Sake Trade Options
The 3 most common trade terms when exporting and importing Japanese are Ex Works (EXW), Free on Board (FOB), and Cost, Insurance, and Freight (CIF). These are all international trade terms, known as Incoterms that define the responsibilities of sellers and buyers. Note that FOB and CIF are terms that are used only for sea & inland waterway transport.
Trading sake with EXW
In the Ex Works scheme, the seller is not responsible to load the sake on the buyer’s designated method of transport (air freight or shipping). The seller has the obligation to deliver the sake to a designated location, after which the responsibility goes over to the buyer. This option is by far the simplest option and often the preferred way of conducting trade.
Trading sake with FOB
With Free on Board, the seller retains responsibility for the sake pallets until they are loaded on board a ship. Once loaded, all liability goes over to the buyer and the buyer pays everything from there, including the transport by ship. This Incoterm is often the most cost-effective option, depending on the contract negotiated with the freight forwarder.
Trading sake with CIF
In the Cost, Insurance, and Freight scheme the seller has to deliver the sake to the designated ship and also cover the sea freight as well as the insurance. Once the ship arrives at its destination port, all liability transfers to the buyer, who is also responsible for unloading the goods from the ship.
Sake Shipping Options
Most of the exported sake is transported by ocean freight on large container ships. Small or urgent sake exports are traded via air freight.
Air freight for Japanese sake
Transporting sake bottles via air freight is at least 5 times more expensive compared to ocean freight. In most cases sending sake bottles via air freight does not make sense, but can be unavoidable when there are urgent deliveries of expensive luxury sake bottles.
The weight of the bottles makes it hard to send sake on the airplane. Also, some airlines might be skeptical about transporting sake as broken bottles could spoil other freight goods in the storage compartment.
Ocean freight for Japanese sake
The main form of transport for Japanese sake is ocean freight via large container ships. The sake bottles are usually packed in 12 bottle cases (for 720ml sake bottles) and stacked onto shipping pallets.
How many sake bottles fit on one pallet?
Due to the inherent wait, most of the time one full pallet has 5 layers of cases. Each layer consists roughly of 10 cases. This converts into 50 cases holding about 600 sake bottles.
How many cases of sake does one shipping container hold?
It is crucial for sake distributors and importers to know how many cases of sake can fit in one shipping container. It decides how much must be spent on shipping per bottle and therefore defines the economics of the sake order. A standard 20ft container can fit around 10 pallets or 500 cases. The bigger 40ft container can hold up to 20 pallets or 1000 cases.
Modes of container shipments: LCL and FCL
Depending on how much sake you have ordered, you may need only a quarter of a container or only space for one fully loaded pallet with sake cases. Full Container Load (FCL) and Less than Container Loads (LCL) describe the main modes of container shipments.
As the term suggests, the FCL shipment mode is a shipment that occupies the whole container without having to share it with other goods.
Also known as groupage, LCL is a shipment that only take up the container space partially and the sake cases are shipped together with other goods from other companies.
What shipping mode is better for importing sake? LCL or FCL?
For low-volume shipments with a volume of 2 to 13m3, the LCL shipment method is the better option. Above 14m3 (roughly 10 standard shipping pallets) the FCL shipment tends to become cheaper than sharing a container. For urgent orders, the FCL shipment is recommended as you do not rely on other people, which could potentially delay your shipment.
What to do if your order is not big enough for one pallet?
Even when you do not have the volume to fill one pallet, there may be the option to share a pallet together with other sake importers or exporters. Sharing pallets is a great way to offset each other's transportation costs. If you have no one to share a pallet, air freight for smaller orders can make sense.
Sake Import Regulations
How to import sake to the USA
The Federal Alcohol Administration Act set the rule work for regulating the labeling and advertising of alcohol. Labels of newly imported sake products need to be confirmed by the TTB in a special application process.
In the USA the alcohol import and distribution laws are managed on state-level. Each state has different laws for dealing with alcohol. When importing Japanese sake to a specific U.S. state, the importer must comply with the state’s laws. The import of alcoholic beverages via mail is generally prohibited.
In addition to the above-mentioned regulations, sake imports need to be compliant with requirements set by the Food and Drug Administration (FDA) as well as the Department of Agriculture, Animal and Plant Health Inspection Service (APHIS). For each commercial import, you need to file the Prior Notice with the FDA.
The tax tariffs that have to be paid when importing sake to the USA are defined in the Harmonized Tariff Schedule. Sake or rice wine belongs to the fermented beverage group and is taxed at 3¢/liter, with some countries being exempted from this tax duty. Exports from countries that do not fall in the Normal Trade Relations category like Iran or North Korea would be charged with as much as 33¢/liter.
How to import sake to the EU
When importing Japanese sake to a country in the European Union, one has to consider the EU requirements as well as the national regulations. To conduct trade business with EU customs the so-called EORI number (Economic Operator Registration Identification) is required and can be obtained by applying to the local customs authority. In order to comply with the national laws as well, it is important to check other national regulations and rules around importing and distributing alcohol.
The tariff code (or also HS Code) for sake is 2206.00.4500. It is taxed based on this category depending on the importing country. The total customs duties and taxes payable contain of the customs duty payable (customs value multiplied by the customs duty), the excise duty payable (imposed tax rate on special goods like alcoholic beverages) and the VAT payable (imposed on commercial imports, which can be claimed back).
The EU regulation regarding the labeling of alcoholic beverages describes the obligation to provide an ingredient list and nutrient declaration. Surprisingly, at the moment all alcoholic beverages with 1.2% alcohol are exempted from this regulation. But this could and will change in the future, as the European Commission is considering making it mandatory for all alcoholic beverages including sake.
What are the necessary documents for importing sake?
- Commercial invoice: the original document with at least one copy
- Customs Value Declaration: needed when the value of imported goods exceeds 20,000 EUR
- Transport Documents: depending on the transportation method documents like the Bill of Lading, Road Waybill (CMR), Air Waybill (AWB), or Rail Waybill (CIM) are required
- Freight Insurance: proof of insurance is needed if there is no proof already on the commercial invoice
- Packing List: list of the imported goods and packaging details like weight, dimensions, etc.
- Single Administrative Document (SAD): standardized import declaration form which needs to be submitted by the importer or representative agent
- Import License: depending on the import country and imported goods