Hidden costs of importing – what does it really cost to import?

container ship

In a prior job, we imported product, so on a surface level I was familiar with the process.  However, as a one-person start-up, this was the first time I’d really dig into all of the details on my own and discover the hidden costs of importing.

Looking for a Teething Toes supplier wasn’t easy because the product incorporates both textile and silicone materials. Working referrals, networks and online searches, no US manufacturer was able to produce the product cost-effectively so I turned to importing.

How much does importing cost?

Following advice from other importers, I found a customs broker (one of six I called for comparison shopping) who seemed the most knowledgeable and offered competitive pricing. They told me I should be prepared to pay for the following fees:

Duty/Tax ~ $290

Bond – $97.50  

Entry – $110

ISF Bond – $175

ISF Filing – $35

Plus ocean rate costs, delivery, warehouse fees, etc.

When I pushed them for a ballpark on the all-up expense, from the port to the truck headed to my warehouse, they said to plan on spending $950. Calculating this expected fee into my product pricing model, I signed an agreement with the broker.

Here’s where things get interesting and if I’m completely honest, maddening.  Hopefully these lessons learned will help others avoid similar mistakes and better navigate the system.

Avoid LCL (Less-than-container-load) if you can

Because Teething Toes is new and unproven in the marketplace, my first production order was coming on three pallets. A 20-foot container holds ten pallets. The container with my product would be shared with other vendors, who could be shipping anything from soap to bicycle parts. I lost control on this point and the LCL bit me hard once the container arrived at the US port. It was subject to extra scrutiny from US Customs and pulled aside for an Xray and then CET exam. This not only caused delays with my product being available, it cost more money too (see below).

Duty fees vary widely on the product

Toys are not subject to a US duty rate and I thought Teething Toes would fit this classification. To be sure of the duty rate, my broker suggested I contact the CBP (Customs and Border Protection) for a classification ruling. Going back and forth with the CBP agent, they found disparity in their classifications and could not make a ruling. Over the phone they declared my product was a baby teether and subject to a 5.3% duty rate.  Even though it wasn’t clear cut, by default, I had to pay the fee.

Be your own advocate

I contracted with the customs broker with the understanding they would help my product navigate the system. They said it usually takes 2-3 days to clear customs because they did all of the paperwork for me ahead of time.  In reality, it took 20 days before my product was available and I believe it’s because I made several persistent phone calls to keep the broker accountable.  They’d tell me, “it just is what it is,” when I asked why my product was unnecessarily pulled out for additional testing (I gave them a US 3rd party materials test result showing Teething Toes is safe), why it was taking so long to navigate (nearly three additional weeks), and why they couldn’t make a call to customs to accelerate the timeline.

With all said and done, here’s where the dust settled on costs and hidden fees:

Customs and duty – $314.81

Entry fees – $110

ISF fee – $35

Annual continuous bond – $500

Forklift charges – $98.17

Handling & forwarding – $65

Setup fee – $35

(from customs broker – total $1,157.98)

Handling – $75

Chassis rental fee – $17.56

Chassis split fee – $13.17

Clean truck fee – $8.78

Pier pass charge – $21.95

Port security charge – $25

LSS – $8.78

DDC charge – $123.36

Stripping fee – $54.88

Others:

Doc Fee – $20

Xray exam – $30.73

CET exam – $285.35

(from freight forwarder – total $684.56)

Grand total: $1842.54 –> $892.54 more than the original customs broker quote.

Next time, if there is a next time, I’ll work with a personally referred customs broker. The good ones have the foresight to vet other product vendors on an LCL to ensure there won’t be delays on arrival. They’ll also have contacts at the port to investigate and navigate problems before they arise.

Bottom line, I hope my hard-knock learnings make importing easier for you.