Incoterms Archives - Personalised Freight Solutions

How Much is Your Product Worth?

Posted by Personalised Freight Solutions Pty Ltdon June 29, 2017Leave a comment

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.

Inconsistent Pricing

Posted by Personalised Freight Solutions Pty Ltdon April 25, 2016April 25, 2016Leave a comment

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:

When accepting a CIF quote from the overseas seller, issue them with a Purchase Order that outlines expectation on arrival time into Australia
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.
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!

Have you Considered?

Posted by Personalised Freight Solutions Pty Ltdon June 9, 2015June 9, 2015Leave a comment

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

Intro to Shipping Internationally

Posted by Personalised Freight Solutions Pty Ltdon May 18, 2015June 15, 2018Leave a comment

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

A guide to Incoterms

Posted by Personalised Freight Solutions Pty Ltdon April 28, 2015April 28, 2015Leave a comment

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!