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3 Ways to Reduce Costs on Importing

As a business owner myself, I understand the need to keep costs as low as possible to remain competitive in your market and gain a healthy profit margin.

When looking at the logistics chain, many importers believe “shopping around” to get the best price is the best way to ensure costs on shipping remain as low as possible. Sure this will absolutely work on face value but may become a somewhat false economy!

If you have a trusted relationship with a freight provider but would like to assess to see if there are any areas in the process where money can be saved, here is 3 suggestions on where to start looking:

1. Documentation

In Australia, to clear goods through our borders it is not always necessary to have to have original documentation. If you pay for your goods before they leave the sellers factory, discuss with the seller and your freight agent to have electronic copies of the shipping documents. This can include: Bill of Lading, Commercial Invoices, Packing Lists, Packing Declarations and Certificate of Origin.

Very often we see (especially ex China), sellers using international couriers to send original documents to the buyers attracting a fee of sometimes up to USD75.00 per shipment.

2. Rate negotiation based on Volumes

Many shipping lines will reduce shipping rates based on commitment of volume on their services. If you are an importer shipping between 2 to 5 containers a week, speak to your freight agent to make sure they are negotiating the best freight deals on your behalf based on your volumes.

Your freight forwarder should be doing the shopping around not you, that is their role, make them work a little harder on your behalf. Loyalty will pay off!

3. Transit Times

Transit times can play a role on both the international and domestic leg of your goods being moved. With international sea freight, as an example, a 2 week transit from Shanghai to Brisbane is not the only option you have when shipping ex Shanghai. There are transit times up to 4 weeks that may see a saving of up to USD 300.00 per container. Work with your freight agent and communicate when cargo is needed (specific dates) so they can work on giving you options based on required dates, rather than say a direct option or a transhipment option.

When the goods arrive into Australia and need to be moved domestically, there are options between a direct drive service and an all day service. If you are in your warehouse from say 8 to 5 everyday of the week and the goods do not need to be there at any particular time, opt for an all day service. There may be a significant saving depending on volumes and distance of travel.

Again communication is key, question what the process currently is and if your business model allows for change work with your freight agent to make the changes and SAVE MONEY! Who knows you may save more than the seemingly “better” quote that you shopped around for.

China Freight Rates – 2015 vs 2016

With the first Quarter of 2016 behind us, it is interesting to check in to see where the freight rates Ex China are sitting.

As you can see from this chart, rates are significantly lower than that of 2015. It was around this time last year that we reported in on rates and how they were trending. What seemed like rates too good to be true in March, April or May 2015 now seem a little high when we you place them in comparison to March or April of this year.

Freight Rates - 15 vs 16

What are the drivers of low freight rates? And why is it a constant up and down situation? It is a simple case of supply and demand. With the low Australian dollar (in March for Example as low as 0.67) and the down turn in mining in Australia, the vessels out of China are carrying less cargo.

To try to make a comparison it is like the circle of life

circle of life

Today’s media is full of reports on the unrest in our government, the Australian dollar movement, Mining and taxes all these economic drivers will affect where the freight rates sit.

ChaFTA – What does it all mean?

At Personalised Freight Solutions we strive to ensure our customers are being educated on process improvements and industry changes in relation to their freight movements internationally. When the government issued a media release 9th December announcing the China Australia Free Trade Agreement (ChaFTA) would set to start and flow as at 20th December (http://trademinister.gov.au/releases/Pages/2015/ar_mr_151209.aspx), we knew we had to act fast to gather comprehensive information and present it in an easy to follow way ensuring importers and exporters would have a complete understanding on how these changes would affect businesses on an individual basis. We have put this website together to take out all of the propaganda and give the facts in real terms.

  • FACT – Not all imports from China will be immediately eligible to claim 0% duty on their exports / imports to / from China.
  • FACT – A staging system will be used to start to implement this trade agreement. Rates for ‘Year 1’ will apply immediately from December 20, 2015, Rates for ‘Year 2’ will apply from January 1, 2016 and so on.

Our Lookup tool will provide this information on what stage your product will be eligible for 0% Duty on Import – http://www.chinaaustraliafta.com.au

Ensure you check the FAQ’s for documentation guidelines or feel free to contact us for further guidance!

 

Have you experienced damaged cargo or loss?

How frustrating is it to receive packages in the mail or delivered to your door and they look like a dog’s breakfast? Do you go back to the online store? Or direct to the supplier & send an email or give them a call to let them know your dissatisfaction.

Or are you on the receiving end of this email / phone call?? ….. How do you feel about receiving complaints from your clients saying they received the package damaged or only partially delivered?

Unfortunately, somethings are out of our control and some risks unpreventable, however did you know that almost 70% of all cargo losses are preventable?

How do I prevent cargo loss?

By being aware and paying attention to the risks that your cargo can be exposed to during your chosen mode of transport will reduce the loss of cargo.

These risks come in many forms, a few have been listed below, Have you considered any of these?

Handling… Rapid acceleration/deceleration of lifting/lowering to ship. Tilting during loading (fork truck handling). Pushing/dragging. Mishandling due to unsuitable equipment or unskilled labour. Improper weight distribution. Unsuitable lifting points.

Via Road… Acceleration/deceleration (stop and go/sudden braking). Impact against loading dock. Tilting (swaying on curves). Vibration and road shocks.

Via Rail… Acceleration/deceleration. Coupling impact (shifting / jolting) Swaying on curves. Vibrations.

Via Sea… Rolling, pitching, yaw and sway, surging. Wave impact Vibrations

Water damage… Rainwater (including snow and ice) Seawater Condensation (in container or on a delivery drivers truck if no tarp / cover)

Flooding, Theft/ Pilferage… Exposure of cargo/ container during all operations including transfer between points. Hijacking of container (Piracy)

Contamination… Residual materials or odours from previous load. Incompatible cargo. Proximity to hazardous or noxious cargos, cross contamination

Errors, omissions and delays are issues that we have all experienced in our lives. It may have been a missed consignment, late delivery, etc. The process of getting materials through airports and wharves can be a complex process.

So what can be done if the flight departure, or the sailing, is missed?

Firstly look after the integrity of the product, especially if it needs special storage. Subsequently look to make alternate arrangements with the exporter / Shipper, Investigate the problem. Identify the cause – this is not a witch-hunt – and implement appropriate procedures and policies to avoid it happening again.

What about Fraud??

Frauds are the result of illegal and unethical behaviour. Fraud may be perpetrated by a number of parties in the transaction, including:

  • the supplier (incorrect or substandard goods)
  • the buyer (obtaining delivery under false pretences)
  • the carrier (changing the departure date on transport documents)
  • and border control agencies (seeking ‘facilitation payments”)

Having Personalised Freight Solutions as your preferred international freight forwarder, we consider the types of processes and the issues that may be encountered, we assist in mitigating these risks and look at what we can do to assist you with these risks when they do occur.

Risk mitigation is the anticipation of risk, so how can you mitigate risk if you do not know or understand the process? How can you identify, analyse, evaluate and treat the risk in ignorance?

You must understand the risk you are trying to manage! Let the team at Personalised Freight Solutions help you.

Have you Considered? Packaging

Our series on “Have you Considered?” has all been about highlighting topics that we can take for granted, our recent post regarding packaging is one of these topics.

It is taken for granted, more often than not, that if you are buying from an overseas company who facilitate selling their goods to an international market that they know how to package goods or will ensure goods are adequately packed for export.

A question we are often asked is “how can we ensure that goods will be packaged adequately?”, the answer to this question is to check, check and check again. In your initial confirmation of purchase advise of your expectation on packaging, communicate with your freight agent your expectation and have your freight agent express further the expectation on packaging.

To provide further assurance on the standard of packaging, we would suggest to engage in a pre shipment inspection service, Personalised Freight Solutions can provide some direction in this area, please contact us via email / phone / Social Media to be provided further information,

Bec

Have You Considered? Documentation

As your freight forwarder we will liaise with your supplier to ensure documentation for importing your goods is correct leading up to departure from the port of loading and prior to arrival to Australia. We do however like our clients to have a working knowledge of requirements when it comes to documentation.

There is a few reasons for this:

1. These are your goods and ultimately your responsibility. A customs declaration (which is created through the information provided on the shipping documents) is a legal document that through the information provided will provide the amount of duty and GST that is payable to Australian Customs on arrival. The shipping documents along with the corresponding customs declaration is to be kept on record by the importer for a minimum of 5 years. Treat it as you do your tax return!

2. Some required documentation such as import permits can only be applied for by the importer (not the freight agent), guidance will be given but again it is the importers responsibility to ensure these are in place prior to arrival.

3. When negotiating terms of sale with your supplier, ensure they are prepared to provide all necessary documentation. Treatment certificates and packing declarations are the most common that a supplier would need to provide in addition to a commercial invoice. Getting into a position where by you have purchased the goods and engaged a freight forwarder to move the goods to then find out the supplier will not provide a crucial document for clearance may result in costs that have not been planned for or time delays on arrival.

Some Important links to provide further guidance and information on your documentation requirements:

Australian Customs

Australian Quarantine – Examples of Acceptable Documentation

We are also always available to discuss requirements specific to your business, contact us anytime!

Bec

 

 

 

Have you Considered?

Even the most experienced importers & exporters would appreciate a reminder of the massive list of “things” to consider when arranging shipping internationally. It happens way too often that it is not until a shipment goes wrong do we sit back and reflect on how processes can be improved to ensure that certain something does not go wrong in the future,

We are hoping that this series of “have you considered?” that we will be posting twice a week on social media will not only assist those who are thankful of the reminder but those who are new to international shipping and have not yet experienced enough to say “well I will make sure that doesn’t happen again!”

Bec

Half Way

It is hard to believe we are rolling into June! A time of year where we reflect if we have achieved what we set out to achieve this year, we start to gather figures and paperwork for the tax man and many people start to tell us how may weeks it is until Christmas!

With receiving our China contract rates for June yesterday, and seeing how incredibly low they were, it prompted me to analyse how the rates have moved in the first half of this year.

Mapping January to June this graph shows a solid start with no movement really between January and February, a drop in March which was due to container volumes being low after Chinese New Year with an increase come April. From April until now, the rates have decreased substantially.

If anyone would like to have insight into any specific port or country, please give us a call or pop us an email.

Pirates!

Monday night, and part of my studies tonight is covering Risk management.

What are you, the Importer & we, the Freight forwarders exposed to when dealing with foreign trade & how do we all effectively manage these risks??
Have you considered Country Risk / Geographical Risk when importing from a foreign country? Geographical Risk is known as a politically risky country where Piracy is a very big factor.
Pirate activity not only disrupts trade, it often results in loss of lives. South East Asia and the Indian Sub-Continent have now been added to the Piracy and armed robbery prone & warning list.
Make sure to ask your forwarder if the country you are importing from or exporting to – is considered a risky country / geographical risk?
Trading with ‘risky’ countries can impose additional charges like security surcharges on top of your freight. This increases your freight cost and adds to your bottom line.
Check out this live map which shows all piracy and armed robbery incidents reported to IMB Piracy. Reporting Centre during 2015  https://www.icc-ccs.org/piracy-reporting-ce…/live-piracy-map
Remember:
Your information saves lives – Use the 24hr Maritime Security hotline – https://www.icc-ccs.org/p…/24-hour-maritime-security-hotline to report any suspicious activity.
– Christine

Intro to Shipping Internationally

For those of who you have travelled internationally whether it be for business or pleasure, what’s the first thing you need to show before boarding your flight?

– Your airline ticket and Passport

To travel internationally and pass through airline security, customs & immigration barriers, you must provide all the right documents. The basic set of documents you would need; is your ticket to travel and your passport. However, you may also require visas, health cards and/or any other special documents dependant on the country you are going to.

When cargo travels internationally, there is no difference. Your cargo must also have a “ticket” to travel. In the freight industry, we call this a Bill of Lading, or Sea/Air Waybill. Your cargo will also require further documentation to pass through customs and quarantine barriers.

A basic set of documents required will include;
the Bill of Lading or Waybill,
Commercial invoice;
Packing list;
and Packing Declaration

However special documents may also be required which will be dependent on the nature of the goods and the destination.

Here is some examples of these special documents;
Weight & Measurement declarations;
Cleanliness declaration;
New & Unused declaration,
Certificate of Origin,
Manufacture declaration,
Free Trade Agreements,
Insurance Certificate.
Fumigation Certificates,
Dangerous Goods declarations and so on.

Going back to my analogy, there is one main difference between people traveling internationally and your cargo traveling internationally and that is, we can communicate when we need something or when something goes wrong and generally there is an airline host or hostess to attend to our needs.

So bearing this in mind, cargo must be handled correctly and right from the start. Having suitable packaging, timing and routing arrangements, clearance and compliance and correct documentation will all be necessary to ensure that a smooth journey for your cargo is achieved.

Did you know, not only will your cargo travel across at least two governmental and possibly cultural barriers, there is many geographical, climatic and handling hazards that may be encountered too?

That’s where the team at Personalised Freight Solutions comes in, let us assist you in this process. We can co-ordinate the documents, duty and tax implications, size and weight restrictions, special permits, route and schedule limitations, letter of credit stipulations and many other factors that require precise detail, timing and dedicated attention.

– Christine