How to calculate international shipping costs

Operating in today’s globalised market demands a firm understanding of international shipping costs. The intricacy of these prices – encompassing freight charges, surcharges, premium services, and import-export duties – can seem overwhelming at first. However, mastering these factors can provide businesses with significant competitive advantage, enabling them to streamline shipping procedures, improve customer satisfaction, and enhance operational efficiency.

Freight charges: Unpacking the details

Freight charges make up the primary portion of international shipping costs and are influenced by a range of factors. These include the shipping rates set by the courier, the weight, and dimensions of the shipments.

Understanding the difference between gross weight and volumetric weight is key. Gross weight refers to the actual weight of the shipment, while volumetric weight reflects the space your shipment occupies on an aircraft. For large, lightweight shipments, the cost is often based on the volumetric weight when it exceeds actual weight, in line with the standard International Air Transport Association (IATA) method.

Calculating the volumetric weight when shipping with DHL Express involves multiplying the length, height, and width in centimetres for each piece in the shipment and then dividing the total by 5,000. This information allows businesses to strategically optimise their packaging, reducing the volumetric weight and, consequently, the shipping cost. It's imperative for senders to offer precise dimensions and weight of their packages. International air express delivery companies like DHL Express undertake a secondary check where all packages are reweighed and resized upon arrival at their service centres.

Moreover, freight charges not only differ based on whether the mode is import or export, but also vary across different zones, as countries are grouped based on geographical and logistical considerations. Utilising tools such as online shipping rate calculators can provide valuable insights into possible cost variations, helping businesses better devise effective international shipping strategies. For instance, with DHL Express’ shipping management platform, MyDHL+, customers can estimate their freight charge simply by inputting address details and specific shipment information.

Surcharges: Anticipating additional activities involved in shipping 

In the realm of international shipping, certain specific situations necessitate added costs. These may include special handling requirements, dynamic fuel prices, or complex delivery conditions. For instance, variations in fuel prices directly impact the transportation industry, leading to the need for an adaptable fuel surcharge. This surcharge is subject to change – it can increase or decrease, reflecting the shifts in fuel costs.

While these charges are sometimes overlooked, it's vital that businesses fully anticipate and understand them to maintain control over allocated shipping budgets.

For instance, DHL Express transparently applies surcharges to final quotes for situations requiring unique handling, such as: 

• Hazardous goods: These are items that can potentially cause harm to people, property, or the environment. Shipping hazardous goods often requires special handling, packaging, and labelling to ensure safety. Some examples of hazardous goods include flammable liquids, corrosive materials, or radioactive substances.
• Deliveries to remote areas: These are areas that are not easily accessible due to their geographical location. These could be regions that are far from urban centers or located in difficult terrains such as mountains or islands. Delivering to these areas often involves additional logistics efforts and costs.
• Oversized pieces: These refer to items that exceed the standard dimensions or weight for normal shipping. Such items require special handling during transportation and might also require special equipment or vehicles for their transport. Examples might include heavy machinery, large furniture, or equipment.

Surcharges applied by shipping providers like DHL Express can vary based on the specific requirements of the shipment, and these charges can be levied in different ways, such as per kilogram (kg), per piece, or per shipment.

By being conscious of these potential surcharges and the conditions under which they may apply, businesses can more effectively integrate these costs into their financial planning such that they avoid unexpected expenses.

Optional services: Catering to specific needs

When it comes to overseas shipping, service providers may offer a suite of optional services designed to cater to distinct shipment needs. These premium services enrich the shipping experience, providing both added convenience and security, and these include: 

• Time-definite delivery services: These enable customers to have their shipments delivered before specific times, such as 9:00, 10:30, or 12:00, providing a tailored solution to meet the diverse needs of businesses. 
• Shipment protection: Offers comprehensive coverage for shipments, giving shippers peace of mind in the unlikely event of physical damage or loss of their shipments. 
• Duty billing: This pertains to the management of customs duties and taxes, offering flexibility in designating the party responsible for these costs. 
• GoGreen Plus: Align your business with global sustainability goals by switching to sustainable aviation fuel (SAF) as an alternative to conventional aircraft fuel. This way, you can reduce the carbon emissions related to your shipments by 30%. 

While these services come with additional charges, many shippers are willing to invest in these premiums to enjoy the additional benefits and maximise the satisfaction for their customers

It is incumbent upon businesses to thoroughly understand these services and astutely align them with their unique needs. This alignment not only assures their shipments' safety and timely delivery, but also ensures cost-effectiveness and efficient resource allocation. 

Duties and taxes: Navigating regulatory implications

One can't speak of international shipping costs without considering duties and taxes, which are not determined by service providers, but are levied by local and foreign authorities. These charges constitute a significant segment of the overall shipping costs and are influenced by a range of factors, including the nature of the goods and their destination.

In the case of Vietnam, authorities impose specific duties and taxes on imported goods. These levies are based on the Customs Valuation Agreement (CVA), which employs the transaction value method for the valuation of imported goods. This value forms the basis for the calculation of import taxes, which typically comprise of import duties, special sales tax, and Value Added Tax (VAT). The rates for these charges vary depending on the type and category of goods, with certain goods enjoying tax exemptions or reductions under specific circumstances.

For exports, the destination market plays a significant role in defining the duties and taxes that will apply. For instance:

When exporting to the United States, Vietnamese businesses need to navigate the complex landscape of the Harmonized Tariff Schedule (HTS), which outlines the duty rates for virtually all goods.

For shipments heading to the European Union (EU), businesses must familiarise themselves with the Common Customs Tariff (CCT) that applies to all goods entering the EU, in addition to understanding the implications of the EU-Vietnam Free Trade Agreement (EVFTA) which can offer significant duty reductions.

As for exports to China, businesses need to comply with China's customs regulations outlined in its Customs Import and Export Tariff schedule, which may entail preferential tariffs, general tariffs, or tariff-rate quotas, depending on the nature of the goods and certain bilateral agreements.

Given the diverse and dynamic nature of import-export duties and taxes, businesses are encouraged to seek a thorough understanding of regulations and employ strategic planning to ensure compliance and cost-effectiveness, so they can effectively navigate the financial landscape of international shipping for smoother operations and improved bottom lines.

Enjoy cost-efficient international express delivery with DHL Express