WhyExport RepresentationCould freight cost allocation become a pain point for businesses?

According to the statistics from the General Administration of Customs in 2023, 78% of theforeign tradeThere are calculation errors in the company's handling of freight costs. Freight allocation not only involves transportation cost control but also directly affectsExport DrawbackLimitandVAT DeductionCommon issues in practice include:

• Maritime Transportation/Air TransportationThe attribution of connection costs in segmented transportation
• Dispute over the allocation of LCL cargo by volume/weight/value
• Handling of ancillary fees such as customs declaration fees and port miscellaneous charges.

How are freight responsibilities divided under FOB and CIF terms?

According to the latest 2025 International Commercial Terms (Incoterms), the freight allocation rules for different trade terms are clearly defined:

• FOB termsThe seller shall bear the costs up to the port of shipment, including:
  • Terminal Handling Charge (THC) at the Port of Loading
  • Export ClearanceRelated fees
• CIF terms: The seller shall bear the freight to the destination port, but please note:
  • Additional risks such as war risk shall be separately agreed upon.
  • Demurrage charges at the destination port are usually borne by the buyer.

What are the scientific calculation methods for freight cost allocation?

Drawing from the practical experience of Fortune 500 companies, we recommend four mainstream allocation methods:

• Weight Ratio Method: Suitable for bulk cargo
  • Calculation formula: Individual shipping cost = (Single item gross weight / Total gross weight) × Total shipping cost
• Volume Percentage Method: Suitable for lightweight and bulky cargo
• Value Allocation Method: The Preferred Choice for High-Value Goods
• Hybrid billing method: Comprehensive weight + volume factors

How to handle freight invoices for compliant tax deduction?

According to the 2025 VAT reform plan, attention should be paid to freight deduction:

• Must obtainSpecial VAT InvoiceorCustoms Payment Voucher
• International freight charges are non-deductible (except for exports under CIF terms).
• Customs declaration agency fees should be separately listed as service fees and prepaid freight.

What are the common misconceptions about freight cost allocation?

During our audits, we have identified the following common errors made by enterprises:

• Include destination port inspection fees in export costs
• Disregard the impact of exchange rate fluctuations on prepaid freight.
• Not distinguishing between deductible and non-deductible expenses
• LCL cargo adopts a single allocation standard.

How do international payment methods affect freight cost allocation?

After the implementation of the new cross-border RMB settlement regulations in 2025:

• Paying in RMB can avoid exchange rate risks.
• L/CThe terms of freight payment must be clearly specified under the item.
• The DP payment method requires prior confirmation of freight payment responsibility.

What are the key points to consider when selecting an agency?

High-quality agents should have:

• ERP System for Automatic Allocation Calculation
• Real-time exchange rate update mechanism
• Itemized bill structure
• Tax compliance guidance capability