0 comments on “How Much is Your Product Worth?”

How Much is Your Product Worth?

Personalised Freight Solutions (PFS) job is to assist, educate and facilitate.

An important service we provide is to assist our clients in understanding the value of their product when it lands at their door here in Australia.

What is Landed Cost? “A landed cost is the total price of a product once it has arrived at a buyer’s door. The landed cost includes the original price of the product, all transportation fees (both inland and ocean), customs, duties, taxes, insurance, currency conversion, crating, handling and payment fees”

Knowing the landed cost of the goods you are importing is vital to be able to gain an understanding on the viability of it in a retail market. The cost of importing your goods can equal if not exceed the actual purchase price of your goods.

Just today, on two occasions both myself and Christine heard “but the goods are only worth……….. and the shipping is double that!”.

It is important to research the cost to import your goods including all the import taxes prior to setting up an entire business model on your product. For example, you have a Chinese supplier who will sell you a 20′ container of chairs, they are offering a sale price of USD 22.00 (AUD 29.00 at today’s exchange) per chair for minimum order of 450 chairs. When looking at the retail market, you can sell these chairs for AUD 45.00 max to be competitive. This gives you a total profit AUD7,200 when you sell all 450 chairs.

However, what will the chairs be worth after you import them to Australia? I can tell you, by using our landed costing model that they will be worth AUD 39.00. This reduces your profit to AUD 4,500 total. To maintain your AUD 7,200 profit if that is what you have based your business model on you would actually need to sell these chairs for AUD 55.00 per chair. Does this make you AUD 10.00 per chair more expenses then your competitions? Can you sell all 450 at this price in the chair market?

Your freight forwarder should be more than a supplier who moves your freight into (or out of) Australia. Your freight forwarder should be able to advise you on the true value of your goods landed so that you have the confidence that your business is making viable decisions on the products it is selling.

0 comments on “Inconsistent Pricing”

Inconsistent Pricing

 

A reoccurring comment we hear from LCL importers is “Why is it that our charges are so inconsistent?”. On investigation, we find that it all comes back to the agreed incoterms of sale. Generally finding that it is that the importer is buying on CIF terms.

CIF is “Cost Insurance Freight”, the buyer is paying the seller for the cost of the goods, transit insurance and Freight to port of entry at destination country. This for importers seems like the “easiest” option.

However, what this can create is limit control on timing, create additional work for the buyer to stay on top of shipping details to plan for the goods on arrival and local charges being charged according to which ever consolidation handling office the suppliers consolidator uses.

Does that mean you should not buy CIF? No, this is still a good option for many importers. To solve the common issues with control and inconsistent charges, communicate with your supplier and your freight agent. Make your expectation clear and ask that your supplier(s) and your freight agent work together to ensure that your expectations on timing and costs are still being met.

3 easy tips that may assist:

  1. When accepting a CIF quote from the overseas seller, issue them with a Purchase Order that outlines expectation on arrival time into Australia
  2. Provide a copy of the quote, purchase order and specific details of the seller to your freight agent. Ask they communicate with the seller to determine the consolidator details and associated arrival charges when arriving in Australia. Your freight agent can advise the seller what are the acceptable arrival charges so this can be negotiated when the seller is booking with the consolidator at origin.
  3. Establish a landed costing model with your freight agent. A landed cost is establishing what your goods are worth when they arrive at your door in Australia prior to being sold into the market. This will give you a value window of acceptable costs to pay on import rather than specific costs.

The key to limiting inconsistencies is EXPECTATION AND COMUNICATION!

 

0 comments on ““My goods ship from China, therefore they are Duty Free””

“My goods ship from China, therefore they are Duty Free”

Many Importers have been enjoying a saving of 5% on their import duties since the China-Australia Free Trade Agreement took affect 20th December, 2015.

For importers, both experienced and new who still think “My goods ship from China, therefore they are Duty Free” please take time to completely understand the implications of the Free Trade Agreement and specifically how the goods you are importing are affected.

It is not correct to make the assumption that because your goods ship from China they are automatically duty free and if your representation who handle your border clearances are declaring them as such with out the correct documentation, it is you as the importer who will be held liable for the 5% duty not paid at the time of importation. 5% of your total imports for the year would certainly add up, in additional to interest and fines.

A good starting point is asking the following questions of your representation:

  1. Are my suppliers providing a certificate of origin for each shipment?
  2. If they are, does the certificate of origin state a HS code for each item in each shipment?
  3. If they are, does the certificate correctly link to all the other commercial documentation for the shipment?

If any of these answers are no, but your duty rate has dropped on your customs declaration. Work with your freight agent and your suppliers to get this right for past and future shipments.

It may be that your items have not dropped to 0% duty at all and will not do so until 2019, in fact if you are importing items that fall under the likes of HS Code 62304300 Boys Shorts, and provide a Certificate of Origin you will end up paying 6% duty!

see www.chinaaustraliafta.com.au for further guidance.

 

0 comments on “China Freight Rates – 2015 vs 2016”

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.

0 comments on “Have you experienced damaged cargo or loss?”

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.

0 comments on “Have you Considered?”

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

0 comments on “Half Way”

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.

I will continue to record and graph rates each month, if anyone would like to have insight into any specific port or country please contact me directly rebecca@my-pfs.com.

 

 

0 comments on “Pirates!”

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
0 comments on “Intro to Shipping Internationally”

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

0 comments on “A guide to Incoterms”

A guide to Incoterms

You will note our short guide to Incoterms in the side bar of our services pages, here is more of what you need to know & why it’s so important to get Incoterms right from the start!

Are you looking at buying goods from overseas to re-sell in Australia? Has the supplier or factory given you a quote for the goods and told you that the terms are FOB / EXW / CIF etc. Are you thinking … what do these 3 letters mean?

What are Incoterms®?

The term, Incoterms® is an abbreviation for International Commercial Terms.

Incoterms® are a set of rules which outline the responsibilities of sellers and buyers for the delivery of goods under a sales contract. They are published by the International Chamber of Commerce (ICC) and are widely used in International commercial transactions.

The first Incoterms® were issued in 1936. The most current version of Incoterms® is Incoterms® 2010, which were introduced in September 2010 and became effective January 1, 2011.

Incoterms are also known as Delivery terms

What are Incoterms® used for?

Incoterms® provide a common set of rules to clarify the responsibilities of sellers and buyers for the delivery of goods under sales contracts (An example of a sales contract – is the invoice your supplier just gave you).

Incoterms distributes the transportation costs and responsibilities relating to the delivery of goods between buyers (importers) and sellers (exporters) and mirrors the modern-day transportation practices. Establishing the incoterm significantly decreases any misunderstandings among the buyer and seller and thereby minimizing trade disputes and litigation.

What are the Incoterms® 2010?

There are now two main categories of Incoterms® 2010 which are grouped by the modes of transport.

These can be used in international as well as in domestic contracts, the new groups aim to streamline the drafting of contracts and assist with avoiding misunderstandings by clearly stipulating the responsibilities of buyers and sellers.

Group 1 – Incoterms® that apply to any mode of transport are:

  • EXW – Ex Works
  • FCA – Free Carrier
  • CPT – Carriage Paid To
  • CIP – Carriage and Insurance Paid To
  • DAT – Delivered at Terminal
  • DAP – Delivered at Place
  • DDP – Delivered Duty Paid

Group 2. Incoterms® that apply to sea and inland waterway transport only:

  • FAS – Free Alongside Ship
  • FOB – Free on Board
  • CFR – Cost and Freight
  • CIF Cost, Insurance, and Freight

The movement of cargo across international boundaries, by necessity, requires the involvement of a number of service providers and authorities. These parties include Customs and other Permit Issuing Agencies, Transport Operators (Forwarders, Carriers, and Brokers), Insurers and Banks.

The delivery terms assist with telling either party at least;

  • who is responsible for taking certain action and who is to pay for it
  • where the risk in transit transfers from seller to buyer

If you need further assistance with your individual circumstances please feel free contacting us anytime!