We’ll demystify cross-border logistics jargon by breaking down the key terms used in every stage of the process, solving the frustration of cross-border e-commerce sellers who struggle with industry lingo.

Hey fellow cross-border practitioners! Ever feel like you’re listening to an alien language every time you talk to a logistics provider?

Those dizzying English abbreviations—one minute it’s FOB, the next DDP, plus HS Code, B/L, AWB… it’s enough to make your head spin with all these letter combinations.

Don’t worry! This article is your ultimate cheat sheet to master cross-border logistics jargon in one go, and level up from a cross-border newbie to a logistics pro in no time!

First-Mile Transportation: Kickstarting Your Cross-Border Journey

(I) Demystifying Incoterms

First-mile transportation, the vanguard of cross-border logistics, is the critical stage where goods are shipped from the seller’s location to the destination country’s port.

Several Incoterms take center stage in this process—they’re like the hidden rules of a game; master them, and you’ll level up your cross-border game with ease!

To help you clearly understand the differences between them, make sure to save the comparison chart below.

(II) Trouble Choosing? Not Anymore!

With so many Incoterms, how on earth do you pick the right one? No need to overthink it—here’s a handy tip:

If you’re a seller looking to cut costs, EXW is a great option. Under EXW terms, sellers don’t have to deal with the hassle of shipping and customs clearance, nor bear the associated costs, so your expenses will naturally be lower!

If you’re a buyer wanting a hassle-free experience, go for DDP. All you need to do is wait at home for your goods to be delivered right to your door—all the tedious procedures and potential risks are borne by the seller.

Customs Preparation: The "Clearance Code" for Your Cross-Border Journey

(I) Mysterious Codes & Key Documents

In the customs preparation stage, every document and every code is like a key—only when you gather them all and use them correctly can you smoothly unlock the door to cross-border trade.

Let’s start with the HS Code first!

HS Code, full name Harmonized System Code, is the "international identity card" of goods. It is formulated by the World Customs Organization and serves as a vast dictionary of commodity classification, systematically categorizing a wide range of goods worldwide.

For example, if you want to export a batch of pure cotton T-shirts, the corresponding HS Code is 6109.1000. Through this code, customs worldwide can know that these are knitted or crocheted pure cotton T-shirts.

If the HS Code is filled in incorrectly, the goods may not be able to be exported or imported smoothly, and may even face high tariffs. So don't underestimate it!

(II) The "Key" to Entering the European Market

Among various certifications, CE certification is undoubtedly a prominent "stepping stone". It is a mandatory product safety mark in the European Union, covering a wide range of product categories.

From electronic devices we use daily, such as mobile phones, tablet computers, and televisions, to toys that children love, and even to medical equipment related to life and health, all fall within its regulatory scope.

Please note that goods without CE certification are highly likely to be detained or fined by customs!!!

(III) Indispensable documents

In the vast array of documents involved in cross-border trade, PL, CI, and COO also play crucial roles.

PL, short for Packing List, is a detailed record of the specifications, quantity, and packaging information of goods, serving as a "personal secretary" for the goods.

CI, Commercial Invoice, is an important commercial document used for customs clearance, containing key information such as the value of the goods and trade terms.

COO, Certificate of Origin, is a document that serves as proof of the origin of goods. As its name suggests, this document can determine whether the goods are eligible for tariff discounts.

Be meticulous in the preparation of these documents, as any minor error could hinder the smooth delivery of the goods to their destination!

Warehouse management: the "overseas home" of goods

(1) Intelligent Brain and Overseas Outposts

Once the goods have crossed the ocean and arrived in the destination country, warehouse management becomes a crucial aspect.

This is like a relay race, where the initial transportation brings the goods to the destination country, while warehousing management is responsible for the "eating, drinking, and sleeping" of the goods in the destination country until they are delivered to the buyers.

WMS (Warehouse Management System) is like the "smart brain" of a warehouse.

This software system is amazing! It can manage the warehouse inventory in an all-round way, from accurate recording when goods are stored, to storage location allocation during storage, to quick picking after orders arrive, and to updating information about goods being dispatched. It can handle everything!

Overseas Warehouse, also known as overseas storage facility, is a storage facility established overseas, serving as the "overseas base" for goods.

After the buyer places an order, they can receive the goods on the same day or the next day, which makes a world of difference in the shopping experience. Moreover, overseas warehouses can also facilitate the processing of returns and exchanges, enhancing the shopping experience of buyers and increasing the traffic and competitiveness of the store.

(II) The Mystery of Amazon Logistics

In Amazon's e-commerce ecosystem, two logistics models have garnered significant attention: FBA and FBM.

FBA (Fulfillment by Amazon), Amazon's logistics service, is a "gold-tier service" launched by Amazon. Sellers deliver their goods to Amazon's warehouses in advance, and Amazon takes care of all subsequent tasks including warehousing, sorting, packaging, delivery, and after-sales customer service. It's super convenient!

FBM (Fulfillment by Merchant) refers to the mode where sellers handle the fulfillment process themselves, as opposed to FBA. In this mode, sellers are responsible for managing logistics throughout the entire process. From packing goods in domestic warehouses, contacting international logistics providers for transportation, to customs clearance in the destination country, and handling customer returns and exchanges as well as inquiries, sellers have to personally manage all these aspects, but they enjoy a high degree of flexibility.

(III) "Identity ID" of the goods and proof of delivery

In the vast arena of warehouse management, SKU and POD are like two indispensable minor roles. Although they may not be eye-catching, their roles are significant.

SKU (Stock Keeping Unit), a unique "ID number" for each product, is a unit of inventory management. Through SKU, merchants can precisely manage inventory, understand the quantity of each style, color, and size of product, facilitating procurement, sales, and replenishment decisions.

POD (Proof of Delivery), a receipt voucher. It's like when you buy something online and have to sign for confirmation upon receiving the package. This signed voucher is very important to the seller. It not only proves that the goods have been successfully delivered but also serves as a crucial basis for resolving after-sales disputes.

Tax optimization: the wisdom of careful budgeting

(I)"Tax code" in the European market

In the realm of cross-border e-commerce, tax optimization is a profound art. Mastering it is akin to possessing a "wealth manual", enabling your cross-border business to run smoother.

First, let's talk about VAT, which stands for Value Added Tax, or simply, value-added tax. In Europe, VAT is like an invisible "shopping companion", present in almost every commodity transaction. It is a tax levied on the value added to goods or services during the production and circulation process.

Let's talk about tax deferral. It's a good way to alleviate financial pressure, just like pressing the "pause button" on your cash flow. Simply put, it means that you don't have to pay taxes for the time being, and you can keep this money for future deductions. This is equivalent to a short-term interest-free loan for the enterprise, which can use the funds for other more urgent purposes, such as expanding production, purchasing raw materials, etc., greatly alleviating the financial pressure on the enterprise.

(II) Customs declaration and clearance: the "customs clearance test" for goods

Customs Declaration and Customs Clearance are crucial links in cross-border logistics. They are like the "gatekeepers" for goods entering the destination country. Only by successfully passing through these two stages can the goods reach the buyer.

Customs declaration involves reporting detailed information about imported and exported goods to the customs. It's a meticulous task that brooks no nonsense. The declaration includes details such as the name, quantity, value, origin, and intended use of the goods. It's essential to ensure that this information is accurate and meets the regulatory requirements of the customs.

Customs clearance refers to a series of procedures that goods need to go through when passing through customs, including declaration, inspection, taxation, release, and other links. The entire customs clearance process is like a thrilling adventure game, with each link full of challenges.

Tariff, also known as customs duty, is a tax levied by government authorities on importers and exporters in accordance with the law when imported and exported goods pass through a country's customs territory. It is like an "entry fee" to enter the destination country, and the tariff rate may vary greatly depending on different goods and different origins.

End-of-line delivery: The final sprint of the last mile

(I) Multiple transportation modes for your choice

When the goods have traveled thousands of miles and finally arrived in the destination country, the next step is the final delivery phase, which is the "last mile" sprint in the entire cross-border logistics process, directly affecting whether the buyer can successfully receive the goods.

In this segment, there are various transportation options to choose from, just like when you go to work, you can choose to walk, ride a bike, take a bus, or hail a taxi. Different modes of transportation have their unique characteristics and applicable scenarios.

Groupage, functions as a "cargo collection station" that consolidates goods from multiple shippers for transportation. This mode of transportation is particularly suitable for the delivery of large items, although it has size restrictions, generally requiring items to be within 6 pallets (a pallet is a commonly used logistics carrier in Europe, with a standard size of 1200mm×800mm).

Due to the consolidation of goods from multiple shippers, the overall transportation time will be relatively long, and the goods will also undergo multiple loading and unloading processes during transportation. For example, if you have a batch of large furniture to be shipped to Europe, but the volume of goods is not enough to fill a container, then consolidation transportation is a good choice, as it can help you save more transportation costs.

LTL refers to less-than-truckload transportation, which is commonly known as ride-sharing delivery. When your cargo volume is relatively small and not enough to fill a truck, you can opt for LTL. Logistics companies will consolidate the cargo of multiple customers onto the same truck, integrating multiple orders through an intelligent routing system to achieve cost sharing.

This mode of transportation is suitable for the transport of small batches of goods. Due to the need to pick up and deliver other goods in the area, the transportation speed is relatively slow.

FTL refers to full-truck transportation, which is akin to direct delivery by a dedicated vehicle. This mode of transportation is employed when the cargo of a single shipper occupies the entire cargo compartment. It utilizes point-to-point direct delivery, transporting goods directly from the originating warehouse to the destination, with the transportation cycle's error precisely controllable within 2 hours. This mode is highly suitable for transporting time-sensitive goods, such as urgent production parts or fresh produce.

FCL refers to full container transportation, where the entire container serves as your "exclusive territory". This mode of transportation is suitable for large quantities of goods, especially when the volume or weight of the goods is large and requires an entire container for loading. It offers high transportation safety and is suitable for long-distance and low-cost transportation needs.

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(II) Reverse logistics and special services

In the final stage of cross-border logistics, apart from ensuring the smooth delivery of goods to buyers, there are also some special services and procedures that need to be understood, such as reverse logistics and cash on delivery services.

Return logistics, in simple terms, refers to the logistics process of customers returning goods or defective products. In cross-border e-commerce, returns are an inevitable occurrence.

COD (Cash on Delivery) is a payment method that allows buyers to pay for goods only upon receipt. It is very popular in some regions, especially where credit card penetration is low and electronic payment infrastructure is weak.

POD (Proof of Delivery) is a receipt voucher that can prove that the goods have been successfully delivered to the buyer. If the buyer claims not to have received the goods, the seller can present the POD as evidence that they have shipped the goods and they have been signed for. Therefore, the seller must remember to request a POD from the logistics provider.

CMR, the Convention on the Contract for the International Carriage of Goods by Road, stipulates the relevant rules of road cargo transportation contracts and the rights and obligations of the parties involved. In cross-border road transportation, CMR serves as a "game rule manual", safeguarding the legitimate rights and interests of all parties involved in the transportation process.

ADR, or the Dangerous Goods Transport Certification, is of utmost importance. It aims to ensure the safety of dangerous goods during road transportation and prevent harm to personnel, property, and the environment.

Become a cross-border logistics expert, now!

Congratulations! You have successfully mastered so many cross-border logistics terms by braving all obstacles along the way! These terms are like your secret weapon, allowing you to quickly understand the other party's meaning and accurately convey your own needs when communicating with logistics providers. You no longer have to worry about being disadvantaged due to misunderstandings of terms!

For your convenience, I suggest bookmarking this article. Whenever you encounter issues in your work, you can easily refer back to it. By revisiting old knowledge, you may discover new insights.

I believe that through continuous learning and practice, you will surely go further and further on the path of cross-border e-commerce, reaping abundant success and wealth! Come on!