5 Costs of Trading in Overseas Markets

Business Insights

Trading in overseas markets is critical for small and large businesses who want to expand and are ready to benefit from trading overseas. Below we look at 5 costs of trading in overseas markets, so you can have a better idea of the charges involved for your business.

Sales Agents and Distributors

If you aren’t going to trade overseas yourself, it is worth investing in an overseas sales agent. They will then represent your company overseas, ensuring any laws and legal requirements are adhered to when arranging sales for goods. Whilst they will take a commission from the goods they sell, it is good to have a person act on your behalf who knows the marketplace and may already have connections. Distributors do a similar job and will take full responsibility for your products once overseas. You can find more information about working with agents in overseas markets here.


When looking to export your own goods overseas, you must know the market and ensure that your packaging and labelling complies with any regulations set out by the government or local offices. An error in packaging or labelling could be costly and could lead to your product being sent back. A simple and easy mistake to make is a mislabelled item. This is the biggest reason for delays when sending products overseas and these items can be sent back or even destroyed. Before sending anything overseas, check out this handy guide to ensure your products make it out safely and legally.


Another big cost of trading overseas is transportation costs. You need to find a freight company that will export goods for you. There are several different ways that companies export their goods to other countries:

  • Air - this is the swiftest and safest method, especially for long-distance. Due to this, air transportation is by far the most expensive. Extra charges include fuel, currency surcharges, transport needed to take items to airport and receive items at the other end, and airport tax.

  • Road - this method is still safe and can be tracked. Many services offer next day delivery for companies too (depending on location), if you need your goods delivered in a timely manner. There are many downsides to this method though, such as borders, risk of breakdown, and petrol/diesel charges. Bear in mind how far your goods need to travel, as it can be costly sending goods via road further than the EU.

  • Sea - when sending products further afield, shipping freight is the best and most affordable option. You can also ship large goods and more quantity on a ship. The downsides are difficulty in tracking, poor weather may delay shipment, you must pay port taxes, and insurance costs are pricey.

  • Rail - sending by rail is a great way to send bulk goods if the required destination can be reached this way. Many companies offer this service, meaning competitive rates and quick deliveries. This method is perhaps the most environmentally friendly. Some downsides include track maintenance, breakdowns and cost of pick-up from the railway station to required warehouse destination.

When choosing which transportation system will work for your goods, consider how fast you need the products overseas, the value of the products, your budget, and the size/weight of goods.


Inspection is required by many countries and this usually must be verified by an independent company. This varies depending on the country overseas you are looking to trade with, therefore it is important to check online for any inspection charges and services available in this country. It is worth finding a great inspection service that can check your product before shipping and after arrival.

Import Duty

One of the most common costs of trading overseas is import duty. Import duty is essentially VAT, which is calculated on the cost of a product, e.g. transport, insurance, commission and packaging. You may need to gain a special import license for your business when looking to import certain products or goods. If you are looking to transport goods into a non-EU country, you must also have an EORI number.

Businesses in the UK will need an EORI number as of 1/1/2021 and you can apply via the government website. For more information on the changes in UK import duty, Goodman Jones can help. Goodman Jones are accountants and tax consultants who aim to advise businesses about importing into and out of the UK. Their blog contains helpful and professional advice on many questions facing UK businesses at present. Their blog can be found at https://www.goodmanjones.com/blog/.

Overseas trade has several benefits for even small businesses, such as less competition, increased revenue and the opportunity to sell surplus goods that aren’t getting sold in the UK market. Once you can calculate the costs of trading overseas, you can see how worthwhile this is for your business.