This post is the seventh post in the “From Idea to Product Launch Series“
- Introduction of series and the Chair Cane product developed
- What Product Idea Should I Develop?
- Do I need a Patent or Trademark?
- Should I Quit My job? (and side hustles I tried)
- How to Make a Prototype at Home
- How to get your Product Idea Manufactured
- Inventor Freight Forwarding for the First Time
- 5 Essential Ideas for Packaging a New Product
Everything was going well. I had been sent samples that looked great. I gave the go ahead and made the initial 50% payment for the first production run of the Chair Cane. Then I get a message from the manufacturer: the order is EXW. We will send you a message when the order is ready and you can let your forwarder know to pick up the shipment. I sat there frozen, staring at the screen. What is EXW? What is a forwarder?
I had clearly not researched enough about manufacturing. This was not even on my radar. I needed to arrange for someone to pick up pallets in China and get them to the USA. My original plan had been to send them directly to Amazon but I had not yet been able to get Amazon to accept the product. It a new product so more steps had to be taken prior to them authorizing the listing. I researched freight forwarding options and decided on the destination.
When researching freight forwarding, I found companies I had never heard of and all seemed to have mixed reviews. I had used Alibaba to find a manufacturer. One day when I was checking my messages, the site popped up a link to their freight forwarding services. I went through the process to get quotes and it looked like most of the companies that gave quotes used FedEx for logistics and/or other steps in the process. I contacted FedEx. This is not the local FedEx office, it is a separate division. The office I was calling was in Miami; at a time when COVID-19 had just begun to hit Miami hard. Everyone was working from home and the phone system had not kept pace. My first message went unanswered and so I tried different extensions until I found a person. After the initial contact, everything was handled through email.
Through email, I was now learning about continuous bonds, classifications for customs, and customs brokers.
The continuous import bond is a type of customs bond—a bond that guarantees the U.S. Customs & Border Protection (CBP) that the importer will make good on its payment. If the importer fails to make its payments, the CBP can file a claim against the bond from the surety company that guaranteed payment. Average is $400-500.
The Harmonized System is a standardized numerical method of classifying traded products. It is used by customs authorities around the world to identify products when assessing duties and taxes and for gathering statistics. Another site if you are researching: https://www.usitc.gov/tariff_affairs/disclaimer
Customs brokers make sure to file all of the necessary paperwork about your shipment for you to clear customs. Is it a dangerous substance? Subject to antidumping laws? tariffs?
I received one email that asked about something I had never heard about before. After unsuccessful research, I asked the sender to explain. They told me that the question was intended for someone else. I can only guess that there is a whole language about freight forwarding that I do not speak.
Other notes: I used ocean freight because air freight is more expensive and, in the middle of a pandemic, air freight is even more expensive. The shipment was LCL (less than container load) and LTL (less than truck load). Those terms are also good to know when looking for manufacturers. Some companies are only interested in working with you if can order a full container of products. Most start ups do not have that kind of capital to throw at inventory, unless they have investors and a warehouse. I wanted to avoid loans but if you are interested in that or other SBA programs you can start here: https://www.sba.gov/funding-programs/loans.
Freight forwarding is something that is going to take awhile to get comfortable handling, but with most things in life and with starting a business: if you wait until you’re comfortable, you will never try anything new.