Navigating the world of international shipping is no easy task. There are many different logistical questions that need to be answered when fulfilling a Kickstarter campaign. What freight hubs should the package be shipped from and to? Which company to use for fulfillment of the Kickstarter pledged? Should all pledges be sent to the same fulfillment location or should the shipments be split to multiple fulfillment centers?
Each of these components have a different cost and can increase or decrease the shipping expenses. It is important to do your research as you may end up spending thousands of dollars extra in shipping if mistakes are made. As a boardgame publisher who uses crowdfunding campaigns, I owe it to my backers to understand the shipping and handling process in order to and provide efficient, cost-effective shipping.
I have summarized the process below. If you have any additional questions or would like to know more about a specific topic, please reach out, as I am happy to talk.
Intercoms - International Freight Shipping
The first step in the process is to work with the manufacturer to determine when the ownership of the product transfers from the manufacturer’s responsibility to the buyer’s responsibility. Prior to the pandemic, manufacturers would assist with shipping and handling and even deliver the games to a destination chosen by the buyer. Due to the current uncertainties, manufacturers have reduced their role in the shipping and handling, forcing the buyer to take on more of the responsibility.
As an example, the image below shows 11 different shipping options that are allowed on Freightos.com, a freight shipping logistics company. These options can be very confusing to creators who are fulfilling a Kickstarter campaign for the first time.
The most common shipping choice in the board game industry is called FOB (Free On Board). FOB means the manufacturer is responsible for getting the game loaded onto the freight ship. Once loaded, the buyer is responsible for getting the game to the fulfillment center. This includes freight shipping costs, cargo insurance, unloading at port, customs, import duties/tariffs, loading the truck, transport to destination, and unloading at the fulfilment center. We will talk about each one of these in more detail.
Freight Forwarding
As an indie publisher, we hire a freight forwarding company to assist with the logistics of getting the game from the port facilities to the fulfillment warehouses in local markets. For our last game, Magical Unicorn Quest, we hired Seabay International Freight Forwarding Ltd. Seabay International helped with the entire process from paying the freight cost to inventory arriving at the fulfillment center.
I recommend researching the different freight forwarding companies as each company provides different services at different rates. Seabay International worked great for us as they were able to provide a discount on a less than full load shipment.
To determine the costs of hiring a freight forwarding company you will need to provide them with the number of pallets you are expecting, dimensions of the pallet, weight of the pallet, and total value of the pallet. The manufacturing will provide you with this information.
The easiest way to save money in freight shipping is to reduce the size of your product box, as the size of the box is the constraining factor in the cost of shipping. The other way to reduce the cost is to make the game lighter, however, this results in a minimal reduction in shipping costs, as board games are relatively light in comparison to other objects that are shipped.
For Towering Purrfection, we are working with the manufacturer to know ahead of time how many games will fit in a pallet, the dimensions of the pallet, and the estimate weight of the pallet. Once we know this information, we can estimate the cost of freight shipping. Freightos.com has an estimated freight shipping calculator that I recommend using.
Link To Freightos calculator.
Economies of Scale
Estimate as of 07-11-2022
The example above is an estimate for the freight cost of 5 pallets, holding approximately 3000 games of Towering Purrfection, being shipped from Shanghai to our fulfillment warehouse in Minnesota. The unit cost is $1.90 per game. Note that this is the lowest cost option (not fastest) and does not include insurance. The fastest option is about $13.00 per game. Yikes!
Freight, like manufacturing, is a large beneficiary of economies of scale. I queried Freightos’ calculator for 1, 5, and 10 pallets of our game going to Minnesota. The cost for 1 pallet was $2.95 per game, 5 pallets was $1.90 per game, and 10 pallets was $1.65 per game. The best way to reduce the cost of shipping per game is to ship more games.
Price Volatility
2021 taught all of us how at-risk global supply chains can be. The good news is that prices are decreasing and will hopefully stabilize to around pre pandemic prices in the future.
While macro indices are useful, it is also useful to periodically check freight costs for your specific skew: quantity of pallets, dimensions of pallets and weight of pallets. I recommended checking daily prior to booking freight. This will give you the chance to take advantage of short-term volatility and book the shipment when prices are lowest. Remember that economies of scale are a better price reduction then short-term volatility. As board game publishers, we have to include an acceptable range of shipping and build in appropriate margins to shoulder the freight price volatility risk.
US Port Fees & Tariffs
The good news is that the U.S does not have any import fees or tariffs for board games. A quick look at the Harmonized System (HS) shows that the rates of duty into the United States are free.
Customs & Inspections
It’s important to keep in mind that all of the estimates we’ve talked about so far are the “nothing goes wrong” numbers.
Shipments can be pulled for inspection incurring additional costs and delays. Our shipment of Magical Unicorn Quest was pulled for inspection resulting in a 37-day delay. During this delay, we had to pay additional storage fees, an inspection fee, and an additional travel fee to the inspection site. Thankfully there were no issues with the package and our paperwork was correct, otherwise there would have been additional delays and costs. We hope that all future packages are not inspected as this process is time consuming and expensive.
Shipping to Fulfillment Center
To increase margins of scale with shipping for Magical Unicorn Quest, we ship all of our games to our fulfillment partner, Atlas Games which is located in Minnesota. The price to move the games from the port in California to Minnesota depends on the price of gas. As gas prices have been increasing these prices are increasing as well. We use Atlas Games as our fulfilment company as they are located close to our headquarters and they specialize in working with smaller companies and orders. By partnering with them, we have been able to support a local business, reduce our costs, and pass additional savings on to our backers.
Fulfillment
Fulfillment with in the United States is straight forward as USPS, UPS, and FedEx are all competitive and provide reliable options for shipping.
International shipping gets more complicated as we, or the backers will have to pay VAT/GST, taxes. In the EU you pay a VAT at your point of import, and then when shipping between EU countries you pay VAT at each country you ship into and get rebated the original VAT. This is important as each country has a different VAT rate, which will increase the costs.
Closing Thoughts
My hope is to help Kickstarter backers and other indie board game publishers understand the process of shipping and handling. I plan to continue to dive deeper into this topic and make useful spreadsheets that can be used by the public to help them better understand the cost of logistic issues that may arise.
I hope you enjoyed learning more about the shipping and handling process. Let me know what questions you have on global fulfillment, as I am happy to help.