10 Helpful Tips to Tackle US-China Tariffs and Reduce Shipping Costs
At Channel Key, we are dedicated to helping your business grow on the Amazon platform and we know that things are getting a bit chaotic with the Tariff situation. With that said, we have produced 10 tips that will help you get ahead of the Us-China Tariffs and reduce shipping costs.
Tips for sellers to maximize cost savings and potentially offset tariffs impacts:
- 1. Create a free ACH account with customs
- You pay customs directly for any taxes or duties owed on your shipment
- Terms for payment are set with customs which can range from 30-45 days
- Can/would replace traditional COD
- 2. Renegotiate rates with supplier
- China is making sure that it’s country’s suppliers can stay in business by helping them absorb the additional costs that result from tariffs
- Since suppliers are now absorbing some of these costs, there is room to renegotiate manufacturing rates
- Typically, a seller can hope to reduce their rates/costs by 5-15% to help offset losses that may arise from tariffs
- 3. Use Telex releases
- This is an agreement made with a manufacturer where goods will only be paid for by the recipient once they have arrived in port in the United States
- Can be set up no matter where the manufacturer is located overseas
- Protects the seller since no outlay occurs until after goods are received
- Protects the manufacturer since goods are not delivered until the seller pays for them upon arrival in the United States
- Can extend initial payment outlay by 14-40 days depending on shipping times, helping to free up capital and/or have sales lined up prior to receipt of goods
- 4. Try sourcing outside of China
- Good options are India and Vietnam
- Pitfalls that can arise when sourcing outside of China include:
- Inexperience by other countries producing a high quantity of goods
- May have extended production times due to inexperience
- May have extended shipping times due to smaller, less active ports
- Possible shipment delays overall that would need to be built into overall business planning
-
- Positives for outsourcing include:
- Costs for labor and manufacturing are lower in comparison to the rising costs of labor and manufacturing in China because of the tariffs.
- Other countries are eager to fill the manufacturing need as companies transition out of China, so have been quick to adapt to the growing manufacturing demands.
- The manufacturing sector in countries like India is growing overall in a push to provide jobs to more of their population.
- Pitfalls that can arise when sourcing outside of China include:
- Inexperience by other countries producing a high quantity of goods
- May have extended production times due to inexperience
- May have extended shipping times due to smaller, less active ports
- Possible shipment delays overall that would need to be built into overall business planning
- Positives for outsourcing include:
- 5. Take advantage of retail margins
- Consider making the switch from Vendor Central to Seller Central
- Taking advantage of higher retail margins can help to offset increased costs due to tariffs.
To ship more economically overall:
- 6. Ship boxes loose
- Up to 33% of available room in a container may be lost by using palettes for a full container load, increasing costs overall
- Items can be re-palettized in the US after arrival
- 7. Do all labor in China
- Suppliers can manage labeling (SKU and FBA), packaging and bundling
- The supplier can include these services in the overall price of manufacture
- Have the supplier send pictures to verify that labor is being done correctly
- Be wary if the supplier is an Amazon seller when asking for labeling services
- 8. Consolidate shipments from multiple suppliers to fill a full container
- If suppliers overseas are within a few miles’ radius of each other, it is recommended to consolidate your shipments into one warehouse
- Shipping from one location can reduce overall shipping costs
- 9. Use Amazon’s partnered carrier(s) once the shipment arrives in the United States
- This can be done even if the shipment is already based in the United States at a warehouse or port
- This option can be much cheaper but may take longer, so factor in additional time for delivery
- You can ship directly to an Amazon warehouse from a port if boxes are already labeled when shipments arrive.
- 10. Ship to the West Coast
- Ship to Los Angeles instead of an East Coast location
- Using a Los Angeles based ship-from address in Seller Central will automatically direct your shipment to an Amazon fulfillment center in the Los Angeles area
- Shipping to Los Angeles can reduce transit time from China by almost half
- Costs will be lowered due to shorter transit time and overland carrier needs.
Hopefully, you found this post helpful. At Channel Key, our number one goal is to help grow your business and we are always here to help. We have a full team of Amazon experts and have more than 30+ years of combined marketplace experience. To learn more contact [email protected] or click here
We hope that this post gave you some insight and a clear understanding of how you can maximize cost savings and potentially offset tariff impacts. If you have any questions or would like additional information, please reach out to one of our Channel Key consultants.
