How to minimize shipping costs when importing to Bangladesh?

Bangladesh's dynamic economy has opened significant opportunities for local businesses to import goods from international markets. In the fiscal year 2023, the country's total imports reached approximately $66.9 billion,¹ highlighting the expanding scope for trade.

However, managing the complexities of import regulations and logistics can be challenging. This article is a practical guide to assist Bangladeshi small and medium businesses in how to reduce import costs by optimizing shipping processes, with tips to enhance competitiveness and profitability.

Understanding factors that influence import costs to Bangladesh

Several key factors, including distance, delivery speed, package dimensions, and weight, influence shipping costs to Bangladesh. Longer distances usually lead to higher transportation costs, while expedited delivery options, such as express shipping, can significantly increase expenses.

Additionally, package size and weight play crucial roles; larger and heavier items incur higher shipping fees due to the additional space and handling required. For instance, air freight costs from the US to Bangladesh typically range between $3 and $8 per kilogram,² with exact rates varying based on specific details like parcel dimensions and weight.

Know your customs duties in Bangladesh before importing

Understand the basics of customs duties

Customs duties are taxes governments impose on imported goods to regulate trade, protect domestic industries, and generate revenue. In Bangladesh, understanding the structure of these duties is essential for businesses aiming to optimize import costs. The National Board of Revenue (NBR) oversees customs operations and implements a range of duties and taxes on imported goods.

• Customs Duties: The primary shipping charges vary by product category. For instance, capital machinery may attract lower rates to encourage industrial growth, while luxury items like perfumes and cigarettes can face supplementary duties of up to 500%. The average Most Favored Nation (MFN) tariff rate is approximately 14%, with a maximum applied rate of 25%.
• Value Added Tax (VAT): A standard VAT rate of 15% is levied on most imports, calculated on the Cost, Insurance, and Freight (CIF) value. Certain essential goods may be exempt or subject to reduced rates.
• Advance Income Tax (AIT): An advance income tax of 5% applies to imports, serving as a prepayment of income tax.
• Supplementary Duty: This additional tax applies to specific luxury items, with rates ranging from 0% to 500%, depending on the product.³
• Document Processing Fees: Importers must pay fees to process import documents, which are standardized to facilitate trade.

Staying informed about current rates and regulations is crucial for businesses to effectively manage import costs and ensure compliance with Bangladesh's customs requirements.

Research Duty Rates for Imported Products

To accurately determine customs duties for your imports in Bangladesh, it's essential to classify them under the appropriate Harmonized System (HS) codes. The HS code, used by customs authorities worldwide, is an internationally standardized system to identify products when assessing duties and taxes and for gathering statistics.

Classifying products under HS codes

• Understand the HS Code Structure: The HS code system comprises six digits. The first two digits identify the chapter, the next two are the heading, and the last two are the subheading. For example, in the HS code 0101.21, '01' refers to live animals, '01' specifies horses, and '21' denotes pure-bred breeding animals.⁴
• Consult Official Tariff Schedules: For detailed classifications and duty rates, refer to the Bangladesh Customs Tariff provided by the National Board of Revenue (NBR). This resource helps you identify the correct HS code and understand the applicable duties for your products.
• Use Online Duty Calculators: Utilize tools like the Bangladesh Customs Duty Calculator to find HS codes and associated duty rates. By entering product descriptions or HS codes, you can obtain accurate duty rates for specific categories of goods.

Tips for finding accurate duty rates

• Cross-Verify Information: Always cross-reference duty rates using multiple official sources to ensure accuracy.
• Stay Informed: Check tariff schedules regularly for updates, as duty rates can change with new fiscal policies.
• Seek Expert Assistance: For complex classifications or when in doubt, consider consulting with customs brokers or trade experts to ensure compliance and accurate duty assessments.

Factor duties into your pricing strategy

Incorporating customs duties into your pricing strategy is essential for maintaining profitability in international trade. Customs duties are taxes governments impose on imported goods, calculated based on the product's classification, value, and country of origin.

Integrating customs duties into pricing

• Calculate Accurate Duties: Determine the customs duties for each product by consulting the Harmonized Tariff System (HTS), which provides import duty rates for virtually every item.
• Incorporate Duties into Product Prices: Add the calculated duties to your product's base cost to ensure that the selling price covers all expenses, including import taxes.

Communicating duty-related costs to customers

• Transparent Communication: Customers should be informed about customs duties and taxes that might apply to their orders. This can be achieved by adding a note on product pages or during checkout.
• Provide Estimated Costs: Offer customers an estimate of the duties they might incur based on their shipping destination, enabling them to anticipate total costs.
• Highlight Responsibility: To set accurate expectations and reduce disputes, clearly state that customers are responsible for additional shipping charges, such as customs duties.

Smart packaging strategies to save on shipping costs

Use Lightweight and Compact Packaging

Implementing smart packaging strategies is key to reducing shipping costs while maintaining product protection. One of the most effective strategies is using lightweight and compact packaging to minimize dimensional weight charges. Shipping carriers charge based on the weight and size of a package, so larger, lighter packages often incur higher fees due to the space they occupy.

By opting for cost-effective materials like polybags and lightweight cardboard, small businesses can reduce both the weight and size of their packages without compromising on protection.⁵ This approach cuts down on shipping costs and enhances operational efficiency, helping small businesses save on import and export expenses.

Optimize Packaging for Multi-Item Shipments

Optimizing packaging for multi-item shipments is essential to balance safety and cost-efficiency. Combining multiple items into a package can reduce shipping expenses by minimizing dimensional weight charges and the number of packages handled. However, it's crucial to pack items securely to prevent damage during transit to Bangladesh. Wrapping each item individually with protective materials like bubble wrap prevents friction and potential damage.

Additionally, using appropriate cushioning materials, such as dunnage, fills voids within the package, stabilizing the contents and reducing movement. Striking the right balance between protective packaging and cost-effective materials ensures that items arrive safely without unnecessarily inflating shipping expenses.

Offer Flat-Rate Options

Implementing flat-rate shipping offers businesses importing to Bangladesh a predictable and simplified approach to managing shipping expenses. Flat-rate options allow businesses to pay a fixed fee regardless of package weight or size, provided it falls within the carrier's specified limits. This predictability aids in budgeting and eliminates unexpected shipping costs.

However, it is essential to assess whether flat-rate shipping aligns with your business needs. For instance, if your shipments consistently approach or exceed flat-rate options' weight or size limits, the fixed fees might not be cost-effective. Conversely, flat-rate shipping can lead to significant savings for smaller, heavier items.

Additionally, understanding Bangladesh's customs duties and regulations is crucial, as these can impact the overall cost-effectiveness of your shipping strategy. Therefore, analyzing your typical shipment profiles in relation to flat-rate offerings can help determine the most economical shipping method for your business.

Leverage Technology

Leveraging technology is essential for businesses that streamline shipping processes and enhance operational efficiency. Automating tasks such as printing shipping labels, tracking packages, and calculating postage fees reduces manual errors and saves valuable time.

Integrating software solutions enables businesses to manage inventory effectively, identify cost-effective shipping insurance options, and gain deeper insights into their shipping needs. Selecting software seamlessly integrating with your existing selling platforms ensures a cohesive workflow, minimizing disruptions and enhancing productivity.

Additionally, partnering with logistics service providers that offer comprehensive visibility over shipping activities can further optimize operations, ensuring timely deliveries and improved customer satisfaction.

Be Aware of restricted and prohibited items in Bangladesh

To avoid additional shipping costs and penalties, it is crucial to comply with Bangladesh's import regulations. Familiarize yourself with items prohibited or restricted from import, such as illegal drugs, firearms, explosives, certain agricultural products, and reconditioned equipment.

Additionally, importing goods from Israel and shipment on vessels operating under the Israeli flag are prohibited.

It's advisable to consult with your logistics provider for the most current information on restricted items, as regulations can change. This proactive approach helps ensure your shipments comply with Bangladesh's customs regulations, preventing unnecessary delays and expenses.

Choose the Right Shipping Partner

Selecting the right shipping partner is crucial for businesses aiming to streamline logistics and minimize costs. DHL Express simplifies the customs process, reducing potential delays and additional expenses. Their dedicated customs experts ensure shipments comply with international regulations, facilitating efficient clearance and timely delivery.

Moreover, DHL Express offers real-time tracking capabilities, giving businesses visibility into their shipments' status at every stage. This feature allows for proactive management, enabling businesses to anticipate and address potential delays before they impact operations. For instance, DHL's tracking tools would allow customers to monitor shipments in real-time, enhancing operational control and customer satisfaction.

By partnering with DHL Express, businesses can more effectively navigate the complexities of international shipping, ensuring timely deliveries of your parcels with greater operational efficiency.

Save on Shipping Costs with DHL Express

Partnering with a reliable logistics provider like DHL Express can significantly enhance shipping efficiency and cost-effectiveness. DHL Express offers preferential rates tailored to your shipping volume, ensuring competitive pricing that aligns with your business needs.

Additionally, our comprehensive support and world-class services streamline your shipping processes, allowing you to focus on core business activities. To fully leverage these benefits, consider signing up for a DHL Business Account. This account provides exclusive discounts, flexible delivery options, and advanced shipping tools designed to simplify your logistics operations.

By choosing DHL Express as your shipping partner, you can ensure timely international deliveries and enhanced customer satisfaction, supporting your business's growth and success in the competitive Bangladeshi market.