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How to estimate the import costs of my products?

Hier Logistic Group > News > freight forwarder > How to estimate the import costs of my products?

How to estimate the import costs of my products?

Posted by: Patricia Carrillo
Category: freight forwarder, importing goods

Knowing in advance the expenses I will have to pay for the importation of goods into Mexico is fundamental to have a good total profitability of the project.

Before embarking on an import process, it is very important to know those factors over which you will have control and that must be considered when calculating the total import costs.

This and other important tips can also be found in the article: “What I should know to buy abroad and import products into Mexico“.

Key aspects to consider when estimating the cost of your imports

 

1.-Know what your supplier’s delivery responsibility is

At the time of quoting the supplier will mention the “Incoterm”, these world-known acronyms, mark the responsibility of delivery of the goods that the value of your goods includes.

Your supplier will tell you for example This merchandise has a cost of USD $10,000 FOB Ningbo.

Your supplier should always mention the “Incoterm” next to the cost. This way we will automatically know up to where he commits to deliver the goods with that cost.

Here are some of the most commonly used Incoterms:

  1. EXW – Your supplier is not responsible for anything, i.e., it will only notify you that the goods are already available for you, through your freight forwarder, to pick up the goods.
  2. FCA – The supplier takes the goods to some point, which may be, for example, the port or airport of departure, but will not be responsible for customs charges and export formalities.
  3. FOB – The supplier is obliged to take your goods to the port or airport of departure and is also responsible for all departure formalities.
  4. CFR – The supplier has included not only the value of the goods but also the international freight to the port or airport of entry in your country.
  5. CIF – The supplier has included not only the value of the goods but also the international freight to the port or airport of entry into your country and also covers the insurance costs of your goods.
  6.  See other Incoterms

Therefore, my recommendation is that you try to contract the international freight with a freight forwarder in your country, since they will offer you better conditions at the arrival of the goods that will generate an important economic benefit for you.

If you do the transportation directly with your merchandise supplier, he will try to contract the shipment without considering beneficial arrival conditions for you in order to facilitate and economize the process for himself.

2.- Consider the entire process

Obviously what follows is that you take care of the rest of the services and expenses. And depending on the above definition, you have to identify the tranche that is needed. Here is a simple guide for you to identify it:

3.- Consider taxes

Import taxes usually represent an important percentage of the total import expense, and to determine if you have to keep in mind that you will most likely pay VAT not only on your merchandise cost; but on other additional factors that have to be included in the cost and are known as Customs Value.

To calculate the customs value you have to consider the value of your invoice plus all the expenses incurred until you reach the customs office of entry.  For example, if you have a FOB NINGBO Invoice Value of usd$10,000.00 and an International Freight Value with insurance of usd$1000.00, customs considers the customs value to be $11,000.00 and on this, the tax calculations will be made.

The duty to be paid to customs will be determined by the tariff fraction of your merchandise. The purpose of this tariff is mainly to take care of our national industry, for example, if our country is strong in the textile industry and you want to import textiles, surely there will be high tariffs to pay and more requirements to comply with.

If, on the other hand, you want to import a product that is not manufactured in Mexico, it will most likely have zero tariffs and the requirements for its entry will be much lower.

International treaties must also be considered. When a product comes from a country where Mexico has a free trade agreement, you will pay a lower tariff indicated by the rules of the agreement.

In this way, the origin of your merchandise and its characteristics will help us to define its tariff fraction and taxes to be paid.

I invite you to request a free quote and evaluation of all the expenses you are going to incur before starting your import project so you can have a safe and profitable business. Contact us for more information.

Author: Patricia Carrillo
CEO Hier Logistic Group International Logistics Expert

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