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 “3 Ways to Reduce Costs on Importing”

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.

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 Considered? Packaging”

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

0 comments on “Have You Considered? Documentation”

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

 

 

 

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