WhyCould freight cost allocation become a pain point for businesses?

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

• /Theattributionofconnectioncostsinsegmentedtransportation
• DisputeovertheallocationofLCLcargobyvolume/weight/value
• Handlingofancillaryfeessuchascustomsdeclarationfeesandportmiscellaneouscharges.

How are freight responsibilities divided under FOB and CIF terms?

According to the latest Incoterms? 2020 rules,the freight allocation rules for different trade terms are clearly defined:

• FOBtermsThesellershallbearthecostsuptotheportofshipment,including:
  • TerminalHandlingCharge(THC)atthePortofLoading
  • Relatedfees
• CIF terms: The seller shall bear the freight to the destination port,but please note:
  • Additionalriskssuchaswarriskshallbeseparatelyagreedupon.
  • Demurragechargesatthedestinationportareusuallybornebythebuyer.

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:

• WeightRatioMethod:Suitableforbulkcargo
  • Calculationformula:Individualshippingcost=(Singleitemgrossweight/Totalgrossweight)×Totalshippingcost
• 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,the following points should be noted regarding the deduction of freight costs:

• MustobtainSpecialVATInvoiceorCustomsPaymentVoucher
• Internationalfreightchargesarenon-deductible(exceptforexportsunderCIFterms).
• Customsdeclarationagencyfeesshouldbeseparatelylistedasservicefeesandprepaidfreight.

What are the common misconceptions about freight cost allocation?

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

• Includedestinationportinspectionfeesinexportcosts
• Disregardtheimpactofexchangeratefluctuationsonprepaidfreight.
• Notdistinguishingbetweendeductibleandnon-deductibleexpenses
• LCLcargoadoptsasingleallocationstandard.

How do international payment methods affect freight cost allocation?

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

• PayinginRMBcanavoidexchangeraterisks.
• Thetermsoffreightpaymentmustbeclearlyspecifiedundertheitem.
• TheDPpaymentmethodrequirespriorconfirmationoffreightpaymentresponsibility.

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

High-quality agents should have:

• ERPSystemforAutomaticAllocationCalculation
• Real-timeexchangerateupdatemechanism
• Itemizedbillstructure
• Taxcomplianceguidancecapability