
- So the total is $206.50 ($200 + $6.50)
Furthermore, looking at what our system tells us about this particular harmonization code, we have reason to believe we can even reduce the duty rate to 0%, but we would need to do some paperwork first with the customs & duty office.
All of these services are included at no extra charge as part of our “Inbound Shipping Service”. This is included in our fiscal representation agreement.
I hope this example helps you. We are also working on an Order Fulfillment Calculator that will be able to allow you to run many of these calculations yourself. These are just a very close approximation today, but we are able to provide you an exact price if you provide the following information:
- Product Harmonization Code (or at least a product description)
- The Gross Weight of the packaged product
- The dimensions (Length, Width & Height) of the packaged product
- The list price or sales price
- The cost of goods sold (COGS) or production value. Even a random value that can be used for example purposes is sufficient.
To learn more about CAPLINQ’s fiscal representation in Europe, visit us at www.caplinq.com. You can also contact us if you have any other questions regarding CAPLINQ’s European Order Fulfillment Service or to get a quote for your specific product.