Skip to content 
Importing power tillers from overseas can be like walking through a minefield. You think you have all your costs covered, but then more and more hidden fees and unexpected costs keep popping up, which not only affects your budget, it also attacks your profit margin and what seemed like a good deal suddenly doesn’t look so good.
To accurately compute the true cost of importing a power tiller you must consider many other costs besides just the purchase price. These costs include shipping costs, tariffs, insurance, inland transportation and more. By following the eight steps outlined in this article you will be able to accurately determine your costs and you will have no surprises when you figure out your true cost.
So let’s get started and I will take you through these eight steps and you can determine what it is going to cost you to import a power tiller.
Step 1. Determine the FOB Price
The first cost you will have when you are importing power tillers is what is called the FOB price. What this cost covers is the cost of the tiller itself and the cost to get the tiller loaded on the ship at the port of origin. You might think of the FOB price as the “ready to ship” price.
The reason the FOB price is so important is that this is the cost from which all other costs will be calculated. Without knowing the FOB price you will not be able to accurately estimate what your total importing costs will be. There are a number of things that will determine the FOB price and some of them are the particular model of power tiller you are purchasing, the quantity of power tillers you are purchasing, and even where the factory is located in relationship to the port.
For example, if you were going to order a large quantity of power tillers and you were going to have the factory make some changes in the design of the tiller to suit your needs then you would probably get a lower FOB price because of “economies of scale”. However, if the factory was located a long way from the shipping port then the FOB price would be higher because of the increased cost to get the tiller from the factory to the shipping port.
It is very important that you negotiate with your supplier and get the FOB price and make sure you know exactly what is included in this price. Some suppliers will include certain things in the FOB price (like basic packaging) that other suppliers might charge extra for. You need to find out what is included and what is not included in the FOB price so that you don’t get any surprises later.
Step 2. Get a Quote for Shipping
After you know the FOB price then the next big part of your importing cost is the shipping. Since power tillers are generally large and heavy, it is most common and cost-effective for countries that have access to the sea to ship them by sea. The way this is usually done is that the power tillers are loaded into containers and then the containers are loaded onto a ship which will take them to the importing country.
The cost of shipping will depend on the size and weight of your shipment and the route that it is shipped. For example, if you could order a full container load (FCL) of power tillers then you will probably be able to get a better rate per unit than if you order less than a container load (LCL). However, if you don’t have enough orders to fill a whole container then LCL shipping might be a good way to go because you can share the cost of the shipping with other people who are importing other things.
For countries that don’t have access to the sea (like the countries in Central Asia) power tillers can be shipped by train or truck. Train transportation is the best way to go for larger orders and it is relatively inexpensive over long distances. Generally speaking, in order to make train transport viable, you will need to order enough power tillers to fill at least two 40-foot containers.
For smaller orders and/or when you need to get the goods quickly truck transportation can be arranged. It will generally be a little more expensive than train transportation but it will be more flexible and you can have the power tillers delivered directly to your final destination.
No matter how you decide to ship your goods it is very important that you get a shipping quote from you logistics provider that includes all the charges that you could possibly have to pay. This should include things like container fees, port handling, and any other charges or surcharges that might be applicable to your shipment. It is very important that you know all of these costs before you make a decision on how to ship your goods because this is the only way you are going to be able to control your costs.
Step 3. Get the Tariff Rate
Another big part of your importing cost is the import duties and tariffs that you will have to pay. These are taxes that the government of the importing country charges you for importing goods and they are generally figured as a percentage of the cost of the goods.
The actual percentage will vary widely depending on the country and also on the specific type of goods that you are importing. As an example, agricultural machinery like power tillers may have different tariff rates depending on how the product is classified under the Harmonized System (HS) code.
The only way to know what the tariff rate is for power tillers is to find out what it is. Most countries have a customs website where you can get this information and I would advise you to look this up and find out what the tariff rate is before you make your final decision to order.
Also, many countries participate in various trade agreements with other countries and these trade agreements often have the effect of reducing or even eliminating the duty on certain products imported from certain countries. You should research this possibility because it could save you a lot of money!
Step 4. Get a Quote for Insurance
Any time you are going to ship high-value items like power tillers you should be sure to get insurance. The cost of your insurance will depend on the value of your goods and the route that your goods will be shipped.
Cargo insurance is designed to protect you from loss or damage to your goods while they are in transit. This could be while they are on the ocean or while they are on a train or while they are on a truck.
Since the power tillers you are importing are quite valuable and also quite heavy, you will be taking a big risk if you do not get insurance. For example, if your goods are traveling by ocean then you will want to be protected against such things as storms (or shipwrecks!) and other types of accidents at sea. Similarly, if your goods are traveling by train or truck you will want to be protected from things like derailments or road accidents or theft.
The cost of this insurance is something that you must put in your budget and you must include it as a non-negotiable expense. It is very tempting to skimp on insurance as a way of saving money but this is a mistake. If anything goes wrong you will be very sorry that you saved a few dollars by not getting insurance. Also, if something goes wrong and you recover your goods and they are damaged and you did not have insurance then you are just plain out of luck.
Step 5. Get a Quote for Handling and Clearance
Still, another big cost that you will have when you import power tillers is what are called the handling and clearance fees. These are the costs that you will have to pay to get your goods through the port and clear them through customs. The cost of these fees will depend on the port that you are shipping to, the services that you need and how complicated the customs clearance process is.
Generally speaking, these costs will include things like unloading the container, temporary storage at the port and the various administrative tasks that are necessary to get your goods cleared through customs.
Sometimes getting your goods cleared through customs can be a very complicated and time-consuming process. This can be especially true if there are problems with your documentation or if your shipment gets “flagged” for inspection. In order to avoid any unnecessary delays, you may want to consider using a customs broker. The downside of course is that you will have to pay the broker a fee. The upside is that the broker is an expert at what he does and the chances of getting your goods processed quickly are much better.
One other thing that is important to be aware of is the possibility of “demurrage” charges. Demurrage charges are what you have to pay if your goods are held at the port for a longer period of time than you expected. So, for example, if you are supposed to pick up your goods on a Wednesday and you don’t show up until Friday then you might have to pay demurrage charges. This is just one other cost that you have to be aware of. There are many and you must be careful to include a buffer in your budget so that you can cover any unforeseen expenses.
Step 6. Get a Quote for Currency Exchange
When you are buying goods from a foreign country and you are paying in a different currency than the currency of the country that you are living in you are always taking a risk. The reason for this is that the currency exchange rates can change and when they do it can cost you a lot of money.
For example, let’s say that you have negotiated a price with your supplier and you have agreed to pay them in RMB (Chinese yuan). However, you don’t have any RMB and you are going to have to pay in dollars. Well, if the exchange rate changes between the time you agree on the price and the time you pay it could cause you to pay more money than you expected.
Step 7. Get a Quote for Inland Transportation
After your power tiller arrives at the port it will have to be transported from the port to your final destination. The cost of this transportation will depend on the distance, the mode of transportation (truck, train, etc.), and the size of your shipment.
You should get a quote from at least a couple of transportation companies so that you can be sure that you are getting a good rate. Sometimes you can save some money by using a company that will also provide storage. You will have to figure out what will work best for you.
Step 8. Get a Quote for Miscellaneous Costs
Finally, you will need to get a quote to cover any other costs that you may have. This includes things like warehouse fees, inspection charges, and, of course, any unforeseen delays.
One way to handle these costs is to just set aside a certain percentage of your total cost and use this as a contingency. That way if anything comes up you will be prepared to take care of it.
Additional Considerations for Importing Power Tillers?
- What is the difference between FOB and CIF pricing?
FOB (Free on Board) pricing covers the cost of getting the goods onto the shipping vessel at the port of origin. The buyer is responsible for shipping, insurance, and other costs from that point onward. CIF (Cost, Insurance, and Freight) pricing, on the other hand, includes the cost of the goods, insurance, and shipping to the port of destination. CIF is often higher but can simplify the process since more of the logistics are handled by the seller. - How can I reduce my shipping costs?
Shipping costs can be reduced by optimizing the volume of your shipment. For example, filling an entire container (Full Container Load, or FCL) is generally more cost-effective per unit than shipping smaller quantities (Less than Container Load, or LCL). Additionally, choosing sea freight over other modes of transport like air or rail (where applicable) can save money, especially for bulky items like power tillers. - Are there ways to minimize import duties and tariffs?
Yes, there are a few strategies to reduce duties and tariffs. First, ensure that your product is classified correctly under the Harmonized System (HS) code, as this affects the duty rate. Second, research any trade agreements your country has with the exporting country, which might offer reduced tariffs or exemptions. Lastly, consider importing during times when tariffs are lower or when specific trade agreements are in effect. - How do I handle customs clearance efficiently?
Efficient customs clearance starts with proper documentation. Ensure that all necessary paperwork, such as the commercial invoice, packing list, bill of lading, and certificates of origin, is accurate and complete. Hiring a customs broker can further streamline the process, as they are experienced in navigating customs regulations and can help avoid delays. Being proactive and well-prepared will reduce the chances of complications during customs clearance.
Conclusion
Calculating the full cost of importing a power tiller is not as easy as it might first appear. There are many things that can go wrong and you can easily end up spending a lot more money than you had originally expected. By following the eight steps I have outlined in this article you will be able to know exactly what your costs will be and you will be much less likely to have any nasty surprises.
By following these instructions you will be well on your way to a smooth importing process and a more profitable agricultural machinery business.
And, as you know, the more money that you can save on your importing costs the more money you will make!
