As one of the largest export markets for the UK, the US is an exciting opportunity for businesses. The United Nations COMTRADE database valued the trade lane at nearly $57bn in 2021, and that’s with the unprecedented disruption caused by COVID-19. So, there is no shortage of opportunity.
Gaining an understanding of the costs involved when exporting to this market is a vital part of whether it would be profitable for you. You need to be aware of all the hidden charges, to assess whether it is worth exploring the market and what your profit margin could be.
Obviously, the costs depend on quite a few factors, including the agreed Incoterms. Incoterms set out the logistical obligations of the buyer and seller in a deal. Knowing your Incoterms of trade is an essential part of shipping, which can influence exactly which charges you will be responsible for paying. But you can read more about those in our separate article.
For this article though we will focus on costs. We’ll outline all the possible outlays you need to be aware of when exporting from the UK to USA and where possible, provide insight into how much the charge could be.
Guaranteed Charges
Freight rate/carrier charge
Perhaps the most obvious charge when exporting to any market, not just the US. Whether transporting cargo via sea or air, you will need to pay the carrier a fee. More widely known as the freight rate.
This is the fee that the carrier will charge for loading your container, moving it between two ports or airports and unloading it again.
Road haulage
It’s almost certain, regardless of whether you’re using air or sea freight, your shipment will involve some road haulage. Firstly, to get your container to the port, then to take it onward to its final destination.
So, road haulage costs need to be factored into your export costs.
US Customs and Border Protection Fees
Regardless of whether your goods need to have duty paid on them (we’ll get to that shortly), you will have to pay a fee to US Customs and Border Protection team, to cover the cost of processing them.
The fees here vary on several factors, such as the value of the shipment and transport method used.
All formal imports into the US are subject to a Merchandise Processing Fee (MPF). This can vary at short notice, but at the time of writing it is set at 0.3464% of the shipment’s value, excluding duty, freight, and insurance charges. There is also a minimum and a maximum charge.
You are best enquiring about what the exact rates at the point in time you’re shipping goods, because it is often tweaked.
If the method of transport is by ship, then a Harbour Maintenance Fee (HMF) will also be applied. This is set at 0.125% of the goods’ value, but again subject to slight changes.
In truth, the exact customs fees for your goods are difficult to calculate because each shipment is unique. For more specific advice, contact our WTA USA customs experts.
Intermodal Fuel Surcharges
For your freight on the US side, you will need to factor in an intermodal fuel surcharge.
This is an additional fee, which is dependent on the average price of diesel in the US, so it fluctuates regularly.
It’s a fee which can be adjusted quickly to protect the carriers and hauliers from fuel prices eating into their margins. Economic shocks, such as the Russian invasion of Ukraine, where oil prices jumped to a 14 year high in a matter of weeks, highlight the need for the intermodal fuel surcharge.
Google the very latest rates close to your shipment date to be sure of what this cost will be for you.
Potential Charges
Detention and Demurrage Fees
Demurrage fees are charged on goods which are left on the quay of a port for longer than the allocated free period, therefore they begin to accrue penalty charges.
Meanwhile, detention fees are charged if an empty container is not returned to the port within an agreed timeframe.
You can learn more about the two fees here.
Both cost roughly $45 - $200 per day. So, as you can see it doesn’t take many days for these fees to really start adding up.
Obviously, in an ideal world you wouldn’t have to face these charges, but mistakes can happen in your supply chain. Sometimes things can happen completely out of your control. No company manages to eliminate them entirely. It’s worth being aware of them so if they do happen it’s not a completely unwelcome shock.
With good organisation and planning you can take steps to minimise these charges. Many freight forwarders receive longer free periods than just regular shippers, due to the strength of their relationship with ports. It’s worth considering whether that would save you money. There is also a wide variety of digital visibility tools on the market these days, which can give you far more control over your supply chain.
Duty and Taxes
A key part of any international shipment. To move goods from the UK into the USA, you might be required to pay import duty. A tax which is applicable for moving the produce into the market.
Again, due to the unique nature of every shipment, it would be impossible to go into detail here about whether your goods will have tax to pay. Some do, some don’t. Your best bet is to ask our WTA USA team for the specifics of your cargo. They are deeply experienced in the US’s strict compliance regulations and very happy to offer consultation for your trade.
What we can say here is that if shipping food or hazardous goods, you will have additional complications. Such is the nature of those types of items.
Customs and Agriculture Exams
For many Products of Animal Origin, an agriculture exam will be required. This is to ensure your items meet the United States’ safety requirements for consumption.
The Food Safety and Inspection Service are responsible ensuring compliance of exports to the US. They have pages of content explaining what to do depending on your type of product.
Whatever items you’re looking to sell in the United States market, there are many charges you need to be aware of. Realistically, the only way to assess the profitability of the market for you is to analyse all the fees and calculate a total landed cost.
Our team specialise in simplifying this process, with endless free advice and guidance along the way. Including analysis of your incoterms to see if your obligations can be reduced and improve your margins. Contact our team below and start exploring the opportunities available in the US for your business.
