Glossary
Terms & Glossaries of Shipping and Trading
KD (Knocked Down)
KD (Knocked Down) refers to a method of shipping goods in disassembled parts or semi-finished components, which are then reassembled at the destination country. This approach is widely used in international trade, particularly in automotive and machinery industries, to optimize costs, comply with tariffs, and leverage local labor advantages.
Tariff Optimization: Importing disassembled parts often incurs lower customs duties compared to finished products. For example, automotive CKD (Completely Knocked Down) components may face tariffs as low as 3–5%, whereas finished vehicles could be taxed at 25% or higher.
Cost Efficiency: Reduces shipping costs by minimizing volume and weight. For instance, SKD (Semi-Knocked Down) shipments of machinery save space by excluding pre-assembled modules like engines.
Localization Benefits: Enables manufacturers to utilize local labor for assembly, fostering employment and reducing production expenses in countries with lower wages (e.g., Vietnam, Thailand).
Types of KD
CKD (Completely Knocked Down): All components are shipped disassembled. Example: Exporting every part of an air conditioner separately for final assembly abroad.
SKD (Semi-Knocked Down): Semi-finished modules (e.g., pre-assembled car chassis) are shipped, requiring simpler final assembly.
DKD (Direct Knocked Down): Nearly complete units (e.g., vehicle bodies) needing minimal assembly, such as attaching wheels.
Automotive Industry: Chinese automakers like C Automotive used SKD to enter the Russian market, benefiting from lower tariffs until policy changes in 2009 increased barriers.
Consumer Electronics: Smartphones and appliances are often exported as CKD to avoid high import taxes on finished goods.
Logistics Design: KD packaging must address complex factors like climate resistance, stacking stability, and part-specific protection (e.g., engine components).
Regulatory Compliance: Mislabeling CKD as finished goods can lead to penalties. A Chinese bicycle exporter faced fines due to incorrect customs declarations.
Supply Chain Risks: Political shifts (e.g., Russia’s tariff hikes) or technical barriers may disrupt KD-based strategies.
Quality Control: Assembly at destination requires strict supervision to prevent defects.
KD remains critical for emerging markets and industries like electric vehicles (EVs). For example,比亚迪 (BYD) uses CKD for EV battery modules shipped to Uzbekistan via multimodal logistics.
