As the nation with the largest population and carbon footprint, China?s clear determination to invest in and develop renewable energy is inspiring. According to China Photovoltaic Industry Association (CPIA), the country brought about 40 gigawatts (GW) of new solar power into operation in 2020, taking its total installed solar capacity to 240 GW. This PV capacity is enough for China to keep its market leader position, with the Chinese market representing over 35% of total global installations.
Additionally, according to the International Energy Agency (IEA), more than 60% of the world’s solar panels are made in China. Out of the 10 biggest solar panel manufacturers, 6 are headquartered in China.
And while the PV market in Europe has been growing steadily (with 2020 being the best since 2011), most of the solar panels installed in the European Union are imported from China.
Renewable energy cargo can be bulky and, in the majority of cases, requires door-to-door transportation of a large number of containers from one continent to another. On average, such projects take a year and a half to come to fruition due to the socio-economic, environmental, and governmental factors involved.
90% of shipments are DAP and require door-to-door service with efficient handling at all stages of the project, from the collection at the factory, through to warehousing and ultimately, delivery at the farm or power station, taking into account the most appropriate methods of transport at all times. This means that most cases require specialist project cargo handling.
What is involved in the transportation and logistics of solar panels from China to the European Union? Keep on reading to find out.
What are the stages of transporting solar panels from China to Europe?
- Loading from factory to the container terminal in origin.
- Transport by sea to destination.
- Receiving container at the destination and transport to a local warehouse.
- Handling pallets into the warehouse and onto the truck.
- Transport from warehouse to the final customer.
Even the best quality PV panels and equipment might end up scratched or damaged beyond repair due to poor logistics. It shouldn?t be this way, as poor and unreliable logistics results in financial loss and damage to your reputation. What is more, in some cases, fine damages are not visible to the naked eye but can cause serious problems and damages to the system.
Handling the logistics of solar module shipments can be complex. Below, we explain the basic contours and important aspects of solar panel logistics.
Controlling The Shipment
Some manufacturers will offer to help with shipping the modules from their factory to the destination port. It is generally better to complete the shipping process via your own arrangements ? from the beginning until the end ? instead of relying on a solar module manufacturer to handle the logistics. Own arrangement means hiring a competent freight forwarding company.
The Benefits Of Hiring Your Own Freight Forwarder
According to the CEO of BTS Logistics, ?hiring a freight forwarder gives you better control over delivery. Freight forwarders work both for manufacturers and importers, and their service and way of handling remain at the same level throughout the whole process. With DDP deliveries, the manufacturer always has the freight forwarder contact the importer.?
Moreover, when importers use their own freight forwarder, the shipping agent is working for them and will act on behalf and in the interest of their clients.
Importers using their own freight forwarder can decide to purchase proper insurance for their shipment, which is not always the case with corner-cutting manufacturers handling logistics.
With an own freight forwarder, the fastest shipping routes according to their requirements and schedules can be picked. Only real charges are involved in the whole logistics process, and no additional (hidden) profit for the manufacturer is included.
The one exception when it may be OK to have the manufacturer handle the logistics is when the PV manufacturer offers credit/extension on the balance payment of a shipment.
What to take into consideration when selecting the right freight forwarder?
According to the CEO of BTS Logistics, ?since margins are small, the price is important but next to that service is the second most important thing for the importers.?
Following requirements should be met when it comes to choosing the right freight forwarder:
- English speaking staff on the ground (own staff, not an agent)
- one central, 24/7 available contact person
- familiarity with solar panels
- referred by a trusted contact
- credit arrangements
Solar Panel Packaging Basics
Boxes, Pallets, And Containers
Solar panels are typically stacked in a box either horizontally or vertically. Usually, separators are placed between each module, and extra protections are added to the four corners of each module stack. In some cases, modules are also packed in individual carton boxes to be packed into a large master carton box.
The box on the pallet is next sealed and strapped and then wrapped in plastic film. Solar panels are then usually shipped via ocean on pallets, holding on average 28-30 panels and ? depending on order quantities, with extra few panels stacked on top in extra small cartons.
There are three most popular models of containers used for shipping:
- 20?GP = 20?DV = 20FT = 20? = 20 feet general purpose
- 40?GP = 40?DV = 40FT = 40? = 40 feet general purpose
- 40?HC = 40?HQ = 40 feet high cube
The 20? container is ideal when one is carrying out low-volume merchandise transportation. Depending on the type of solar panel (60 cells / 72 cells), the load capacity will vary. 60-cell panels allow for a load capacity of about 400 panels, that is, about 12-13 pallets depending on the size of the solar panels that will be transported. 72-cell panels allow for a load capacity of about 290 panels, that is, about 9-10 pallets of solar panels.
The 40? container is advisable for ?groupage? orders. For 60-cell modules, 896 panels spread over 28-29 pallets can be transported. For 72-cell modules, 716 pieces divided into 24-25 pallets will fit into a container.
The high cube 40? container is the container mastodon because many of them reach up to 45?. It has the same characteristics as 20? and 40? containers, with the difference that it is higher, which allows the FF to load a bigger order into the container.
Protecting Solar Panels During Transit
Ensure the following steps are followed to provide protection from damage to the solar panels during transport:
- Inspect the solar panel before shipping for any obvious damage.
- Place the sunny side (front side) facing the pallet.
- Put foam pads around the frame of the solar panel.
- Have the last solar panel sunny side up.
- Add edge protectors.
- Tightly add straps near the corners and not centered!
- Cover the whole shipment with foil (at least 35 turns for larger shipments).
Documentation and Terms Used in Solar Panel Transport
Before starting to handle shipments successfully, there are several things to learn. Below we outline here important points to look into when it comes to the organization of solar panel logistics.
There are certain freight documents that forwarders must be familiar with, including a letter of credit, certificate of origin, commercial invoice, bill of lading, and packing list. Even a seemingly small error while filling in paperwork can cause significant shipping delays, thus disrupting the supply chain.
- Bill of Landing
This is a type of freight document that works as a contract between the cargo owner and shipper. The exporter and importer details must be filled in, including information such as the number of packages, list of goods, dates of arrival and departure, ports of destination and departure, and consignee and consignor names. Additional details to include are freight amount and rate, volume and weight of cargo, and number and marks on the packages.
- Packing List
This is another document for freight forwarders to bring when shipping cargo by ocean freight. It includes detailed information about the merchandise being shipped, such as value, volume, and weight.
- Commercial Invoice
All transactions that involve exporting or importing must be accompanied by a commercial invoice which is a form of proof of sale. While it looks like standard invoices, shippers must also include information such as shipping line, financial institution, forwarder, and exporter and importer. Reasons to use a commercial invoice include easy tracking of the whereabouts of cargo and reduced shipping delays.
Incoterms are shipping terms that set the parameters for international shipments. The most common incoterms in the solar industry are CIF (Cost Insurance and Freight), FOB (Free On Board), Ex Works, and DAP (Delivery At Place).
- CIF (Cost of Insurance and Freight)
Cost, insurance, and freight (CIF) is an expense paid by a seller to cover the costs, insurance, and freight of a buyer’s order while it is in transit. The goods are exported to a port named in the sales contract. Until the goods are fully loaded onto a transport ship, the seller bears the costs of any loss or damage to the product. Further, if the product requires additional customs duties, export paperwork, or inspections or rerouting, the seller must cover these expenses. Once the freight loads, the buyer becomes responsible for all other costs.
- FOB ( Free On Board)
Free on Board (FOB) is a shipment term used to indicate whether the seller or the buyer is liable for goods that are damaged or destroyed during shipping. “FOB shipping point” or “FOB origin” means the buyer is at risk and takes ownership of goods once the seller ships the product. Historically, FOB was used only to refer to goods transported by ship; the term has since been expanded to include all types of transportation.
For accounting purposes, the supplier should record a sale at the point of departure from its shipping dock. “FOB origin” means the purchaser pays the shipping cost from the factory or warehouse and gains ownership of the goods as soon as it leaves its point of origin. “FOB destination” means the seller retains the risk of loss until the goods reach the buyer.
- Ex Works
Ex Works means that the seller shall deliver the goods as soon as they are made available to the buyer at the seller?s premises or other designated premises (e.g. factory, plant, warehouse, etc.). The seller shall not be obligated to load the goods onto a collecting vehicle or to clear the products for export.
- DAP (Delivery At Place)
If a delivery is sent on a DAP basis, the seller is responsible for the delivery of the goods including transport costs to the named destination at the buyer. The costs of carrying out all the necessary import formalities are expressly excluded. The buyer is only responsible for costs to import the cargo and unload the shipment once it arrives at the requested destination.
What to choose?
Based on the incoterm you select, you can let the supplier handle the goods transportation to:
- no further place but the factory/manufacturer, which is EXW
- a nearby port in China, which is FOB
- a nearby port in your country, which is CIF (including maritime insurance)
- all the way to your facility, which is DAP/DDU (not including tariff and taxes)
When you compare prices from several suppliers, make sure they are based on the same term. For example, A-seller quoted EXW $5/unit while B-seller quoted FOB $5.5/unit, it doesn?t mean the price from B-seller is not more competitive than A-seller.
Even to-door service providers, unlike parcel delivery companies (FedEx, UPS, etc.), typically only provide dock-to-dock service or curbside delivery where the driver does not touch the freight. This is known as ?Dock to Dock? or ?Shipper Loads / Receiver Unloads?. Residential or inside delivery means extra fees.
When shipping solar PV modules across borders, the freight forwarder will need to inform customs about the types of goods that are being shipped. This is done with HS codes. The Harmonized System is a standardized numerical method of classifying traded products. It is used by customs authorities around the world to identify products when assessing duties and taxes and for gathering statistics.
There are many ways HS codes are used by governments, including freight tariffs, internal taxes, and quota control.
It is important to know the HS codes for the relevant solar products so that the freight forwarder or contact at customs can inform the importing company about the latest tariffs, which can drastically affect the cost of the shipment.
Certificates for photovoltaic panels in the EU
There are two sets of elements in the photovoltaic panel system: power supply (meters, inverters, DC isolation switches) and the panel, i.e., connectors, mounting, and trackers. The importer should ensure that all these components comply with the requirements of the European Union market.
The main European document regulating photovoltaic panels on the market is the Regulation (EU) No 305/2011 of the European Parliament and of the Council of 9 March 2011. It lays down harmonized conditions for the marketing of construction products. Photovoltaic panels are listed under code 20: ?Structural Metallic Products and Ancillaries? in Annex IV.
The regulation states that products such as solar panels should have CE marking. It means that the declaration of conformity is also required.
Following Directive 2012/19/EU of the European Parliament and of the Council of 4 July 2012 on waste electrical and electronic equipment (WEEE), modules should be marked with a crossed-out waste container.
An additional advantage is standard ISO 9050, which specifies the methods of determining light and energy transmittance of solar radiation for glazing in buildings.
Generally, when it comes to products intended on the EU market, you have to check whether the goods are subject to harmonized standards. If your construction products it not fully covered, a European technical assessment (ETA) should be issued. ETA is the basis for a manufacturer?s Declaration of Performance, further allowing to place CE marking. Be mindful of the fake CE markings.
Customs Duty On Solar Panels
Payment of customs duties is one of the importer?s many obligations. Customs codes and tariff rates can be found in the tariff systems ? TARIC (Integrated Tariff of the European Communities) in case of imports to the EU.
According to TARIC, customs duty for photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light-emitting diodes, code 8541409000, is 0%.
Such an attractive duty makes it profitable to import photovoltaic modules to the European Union.
The EU initiated an investigation in late 2012. The Minimum Import Prices (MIP) was imposed by the EU on Chinese solar goods initially in December 2013 and extended by a further 18 months in March 2017, in response to concerns over the EU solar manufacturers struggling to compete with Chinese companies that had allegedly benefited from unfair levels of state support. After the implementation of these anti-dumping measures, Chinese solar panels manufacturers were allowed to sell solar products in Europe free of duties if they do so at or above the MIP. If they sold for less that the MIP, they were subject to duties of up to 64.9 percent.
On September 3rd, 2018, the European Union decided to end up its five-years-old restrictions on solar panel imports from China. As intented, the European Commission removed the Minimum Import Prices (MIP) rules.
According to the European Commission, the hopes of the abolishment of these protectionist measures are:
- The increase of European Union supply in terms of renewable energy.
- The restoration of EU-China trade of photovoltaics to a normal market condition providing a more stable business environment between the two sides.
- A step forward dealing with climate change as China will continue cooperating with the European Union to tackle carbon emission and push for global free trade.
As a “watershed moment” for Europe?s solar industry, the lifting of price controls on Chinese solar panels symbolizes a delicate balancing act between the interests of EU manufacturers and importers pressing for a reduction in the cost of solar power generation.
The Use of Bonded Warehouses
A bonded warehouse, or bond, is a building or other secured area in which dutiable goods may be stored, manipulated, or undergo manufacturing operations without payment of duty. While the goods are in the bonded warehouse, they may, under supervision by the customs authority, be manipulated by cleaning, sorting, repacking, or otherwise changing their condition by processes that do not amount to manufacturing. After manipulation, and within the warehousing period, the goods may be exported without the payment of duty, or they may be withdrawn for consumption upon payment of duty at the rate applicable to the goods in their manipulated condition at the time of withdrawal.
PV businesses looking for a convenient and cost-effective solution to supply chain management often get the results they seek through a third-party logistics partner. Businesses looking to expand into new markets in foreign countries can also benefit greatly from third-party global warehousing and distribution services.
Calculating Landed Cost When Importing from China
Landed cost refers to the total cost of a product (a shipment) one needs to pay, from the seller?s warehouse/manufacturer to the buyer?s warehouse/facility.
This list of components that are needed to determine to include the original cost of the item, inspection charges, all brokerage and logistics fees, complete shipping costs, customs duties, tariffs, taxes, insurance, currency conversion, crating costs, bank charge, and handling fees.
Not all of these components are present in every shipment but must be considered part of the total cost.
Landed Cost = EXW/FOB + To-Door Freight + Customs Fees
- EXW/FOB to be paid to the seller/supplier
- To-Door Freight to be paid to the freight forwarder
- Customs Fees to be paid to the customs (via customs broker)
Freight Cost ? Ocean Rates
The general ocean rate includes the base rate and surcharges, but no customs clearance and port charges at both sides, duty, taxes, and other miscellaneous charges are included.
All international shipments are subject to destination charges:
- Destination country customs related fee (i.e. Duty/Tax)
- Destination port/terminal handling fee (i.e. THC)
- Destination agent service fee (i.e. D/O)
The international shipping industry, and the freight rates within it, are always volatile. There are plenty of variables that factor into it. The following are the main five.
Bunker fuel is a considerable cost for crude tanker companies. Closely related to the cost of oil, there is a direct relationship with the cost of oil and the cost of bunker fuel and therefore the ultimate cost of freight. When oil prices rise and fall within international markets, there is a direct impact on freight rates. The volatility of oil prices is correlated to fluctuating international ocean freight costs.
For many goods, especially reefer cargo, seasons plays a large role in the cost of transportation. Some goods become more expensive to ship during high seasons, due to demand and supply changes. Inclement weather can cause many smaller ships to be docked, decreasing supply while demand increases, spiking shipping fees.
Fees and Service Charges
Terminal fees are charged both at the embarking point, and the intended destination. During Hanjin?s bankruptcy, many of their ships were stuck out at sea due to the inability of the company to pay the terminal fees. Services charges can be any extra charge levied by port authorities.
The U.S. dollar is the common denomination used for international transactions, however, the currency exchange rates fluctuate on a daily basis. This fluctuation can be a basis of fluctuating ocean freight rates.
Shipping containers are designed to operate at maximum capacity. Should the container not reach optimum capacity, ?economies of scale? come into play, wherein the shipper becomes responsible for the cost of the empty part of the container although the quantity of actual goods shipped is less than what fits in the container. It is therefore vital to get as close to 100% container utilization as possible.
According to the CEO of BTS Logistics, at the moment seafreight costs are over the top due to lack of equipment, less vessels sailing and also the recent congestion at Suez Canal.
How Long ? Transit Time
Estimated Transit Time (ETT) is the time between the Estimated Time of Departure from the origin (ETD) and the Estimated Time of Arrival at the destination (ETA).
As for sea cargo transportation out of China, there?s only a very rough idea showing below. You can find the schedule of each carrier for reference.
|Western Europe||25 days|
|Northern Europe||30 days|
|Southern Europe||27 days|
Please note that there may be 5 to 10 days differences in practical transportation, dipending on the loading port, destination port, and different carriers.
ETDs and ETAs are never guaranteed by the sea carrier and are subject to change at any time. Also, keep in mind that it can take up to 7 days before the cargo is loaded at the loading port. The same thing is true at the destination port, one week or more for discharge and dispatch needs to be allowed.
Upon Arrival ? Clearance and Pickup
Goods may only be entered by their owner, purchaser, or a licensed customs broker designated by the buyer. Normally the consignee will be notified via an arrival notice within 5 days or less of port arrival by the delivery agent listed on the B/L.
Several documents need to be filed with customs before your shipment arrives at port. Customs also require an earlier lodgment (ENS for Europe), for ocean freight only.
The consignee is then responsible to file entry documents to the customs, arrange for payment of any duties, taxes, and other fees. Finally, it?s time to pick up and to-door delivery from the discharge port by yourself or through a trucking company.
Here?s how a customs official will process your shipment:
- Inspect the paperwork.
- Determine if duties apply.
- Request duty payment.
- Following confirmation of payment, release the shipment for pickup.
Unless there?s a problem, ocean freight is generally cleared within 1 or 2 days of the ship landing in port.
You might get caught up in a random inspection/exam. Non-intrusive inspections are fairly quick, but an intensive exam could take more than a week. Non-intrusive inspections cost around $275 at major ports, but an intensive examination costs around $800, not including third-party transport and storage costs.
Clearance involves the preparation and submission of papers required to the authority. It?s quite complicated and you?d probably prefer to find a customs broker for assistance. Smooth clearance can help you avoid further unnecessary detention and demurrage fees.
Transport On Land
The final part of your solar panels?s journey is getting them delivered to the final destination, which is usually done by land. To ensure the safety of this final process, you should use a trucking company that specializes in and has a proven record of transporting solar panels and will ensure that necessary procedures and safety measures are followed during:
- Loading the truck
- Unloading and unpacking
Shipping solar panels is a unique kind of logistics that requires an expert eye and a diverse range of professional skill and knowledge to get such a mammoth of a job completed with success.
It is important to spend some time when picking the right freight forwarding partner. Many people working in the industry are in touch with their logistics company almost daily.
Having a direct with logistics experts will save importers a lot of time and trouble in the future, as they can advise on latest regulations, import duties and fastest or most affordable routes. A freight forwarder plays a huga part in the process of importing solar panels from China to the EU, so it should be selected very carefully.