
Sold a set of TE37s from Japan for $2,800 shipped. FedEx charged my customer $945 at the door. Here's what went wrong.
I source and sell JDM wheels out of western Shizuoka, Japan. Last year I sold a set of used Rays Volk TE37 XT, 18x9 +0, bronze, 6x139.7, to a buyer in Florida. Price was $2,800 shipped. He paid through PayPal. I packed the set and sent it FedEx International.
Three weeks later the shipment got stuck at FedEx's Memphis hub. My customer sent me a screenshot from FedEx's clearance portal. They were holding the package until he paid $945.21.
The breakdown:
Customs Duty: $840.00 Disbursement Fee: $17.47 Storage Fee: $54.16 Merchandise Processing Fee: $33.58 Total: $945.21
He had no idea this was coming. He thought $2,800 was the final number. He told me if he had known about this, he would not have done the deal.
What went wrong
Two things happened at the same time.
First, FedEx classified the wheels as a Chinese product instead of Japanese. Chinese origin means a much higher tariff rate, so this alone nearly doubled the duty. On top of that, my Commercial Invoice was missing the manufacturer name and address, which caused a clearance hold in Memphis. My customer had to call FedEx himself to find out what was going on and sent me the form I needed to fill out. That should not have been his problem.
I contacted FedEx, submitted corrected origin documentation, and got the classification fixed to Japan. The $840 duty dropped, but it did not disappear.
Second, even with the correct country of origin, the duty was still $453.58. Most people think the duty rate on aluminum wheels coming into the US is 2.5%. It's not. The actual rate right now is 15%.
On $2,800 declared value that works out to:
15% duty = $420.00 Merchandise Processing Fee = $33.58 Total corrected customs bill = $453.58
That is the real number even when everything is classified correctly. Most buyers do not know this. They look up the rate online, see 2.5%, and assume that is what they will pay.
The actual mistake
Both of these problems were made worse by one thing. I shipped DDU, which stands for Delivered Duty Unpaid.
What that means is the customs bill, whatever it turns out to be, gets sent directly to the buyer when the package arrives in their country. The buyer does not see the amount beforehand. They cannot dispute it before delivery. They cannot plan for it. They just get a notification from FedEx saying pay this or we hold your wheels. And while the wheels sit there, storage fees start adding up.
My customer never agreed to pay an extra $453 on top of the $2,800 he already sent me. He was right. I paid back the full $453.58 plus the PayPal fees out of my own pocket.
What I changed
This was not a one time shipping mistake. It was a problem with how my business worked.
I switched to DDP, which stands for Delivered Duty Paid. This does not mean I eat the customs cost as some kind of favor. It means I calculate the duty before quoting the price, include it in the total, and set the customs billing to me as the shipper. The buyer sees one price, pays one price, and receives their wheels without FedEx coming back for more money.
DDP is not something I can offer to every country. Customs systems and import rules are different everywhere, and there are destinations where DDP is not realistic. For the countries where I can do it, it is now my default.
What this means if you are buying wheels from Japan
If you are shopping for JDM wheels from a seller in Japan, the one question you should ask before sending money is whether the quoted price is DDP or DDU.
If it is DDU, you need to understand that the price you are paying does not include customs duty. The current duty rate on aluminum wheels imported into the US is 15%, not the 2.5% you will find if you Google it.
If the seller does not know what DDP or DDU means, that tells you everything you need to know about how prepared they are to handle your shipment.
If you have any questions, I'll be happy to answer them. If any of you have had similar experiences, please share them!