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12 signs you’re suffering from freight & logistics stress

How do you know if your Freight Forwarder is giving you the best possible service? There are a number of symptoms of freight & logistics stress. To get to the bottom of them you need only ask a few simple questions:

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Q: What is a good freight rate?

Getting the right deal is based on your point of view and the importance you place on your supply chain. It depends on the nature of your supply chain, what type of service you need and the focus and attention you place on supply chain optimisation.   In short, it depends on you.

The saying “you get what you pay for” has never been more relevant than in the current market conditions. The costs and business consequences of something going wrong can far outweigh a minor saving in rates.

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Adverse weather affecting freight in India & USA

Adverse weather in India and USA is affecting freight movements.
Mumbai and other cities in the west coast of India have been experiencing heavy rainfall for the last week. Since this morning, rain has intensified and caused flooding in most parts of Mumbai. The regional meteorological department is predicting the heavy rains and flooding to continue to worsen over the next few days.

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Triangles, Handovers and 3rd party shipments: What are they and why you need one?

It’s not hard to think of a product made up of components sourced from multiple locations, assembled offshore and sold in a local Australian shop.  An elegant suit made in Hong Kong from Italian wool cloth, and sold in Collins Street?  A sofa manufactured in Indonesia to a Sydney customer’s precise specification covered in fabric milled in China’s Shandong province, perhaps? You’ve probably got a house full of items just like these.

But did you ever consider the logistical procedures that make it happen?

Time from order to delivery into store, handling costs, import duties and the protection of the manufacturer’s and consignee’s intellectual property are some of the main factors that need to be considered when arranging for the importation and delivery of goods with complex supply chains.  There are countless others, but that’s for another day.

Triangle shipments - traditional method

Traditional method:

Using the Italian wool suit as an example, the consignee imports fabric from Italy and arranges for it to be delivered to their warehouse in Melbourne.  From there it is shipped to the factory (3rd party) in Hong Kong to be manufactured into a suit.  While this is great way to protect the consignee’s intellectual property and ensure the details of the supplier of fine Italian wool fabric remains a trade secret, it also effectively means the goods are double handled, there is additional duty to be paid and considerably more time and cost is added in the supply chain.

The alternative is to use Triangle Shipments (sometimes known as handovers or third party shipments).

 

Triangle2.png

Triangle Shipments:

Using the same example, the consignee would order the fabric from the supplier in Italy and arrange for it to be shipped directly to the 3rd party – factory in Hong Kong.  On the face of it is clear that this will reduce handling, time and costs, but the question of protecting the consignee’s trade secrets still remains.

The answer to this lies in the concept of the Switch Bill.  In traditional forwarding, a Bill of Lading is produced by the carrier and notes the goods, the consignee and the destination (among other things) and is effectively the contract for the transportation of the goods.

In a Triangle Shipment, 2 Bills of Lading are produced – the first one details the original consignee and true supplier of the goods.  The second BoL is prepared to travel with the goods from origin (supplier) to the 3rd party that shows the original consignee as the supplier of the goods and the 3rd party as the consignee.  The effect of this is to render the supplier of the goods (Italian wool fabric) anonymous, thus protecting the IP of the original consignee.

Sound complicated?

Triangle Shipments are a specialist freight forwarding service.  While the concept is pretty well known and most forwarders do it, it is a boutique offering.  Critical to a forwarder’s success with Triangles are strong relationships with both clients and overseas agents alike.

To ensure the triangles go to plan, a forwarder will have a thorough understanding of their client’s requirements developed as up to date and clear SOPs, combined with regular communication with shipping agents.  Instructions may include the stripping of documentation, repackaging of goods and in some instances, the removal of labels and tags.  Getting this right, every time, is the only way to ensure that clients’ relationships are protected.

Magellan has a solid track record with Triangle Shipments – some of our customer service team members estimate that up to 80% of their work involves Triangles.

If you think a Triangle Shipment is the perfect solution to your freight forwarding needs, then don’t hesitate to get in touch with us on 1300 651 888, or visit www.magellanlogistics.com.au.

Resources:
http://shippingandfreightresource.com/about/shipping-and-freight-resource/
http://www.austrade.gov.au/australian/how-austrade-can-help

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SOLAS VGM NEW DRAFT MARINE ORDER 42

The following information has been provided by the Australian Maritime Safety Authority (AMSA) concerning the industry consultation on Marine Order 42.

“New Draft Marine Order 42” (Carriage, stowage and securing of cargoes and containers) 2016 is open for consultation until 30 April 2016.

Background: The current Marine Order 42 deals with carriage, stowage and securing of cargoes and includes requirements for loading of freight containers and blending of bulk liquid cargoes. The Order gives effect to Regulations 2 (Cargo information), 5 (Stowage and securing), and 5-2 (Blending of liquid bulk cargoes) of Chapter VI of the International Convention on Safety of Life of at Sea 1974 (SOLAS).

In November 2014, the Maritime Safety Committee (MSC) of the International Maritime Organization (IMO) adopted amendments to SOLAS chapter VI contained in IMO Resolution MSC.380 (94), which come into force internationally on 1 July 2016. The amendments provide new regulations for the verification of the gross mass of a packed container.

Marine Order 42 (NNF 2016/019) reflecting the SOLAS VGM amendment is amended to:

  • give effect to the new SOLAS regulations for verification of gross mass of containers
  • move existing requirements on weighing gross mass of containers from Marine Order 44 to this Order
  • move existing requirements of SOLAS Chapter VI Regulation 5-1 for material safety data sheets (MSDS) from Marine Order 21 to this Order
  • include SOLAS Chapter VI Regulation 4 on the use of pesticides on ships and for fumigation of cargo transport units
  • rename the Order to make it more appropriate to the subject and contents.

AMSA looks forward to comments and contributions from shippers that will assist AMSA in developing best regulation.

Should you wish to make submissions to AMSA, please visit the AMSA Consultation page.

The consultation process runs through to 30th April 2016.

Magellan’s submission to AMSA will be done though our representative industry bodies.

AMSA’s responsibility in the compliance of the new SOLAS regulations covers vessels and associated operations within Australian territory, and in particular are of interest to Australian Exporters, Shipping Lines, Terminal Operators and Freight Forwarders requiring compliance.

For information about your obligations under the new marine order and the amendments to the Safety of Life at Sea (SOLAS/VGM) Convention please contact Magellan on 1300 652 888 or download a copy of our SOLAS/VGM presentation.

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Container Weight Verification legislation from July 2016

The United Nations’ International Maritime Organization (IMO) has decided to make compulsory the container weight verification or the gross mass (weight) of loaded containers before their sea transportation, effective 1 July 2016.

The purpose of the regulation is to ensure the safety of the ship, workers both aboard ships and ashore, the cargo and overall safety at sea. The International Convention for the Safety of Life at Sea (SOLAS) requires that packed containers’ gross mass (weight) is verified prior to stowage aboard ship.

The shipper will be legally responsible for the verification of the gross mass (VGM) of a container carrying cargo and also responsible for ensuring that the verified gross mass is communicated in the shipping documents sufficiently in advance to be used by the ship’s master or his representative and the terminal representative in the preparation of the ship stowage plan.

Identifying the processes by which the verification will take place is a work in progress in Australia, and most exporting countries still. The entire supply chain will be impacted by the amendments.

The exact weight, called the verified weight (VGM), can be declared in two ways….

Method 1 – The loaded container can be weighed at an approved weighing station or using calibrated and certified weighing equipment (ie a licensed weighbridge, or similar method).

Method 2 – The weight of separate items in the container can be added to the net weight of the container. This method must be individually approved and certified by the regulatory body responsible in the exporting country. (Weighing all packages and cargo items, including the mass of pallets, packaging, dunnage and other securing material to be packed in the container and adding the tare mass of the container to the sum of the single masses.)

The introduction of the new requirement has raised questions as to the reliability of current documentary evidence of weight verification by Shippers globally and evidence of standards of testing of weighing equipment.

It has also raised questions as to the availability of suitable infrastructure to undertake large scale container weighing at high volume export ports overseas (method 1).

The Australian Maritime Services Authority (AMSA) will have overall control and powers to act in Australia in regard to contravention of the new laws regarding any cargo received for shipment at any port in Australia.

Similar origin country regulatory bodies will be responsible for the application of the new global regulations in origin ports overseas. It would appear that many countries, whilst they are signatories to these new requirements, have yet to publicly release how they will be applying these new regulations.

We strongly recommend that all Australian importers now take this matter up with their suppliers overseas to identify how they (the suppliers) will be complying with these regulations at their origins, from 1st July 2016.

The team at Magellan Logistics is here to assist and guide our Customers regarding this compliance, however it must be stressed that this is essentially an issue for shippers to now understand and agree on what methods of certification will be used by them, for any shipments originating and received for shipment from an overseas port from 1st July 2016.

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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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Changes to Aircargo imported into the USA

A recent US Transport Security Administration (TSA) revaluation of the air cargo security arrangements Australia has in place for exports to the USA has found that they do not meet US requirementsThe TSA has advised that Australia will need to screen 100% of export cargo carried on passenger aircraft to the US at piece level, in order to meet US requirements.

At this stage there is only a very limited capacity in Australia to screen and inspect every piece of every shipment that is tendered to the airlines for uplift to the USA, prior to being loaded on board an aircraft.

Australian Government’s Office of Transport Security (OTS) is working to quickly implement a two part strategy in cooperation with industry to meet these requirements, including:

1)      Allowing approved industry participants to examine air cargo off airport and

2)      Establishing a Known Consignor scheme.

The implementation deadline to comply with the USA regulations is 31st July 2015 – we do not expect that full industry wide arrangements to comply with the US regulations will be in place by that date.

What’s next?

We await advice from the Government OTS on its expectations of the Australian aircargo industry to address the issue of the available resources for screening of aircargo to USA.

As a consequence of the rushed application of these regulations, we foresee significant issues including:

  • Delays and costs in the immediate & longer term
  • Airline & airfreight terminals will be required to invest in new screening equipment and resourcing
  • Significant cargo congestion will be experienced at most Australian airports, with corresponding delays in uplift of cargo
  • At peak times there will be Airline cargo terminal space issues
  • Earlier receival cut-off times will be implemented for freight acceptance at airline and airfreight terminals
  • We expect that a new level of fees will be introduced to cover the costs associated with the application of these USA regulations
  • Confusion & chaos….

 

The application of any interim and long term solution will have an impact on exporters moving their product to the USA via airfreight.

Magellan’s priority at this stage is to find the best “work around” solution to minimise the impact on our customer’s aircargo moving to the USA.

If you would like more information, please contact our office on 1300 651 888 (Aus) or (09) 974 4818 (NZ) or via email on info@maglog.com.au

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Chinese May Day Holidays

Chinese May Day Holidays are one of the major holiday periods across China. Most businesses and Government agencies will close during the period 1st May thru 3rd May inclusive (excluding Hong Kong).

Magellan’s China offices will be either closed or on skeleton staff during this time.

Please note the following when planning shipments.

SHANGHAI

Holidays from 1st May, returning  4th May.

AIR Cut off 30th April  (for both freight and documents).

SEA Cut off as follows:

ETD: 1st May , Cut-off: 27th April 18:00

ETD: 6th May , Cut-off: 29th April 18:00

Most other China offices will also be closed in line with Shanghai.

QINGDAO

Holidays from 1st May, returning 4th May.

AIR Cut off 30th April  (for both freight and documents).

SEA no change,  schedules remain unchanged.

HONG KONG

Holidays 1st May only.

AIR Cut off 30th April (for both freight and documents).

SEA no change, schedules remain unchanged.

Should you need clarification, or options available for freight movement around this holiday period, please contact the Magellan Customer Service team on 1300 651 888 or info@maglog.com.au

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Quality Control – Eliminate claims for non-compliant product

Traditionally, fashion companies have used buying agents or sourced resident teams to undertake quality control procedures at the manufacturer’s premises – either in-line or final quality control (Q/C).

However, this process has not always proved to be totally effective and product is often determined to be out of specification once it has arrived in Australia. Australian importers then need to engage in lengthy and costly discussions with their suppliers about who pays for what.

THERE IS A BETTER WAY AND MAGELLAN CAN HELP

Magellan can provide quality control facilities in its offshore warehouses that allow for detection of issues BEFORE the goods are exported. In the event of any non-compliance the goods are returned to the supplier for correction and re-delivery. This approach eliminates claims and the onus is put squarely on the supplier to get the product right BEFORE it leaves the country of manufacture.

Experience has shown that suppliers learn very quickly that if they deliver non-compliant product this will disadvantage them economically. It follows that self regulation becomes an imperative for them.

EXAMPLES OF QUALITY CONTROL PROCEDURES INCLUDE:

  • Needle detection
  • Button and stud testing
  • Swing Tag confirmation
  • Labelling confirmation
  • Thread snipping
  • Re-ticketing
  • Technical Q/C – (provided by client)

 

So, if you want to eliminate claims for non-compliant product in the future contact Jeff Kershaw at jeff@maglog.com.au or call on 0418 543 994.

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