Freight and insurance expenses in import trade

The National Board of Customs has studied the share of the freight and insurance expenses in the import trade. The previous survey on expenses of import of goods was carried out in 2002-2003. The new survey was carried out based on the statistical material of year 2007 and spring 2008.

​The share of the total freight seems to have increased in comparison with the survey of 2002-2003. The share of the freight in 2002 was approximately 4.9 per cent of  the statistical value of the import trade. The present share of the statistical value is on average 6.8 per cent. The share of Finnish companies in the freights of import trade was 23 per cent and the share of foreign companies was 77 percent.  The shares were the same in 2002.

Evidently, the rise in the share of freight can be attributed to the increase in the share of imports of cheap bulk goods, such as metals and energy, whereas the share of exports of expensive piece goods has decreased in comparison with the period of the previous survey.

The insurance expenses have also risen in comparison with the previous survey. In total, the insurance expenses were now 0.4 per cent of the value of the trade, whereas the figure was 0.2 per cent the previous time. The share of insurances paid to domestic companies increased significantly and was now 27 per cent, whereas the figure was 21 per cent the previous time. Thus, the share of insurances paid to foreign companies is 72 per cent, whereas the figure was 79 per cent in 2002.

Background and purpose of the survey

According to the European Union regulation on Community statistics concerning balance of payments, international trade in services and foreign direct investment (No 184/2005 of January 2005), the import data on the national accounts and balance of payments are to be recorded as FOB values at the level of the national economy instead of CIF, which is applied to foreign trade statistics. According to the UN recommendation, the countries that use the CIF-type value should collect separate data on freight and insurance expenses. This should be carried out at a level as detailed as possible. In this way, the FOB value can be established for customers’ needs.

The objective of the survey was to produce a calculation in which the importation of goods according to the CIF value is divided into importation of goods according to the FOB value, transport expenses from the border of the export country to the customs border of Finland and freight insurance expenses. Transport and insurance expenses ought to be divisible into payments to domestic and foreign companies. In addition, the aim was to find out the distribution of the used terms of delivery.

It was only possible to calculate the results at a  fairly general level. This was due to the fact that too few responses were received regarding some import areas, product categories and transport modes for the results to be reliable.

Sampling, data collection and data processing

Single lots were chosen for the sample so that the required countries, goods categories and transport modes were included. The target population was formed  based on the statistical material of year 2007 and spring 2008. The target population was divided into 28 different areas of countries of departure and 13 goods categories based on  the Combined Nomenclature (CN).

The final sample consisted of 913 companies and 1378 observations. The data was gathered with questionnaires.  Responses were received from 781 companies and on 1197 lots, i.e. the response rate for the companies was 85.6 per cent and 86.9 per cent for the lots. After eliminating faulty and incomplete responses, there was useful data from 562 companies and on 805 lots.

Already in 2003 it became clear that for many companies it was not possible to provide the shares of the required freight and insurance expenses. Several companies also used other terms of delivery than the CIF. The same problems were encountered now. Companies had great difficulties in responding to the questionnaire. Some of the companies did not have any knowledge of the freight and/or insurance expenses or knowledge e.g. of the share of a foreign freight or insurance. Many of the companies had a yearly insurance, and thus the share of the insurance for a single lotcould not be calculated. Due to the lack of accurate knowledge, expert estimates were also accepted as responses from companies.

As all the country groups, product groups and transport modes did not provide enough data, groups had to be combined in the calculation phase. The results were calculated by weighting the observations of each country area over the value share of the corresponding area of the target population.

In the final results, it was possible to use ten country groups:

• Asia, Oceania
• Africa
• Benelux
• The British Isles and the neighbouring regions
• South America
• Europe (other than the specified areas)
• North America
• Sweden
• Germany
• Russia

The used goods categories were:

• 01-24 Foodstuffs etc.
• 25-27 Mineral products
• 28-38 Products of chemical industry
• 39 Plastics
• 40-43 Rubber, leather
• 44-49 Forestry products
• 50-67 Textile products, clothing
• 68-71 Articles of minerals
• 72-83 Metals and articles of metals
• 84-85 Machinery, equipment
• 86-89 Vehicles
• 90-97 Instruments, clocks and watches, musical instruments
• 98-99 Industrial plants, specific deliveries etc.

The means of transport were classified (into categories) as follows:

• Own propulsion (watercraft)
• Air transport
• Road transport
• Sea transport
• Postal consignment
• Rail transport
• Inland waterway transport

Twelve different terms of delivery were used in the lots chosen for the sample. The descriptions of the terms of delivery can be found for example online at
http://www.if.fi/web/fi/SiteCollectionDocuments/Commercial/kuljetusvakuutukset/Incoterms_2000_suomi.pdf (only available in Finnish).