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HOW TO: Choose a freight forwarder

How to choose a freight forwarder?  On the face of it, it would seem pretty simple.  But in my experience, those who embark on the process of buying product from overseas can find it a bit of a challenge to select the right freight forwarder and customs broker for their business.  In many instances the intricacies of the logistics and supply chain process is not a core skill.

In general, as an importer you will – rightly – devote most of your attention to sourcing the right product, negotiating with overseas suppliers, obtaining product samples by international courier and/or visiting the overseas supplier abroad to meet with product managers, visit and inspect their site, quality control and obtaining an understanding of their manufacturing process.

When the overseas supplier assures you that they have their own forwarding agent with whom they regularly ship on a CFR (Cost of Goods and Freight) basis the challenge of the supply chain process and selecting a forwarding agent may seem to be alleviated.

So, job done – right?  Couldn’t be simpler to have the supplier handle the exporting too.  While this might seem like a big relief and a streamlining of a seemingly cumbersome process, there are often services and deals to be had by working with an Australian based freight forwarder and customs agent for two main reasons:

  1. The overseas supplier will book with their preferred agent, usually not to meet the needs of the importer, but to suit their own,
  2. CFR (Cost of Goods and Freight) is not the end of the story and often by the time the importers receive the invoice from the local receiving agent in Australia, a lot of unnecessary cost has been incurred which is often be due to the supplier’s handling of the negotiation. This is especially prevalent with LCL (Less than Container Load) cargo where, a whole system of rebates between the load port forwarding agent and the destination port forwarding agent are available.

How to choose a freight forwarder checklist:

  • Find your own freight forwarder and import on an FOB (Free on Board) basis to ensure control of costs, visibility and flexibility.
  • Understand and extrapolate what it is you really want and what your logistics needs are now and in the future. Ask the appropriate questions to qualify your freight forwarder candidate.
  • Select a forwarder who specialises in the market or industry you participate in. For instance, if you are importing clothing or footwear, find a forwarder that specialises in this.  There are a number of players in the marketplace that specialise in apparel logistics – large, medium and boutique.  It can be a good idea to match your business size relative to your industry to that of your forwarder.  For example, if you are a medium sized or boutique business you will have specific needs and may require a bespoke service to meet them.  Forwarders that serve a niche market tend to be more agile, flexible and adapt quickly to sudden changes to your freight requirements.
  • Pricing is important and it is imperative to not leave your money on the table, it is also important to find a forwarder that has good systems and processes and a good reputation amongst your peers. Your industry networks and social media can help you find a reputable company.
  • Ensure you understand what you will pay for your consignment and beware of extra or hidden costs.
  • Seek full transparency and integrity from your forwarder.
  • Choose a forwarder with an appropriate reporting or tracking system for visibility.
  • And finally, many forwarders in Australia have a wealth of knowledge about your origin country and markets and in many instances can provide you with the benefit of this to save you time, money and anxiety at all stages of the importing process.

 

If you would like a confidential discussion about your  importing and freight forwarding needs please call Edi Lenkic on 1300 651 888,  or if you’re in New Zealand call Paul Knight (09) 974 4818.  Alternatively visit www.magellanlogistics.com.au for more information.

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Chinese New Year 2015

What does the celebration represent and how might this national holiday impact your shipments?

Chinese New Year (CNY), also known as the Lunar New Year or the Spring Festival, is the most important of the traditional Chinese holidays.

CNY is based on the Chinese calendar and usually begins on a different date each year. It is based on the moon’s orbit around the earth.  The festival traditionally begins on the first day of the first month in the Chinese calendar and ends on the 15th of the month. Each CNY is symbolized and named after one of 12 particular animals (Rat, Ox, Tiger, Rabbit, Dragon, Snake, Horse, Goat, Monkey, Rooster, Dog and Pig) and consists of a 12 year cycle. 2015 is the year of the Goat.

The holiday for CNY is officially recognized by the government as 7 days, with typical CNY celebrations lasting for 15 days. In 2015, holidays start on 19th February until 25th February.

Within China, regional customs and traditions concerning the celebration of the CNY vary widely. People will pour out their money to buy presents, decorations, material, food, and clothing. It is also the tradition that every family thoroughly cleans the house to sweep away any ill-fortune in the hope to make way for incoming good luck. Windows and doors will be decorated with red colour paper cut-outs and poems with popular themes of “happiness”, “wealth”, and “longevity”. On the Eve of CNY, supper is a feast spent with family. Food will include pork, duck, chicken and sweet delicacies. The family will end the night with firecrackers. Early the next morning, children will greet their parents by wishing them a healthy and happy new year, and receive money in red paper envelopes. The CNY tradition is a great way to reconcile by forgetting all grudges, and sincerely wishing peace and happiness for everyone.

Effect on your imports / exports during Chinese New Year

As is the same every year, CNY has a massive impact on sea freight and transportation to and from Australia. During the holiday, most areas of government, construction and factories shut down, while ports and customs usually operate with a skeleton staff focusing on perishable priority items that are time-sensitive only, such as fresh produce.

Manufacturing plants across China typically shut down and tens of millions of workers make long trips back to their home towns from the industrial cities where their jobs are based. It has a huge impact on all global supply chains originating from China and it’s not always back to business as usual, before and after the 15 day celebration. The celebrations are also expected to affect port operations in terms of loading, barging schedules and possibly product availability. It can have a considerable effect on your supply chain during the celebration and should be planned for.

When the New Year approaches, factories kick into high-gear in an attempt to ship as many orders as possible before officially shutting down for the holiday.  Major retailers tend to plan ahead to accommodate for the manufacturing shutdown in China during the CNY. Planning and coordination are key to ensuring your supply chain continues to run smoothly during this period and you have enough merchandise for your customers. Importers and exporters will also need to make changes to their production and shipping schedules to ensure they have enough goods to get them through the downtime caused by the factory closures. Stocks are also at times kept in storage until factories are up and running again. China’s entire transportation system is practically at capacity during this time, and it is common for issues with container and truck availability when shipping goods close for CNY.

The shipping lines often introduce GRI (general rate increase) in January for peak demand before CNY, and space becomes tight as all suppliers struggle to ship their cargo before the holidays, as well as considering blank sailing programs with shipping lines.

The container shipping lines servicing the North East Asia-Australia trade lanes are moving to cut back on capacity and skipping a series of sailings. This Blank Sailing Program with shipping lines from all 9 consortiums, participate in managing the available space in the off peak period to combat the over-supply of tonnage in the shipping trade. Particularly during the two weeks of CNY, in preparation of volume lulls following the start of the holiday on February 19th, 2015, capacity will be cut by 35 – 42% which will mean less available space on the berth. Trade will be slow due to factories closing over the CNY Period and the traditional off peak period commences. Port capacity is limited and congestion is increased weeks before and after CNY that can lead to delays at the ports limiting the availability of goods in the supply chain. In China and its mainland ports, the celebrations are also expected to affect port operations in terms of loading, barging schedules, etc

chinese-new-year-2015

Timeframes to consider & planning

Shipments must be at port at least 10-14 days before Chinese New Year to ensure shipment before the break starts. Shipments must also be booked at least two weeks in advance because space quickly fills up. If you ship a large amount around that time, then congestion will likely bump at least one of your shipments to a later ship date, often a week after CNY if you do not manage your shipments in time. Most ports open again for normal shipping about one week after CNY. Filling containers and preparing customs declaration documents well in advance of the holiday are advisable steps to take. Ports will have major congestion the week leading up to and after the New Year as factories gear up for the shut down and return to work.

In summary, when planning for peak season, be sure to have a buffer for CNY – Two or three weeks for bookings and then another week for ETA in case of delays.

This annual celebration should be a part of your yearly supply chain planning.

Here are the dates of Chinese New Year for the next 6 years for your reference:

chinese-new-year-6-year-dates

We hope this article provides insights on how Chinese New Year may affect your shipping and the necessary steps to take to prevent facing supply chain and shipping delays at this time of the year.

For more information please contact your Magellan account representative, email info@maglog.com.au or our customs team on 1300 651 888.

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News Alert: Allowing more time for your exports due to China pre-export inspections & buyer consolidations.

 

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Increasing the ratio of Customs Inspections for Export Cargo in China.

The export cargo inspections ratio from Customs in China, and in particular at Xiamen and Huangpu have been increasing during this year for export shipments to all international ports. When cargo is held for pre-export inspection, this affects the export clearance process, to the extent that shipments may not meet the intended booked vessel. We have noted that pre-export inspections by Chinese Customs can take up to 3 days. It is a random process that is done within the complete control and direction of Chinese Customs.

We recommend a further allowance when delivering export cargo to the receival depots and wharf terminals of 3-4 days before the closing date for FCL & LCL shipments.

Single Buyer Consolidations from various suppliers in different provinces

In the case of buyer consolidations (BCN) that may involve various suppliers from different Chinese provinces, we need to allow longer transits for the domestic transfer to the receival depot. We recommend instructions are given to your suppliers to allow at least 4 days prior to vessel close-off to cover any delays, to ensure adequate time to stuff the container and lodge it at the wharf terminals for export.

For more information please contact your account manager or the customs team on 1300 651 888.

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Magellan Logistics featured in Ragtrader Magazine, September 2014

Read the latest power brokers article where our sales director, Joe Carbone, shares his knowledge and experience on the supply chain.

Let us know your feedback in the comments.

(Hit CTRL + to zoom in)

ragtrader-sept-2014-magellan-logistics-joe-carbone ragtrader-sept-2014-magellan-logistics-joe-carbone ragtrader-sept-2014-magellan-logistics-joe-carbone ragtrader-sept-2014-magellan-logistics-joe-carbone

 

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Customs charges increase, effective 1st Jan 2014

 

The Budget papers released in May, 2013 stated that the Government will restructure the Import Processing Charge (IPC) to recover the costs of import related cargo and trade functions undertaken by the Australian Customs and Border Protection Service (ACBP).

This Import Processing Charges Amendment Bill has now been passed through both Houses of Parliament without amendment.

On Magellan invoices IPC this shows up as “Declaration Processing Charge”. On a Customs Declaration/Entry, IPC forms part of the customs “other charges”, seen at the bottom of every electronic entry – Please note that the AQIS container and processing charges which also make up part of the other charges, will not change at this stage.

The Bill will increase the import declaration and warehouse declaration processing charges levied on air, sea and post consignments with a value of $10,000 and above effective from 1 January 2014.

For jobs valued over $10,000, please see the guide below for increase values.

FCL Other charges – Currently $88 will increase to $190.60

LCL Other Charges– Currently $70 will increase to $172.60

Airfreight Other Charges– Currently $55.20 will increase to $137.10

For consignments valued from $1,000 to $10,000 the customs “other charges” will remain at the current level of $88.70 for sea import declarations and $55.20 for air import declarations.

Clients should note these increases will become effective on 1 January 2014.

If you have any queries please feel free to contact Daniel Crawford – Daniel@maglog.com.au

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