The hidden cost of freight forwarding & what to watch out for
Unmasking Hidden Costs for Australian Shippers
In the world of global commerce, freight forwarding is the unsung hero, orchestrating the complex symphony of shipments, customs, and logistics. However, amidst the logistical brilliance lies a labyrinth of hidden costs that can catch even the most seasoned shippers off guard. In this blog, we'll unveil these covert expenses and arm you with the knowledge to steer clear of them.
1. Unforeseen Detention and Demurrage Charges
Picture this: Your cargo arrives at the port, but for unforeseen reasons, it's held up – maybe due to customs clearance delays or logistical hiccups. This delay can result in detention and demurrage charges, which are often overlooked in initial quotes. These charges can quickly escalate if not managed properly. To avoid this pitfall, choose a freight forwarder that provides transparent and comprehensive cost breakdowns.
2. Hidden Fees in the Fine Print
Contracts and agreements in the freight forwarding world can sometimes resemble a legal thriller with pages of fine print. Buried within those documents may be hidden fees for services you assumed were included. Thoroughly review all terms and conditions, and don't hesitate to seek clarification on anything you find ambiguous.
3. Currency Exchange Rate Fluctuations
Global trade means dealing with various currencies. Exchange rate fluctuations can significantly impact the cost of your shipments. Forwarders often charge for currency conversion services, and the rates they offer might not be as favorable as you'd get from a dedicated currency exchange service. Keep an eye on exchange rates, and consider using specialized financial institutions for currency conversions when possible.
4. Overlooking Insurance Costs
Freight forwarders typically offer insurance coverage, but it may not be comprehensive or cost-effective. It's essential to assess your cargo's value and the potential risks involved. If the forwarder's insurance doesn't align with your needs, consider external cargo insurance providers to ensure full coverage without surprises.
5. Warehouse and Handling Fees
Storage and handling fees often lurk in the shadows. If your cargo spends more time in warehouses than anticipated, these costs can mount quickly. Understand the storage terms and charges applied by your forwarder and factor them into your budget.
6. Fuel Surcharges and Accessorial Fees
Fuel surcharges and accessorial fees can catch you off guard. These fees are tacked onto your bill and can vary depending on market conditions. Stay informed about fuel price trends and negotiate clear terms with your forwarder regarding any potential surcharges.
7. Customs Compliance Costs
Failure to comply with customs regulations can result in fines and penalties. Staying on the right side of customs requires expertise and sometimes additional costs. Ensure that your forwarder has the necessary knowledge to handle customs matters effectively to avoid costly missteps.
8. Port Congestion and Peak Season Charges
During peak shipping seasons or periods of port congestion, extra charges may come into play. Plan your shipments wisely, and be prepared for potential surges in costs during peak times.
In the complex world of freight forwarding, knowledge is power. By staying vigilant, asking the right questions, and choosing a forwarder with a transparent and trustworthy approach, you can navigate the labyrinth of hidden costs and keep your logistics operations on budget and on track. Remember, a well-informed shipper is a successful shipper in the world of global trade.
ArticLes : Shipping Australia Mid-Year 2024 Magazine is out now Governments inch toward global net-zero regulations AFP charges two WA men and seizes meth, cocaine, heroin and cash Gold Coast man jailed for possessing methamphetamine Australian Border Force - Array of updates, notices and statistics from their Goods Compliance Update 2024-1 Rejection of Vague Descriptions in air freight for US - from 12 Nov 2024 Fewer rise notifications as index slides US port strike ends, leaving cargo backlog Webinars : Australasian Promotional Products Association: Webinar: Maximising ESG Return on Investment Based on Customer Buying Trends Podcasts : Business Matters - BBC World Service World Business Report
Are you an importer looking to optimise your business operations and improve your bottom line? Understanding landed cost is essential for making informed decisions and achieving long-term success. What is Landed Cost? Landed cost is the total cost of a product, including the purchase price, transportation fees, customs duties, taxes, handling charges, and insurance premiums. It's crucial to accurately calculate landed cost to determine true product costs, set competitive prices, and manage your inventory effectively. Why is Landed Cost Important? Informed Pricing: Accurately calculating landed cost helps you set competitive prices that reflect the true cost of your products. Profit Margin Optimisation: Understanding landed cost allows you to identify areas where you can reduce costs and improve your profit margins. Risk Management: By anticipating potential costs and challenges, you can better manage risks associated with importing. Inventory Management: Knowing the landed cost of your products helps you make informed decisions about inventory levels and pricing strategies. Key Components of Landed Cost: Purchase Price: The cost of the product from the supplier Transportation Costs: Fees for shipping the product from the supplier to your location. Customs / Government Duties and Taxes: Taxes imposed by the importing country Handling Charges: Fees for handling and storing the product at the port or airport. Insurance Premiums: Costs for insuring the shipment against losses or damages. Tips for Managing Landed Cost: Research Suppliers: Compare prices and shipping options from different suppliers to find the best deals. Negotiate Terms: Discuss terms like payment methods, shipping arrangements, and minimum order quantities with suppliers to get the most favorable conditions. Optimise Shipping: Explore different shipping methods and carriers to find the most cost-effective option for your needs. Monitor Exchange Rates: Keep track of exchange rates to anticipate potential fluctuations that could impact your landed cost. Industry standard applies a 3% CAF - currency adjustment factor. Consider Incoterms: Use Incoterms (International Commercial Terms) to clearly define the responsibilities and costs between you and your supplier. Understanding landed cost is a crucial step in ensuring the success of your import business. By educating yourself and staying informed about the factors that influence landed cost, you can make more informed decisions, optimise your operations, and improve your overall profitability We encourage you to explore our resources and reach out to our team if you have any questions or require further assistance Would you like to learn more about specific strategies for managing landed cost? We can provide you with additional resources or personalised advice based on your unique business needs. Book in a free consultation HERE
Ben, a budding entrepreneur, was excited to launch his new online store selling eco-friendly home decor. He found a promising supplier in China offering competitive prices. However, when he calculated his potential profit margin, he realised something wasn't quite right. Ben had only considered the purchase price of the products. He hadn't factored in the additional costs associated with importing, such as shipping fees, customs duties, taxes, and handling charges. These hidden costs, often referred to as the "landed cost," can significantly impact the profitability of imported goods. Feeling overwhelmed, Ben reached out to Mika at Pivot Freight. Mika explained the various components of the landed cost in detail. Providing a comprehensive breakdown, including: Shipping Costs: The cost of transporting the goods from the supplier's location to the importer's destination (Ben's warehouse). Customs Duties: Taxes levied by the importing country on imported goods. Import Taxes: Additional taxes imposed by the government on imported products. Handling Charges: Fees associated with the handling and storage of goods at the port or airport. Insurance Premiums: Costs for insuring the shipment against losses or damages. Armed with this information, Ben was able to accurately calculate the landed cost of his products. He realised that the initial savings he thought he was getting were offset by the hidden costs. By adjusting his pricing strategy and negotiating with his supplier, Ben was able to ensure a profitable margin. A freight forwarder's expertise was invaluable in helping Ben understand the true cost of importing. Mika's detailed breakdown of the landed cost allowed Ben to make informed decisions and avoid costly mistakes. Ben's Advice for other Importers: "Never underestimate the hidden costs of importing. A freight forwarder can provide the clarity and expertise you need to make informed decisions and ensure a profitable business."
ISPM 15 is a global standard that sets the rules for wood packaging used in international trade. Think of it as a stamp on your passport for your wooden pallets, crates, and other packaging materials. It's designed to prevent pests from hitching a ride on your products and causing problems in other countries. Why is ISPM 15 Important for AustraLian Businesses? Australia has adopted ISPM 15 as part of its biosecurity regulations. This means that all wood packaging materials imported into or exported from Australia must comply with the standard. Australia is committed to protecting our unique flora and fauna. ISPM 15 ensures that wood packaging coming into and out of Australia is treated to prevent the spread of pests. Imagine your shipping container full of goods arrives into port only to find that the wooden pallets are infested with pests. Not only can this delay your shipment, but it can also lead to serious biosecurity risks. ISPM 15 ensures that wood packaging is treated to eliminate these pests, protecting both the environment and your cargo.This process helps us maintain our biosecurity and protects our agricultural industries. How Does ISPM 15 AppLy to Your Business? If you're importing or exporting goods that require wood packaging, it's essential to ensure that it complies with ISPM 15. This can involve working with a certified treatment provider or manufacturer and providing the necessary documentation to customs authorities. To be ISPM 15 compliant, wood packaging must: Meet bark toLerance requirements: The bark must be removed to prevent pests from hiding. Undergo approved treatment: The wood must be treated with a method approved by the International Plant Protection Convention (IPPC). This can include heat treatment, fumigation, or other methods. Be marked appropriateLy: The packaging must bear a specific mark indicating that it has undergone the required treatment. Common Wood Packaging Covered by ISPM 15 Pallets Crates Dunnage (packing materials) Packing blocks Drums Cases Spools/reels Exceptions to ISPM 15 Certain types of wood packaging are exempt from ISPM 15 requirements, including: Thin wood packaging (6 mm or less) Processed wood materials like plywood or particle board Veneer peeler cores Wine and spirit barrels Gift boxes made from processed wood Sawdust, wood shavings, and wood wool Wood components permanently attached to freight vehicles Key Points to Remember: CompLiance is EssentiaL: All wood packaging used in international trade must comply with ISPM 15 unless it's considered low-risk (like thin plywood or sawdust). Treatment is Required: Your wood packaging must be treated by an approved provider to kill any potential pests. Marking is Mandatory: Your packaging should have a clear ISPM 15 mark, which includes a unique certification number and treatment code. Ongoing CompLiance: Even after treatment, your packaging can still be inspected. If it shows signs of pests, it may need further treatment or be destroyed. Stay Safe and CompLiant By understanding and complying with ISPM 15, you can help prevent the spread of wood pests and ensure the smooth movement of your goods across borders. So, next time you're shipping a wooden crate, remember ISPM 15 and keep your cargo safe and compliant. Need More Information? Check out the official ISPM 15 webpage for detailed guidelines and resources. And if you have any questions, don't hesitate to reach out to a trusted freight forwarder or customs broker. They can help you navigate the complexities of ISPM 15 and ensure your shipments comply with all regulations. Book a free consultation call with one of our team members here
Sarah started her business as a hobby, selling handmade jewellery she created in her spare time. Her unique designs quickly gained popularity, and she found herself overwhelmed with orders. To meet the demand, Sarah realised she needed to source materials on a larger scale. After some research, she discovered that importing directly from overseas suppliers could offer significant cost savings. However, the prospect of navigating international shipping seemed daunting. That's when Sarah met Christine from Pivot Freight, a seasoned freight forwarder. Christine's expertise and personalised approach were invaluable. She guided Sarah through the entire importing process, from identifying reliable suppliers to ensuring smooth customs clearance. Cross-Checking: Christine helped Sarah identify reliable and trustworthy suppliers, ensuring quality and timely deliveries. Documentation Assistance: Christine provided expert guidance on the necessary documentation, such as commercial invoices, packing lists, and certificates of origin. Negotiating Rates: Leveraging industry connections, Ivy helped Sarah secure the best sailing schedule and competitive shipping rates from the carriers. Customs Clearance Expertise: Christine's knowledge of customs regulations and procedures ensured that Sarah’s shipments cleared customs efficiently, avoiding delays and additional costs. Risk Management: Christine advised Sarah on insurance options to protect her shipments against potential losses or damages. Ongoing Support: Christine continued to provide support and guidance even after the initial shipment, ensuring a seamless and ongoing importing experience. With Christine's support, Sarah’s business flourished. She expanded her product line, opened an online store, and even started exporting her jewellery to international markets. In this situation, having a freight forwarder had been instrumental in her success, providing the logistics expertise and peace of mind that allowed Sarah to focus on growing her business. Sarah’s advice for aspiring importers: "Don't be afraid to seek help. A good freight forwarder can be your partner in success. They'll guide you through the complexities of international shipping, saving you time, money, and stress."
The Department of Agriculture, Fisheries, and Forestry (DAFF) has announced the commencement of the 2024-25 BMSB risk season, effective September 1st, 2024 to April 30th, 2025. This season brings key changes for stakeholders involved in importing and shipping goods to Australia during this period. The 2024-25 Brown Marmorated Stink Bug (BMSB) Risk Season: What You Need to Know The Brown Marmorated Stink Bug (BMSB) poses a significant threat to Australian agriculture. To prevent its establishment, the Department of Agriculture and Water Resources enforces strict seasonal measures during high-risk periods. Key Changes: Heightened Vessel Surveillance : China and South Korea have been added to the list of countries requiring stricter monitoring of vessels arriving in Australia. AusTreat: The Offshore BMSB Treatment Provider scheme has been replaced by AusTreat, a new government-to-industry program regulating pre-border biosecurity treatment providers. Safeguarding Arrangements: The scheme offering an alternative clearance pathway for high-risk cargo remains available Who should be aware? This information is crucial for stakeholders in the import and shipping industries, including: Importers Freight forwarders Treatment providers Customs brokers Vessel masters Peace of mind starts with certified care. Find an approved supplier for your offshore fumigations and treatments. It's your guarantee of quality and compliance *All pre-border biosecurity treatment providers must be registered under AusTreat, check yours are on the List of Approved treatment providers. Stay informed & compliant: For detailed information on BMSB seasonal measures, AusTreat registration, and Safeguarding Arrangements, visit the DAFF website: HERE
A crisis in the Red Sea, caused by attacks on vessels, is forcing ships to take a much longer route around Africa. This detour adds weeks to travel times, impacting the flow of goods and potentially pushing prices up for Australian consumers. Why the DELAYS? Normally, a large portion of cargo bound for Australia travels through the Red Sea and the Suez Canal. However, due to the current security threats, many shipping companies are opting for the safer, but significantly longer, route around Africa's Cape of Good Hope. This adds roughly 6,400 kilometers to each journey. Impact on AUSTRALIAN Consumers While the crisis isn't expected to cause widespread shortages like those seen during the pandemic, it could lead to some stock issues and potentially higher prices. The delays disrupt the delicate balance between supply and demand, and with inflation already on the rise, these disruptions could keep prices elevated for a longer period. Interest Rates and the Economy The Reserve Bank of Australia is tasked with keeping inflation under control. This shipping crisis makes their job a little harder. If inflation remains high due to ongoing supply chain issues, the Bank may be forced to raise interest rates to slow down spending and cool the economy. How Long WILL This Last? Experts predict the Red Sea crisis could continue for another six months. This means potential disruptions to the flow of goods impacting Australian consumers and businesses for a significant period. Staying Informed As the situation unfolds, it's important to stay informed about potential impacts on the availability and price of goods. Keep an eye on news reports and information from retailers to stay updated. Watch: Channel 10 News - international shipping Lucy Gray interviews the Assistant Minister for Trade, Paul Zalai, importers and leading finance commentators on how international shipping freight rates is adding to the cost of living.
Did you just get an email alert from us? Is your vessel arriving or is your cargo almost in your grasp, just waiting to be unpacked out of the shipping container? This is one of those 'trust the process' moments. We are keeping you up to date from the moment it arrives to the moment your cargo is available and ready to be delivered to your door, silver platter and all. At Pivot Freight, We understand that the concept of CHEP pallets may be daunting, but don't fear, Our crew are here to help you navigate the troubling tides of getting your cargo unpacked and delivered to your door. SO, WHAT ARE CHEP PALLETS? CHEP pallets , are the odd blue-painted pallets you see in the above image. It's a multipurpose platform that is safe to use for product loading, distribution, and display. It is combined and maintained across the network of CHEP's service centres, promoting efficiency and the responsible exploitation of natural resources all along the supply chain. The idea of "share and reuse," or 'pooling', is the foundation of CHEP's business strategy. CHEP implements this strategy as they believe that items are more sustainable when they are shared and reused. LCL FREIGHT UNPACKING: 📦 Once your cargo has been deconsolidated and unpacked, delivery to your door will be booked in ASAP. We check over details with you depending on the size and quantity of your expected item/s. If you have a big load of loose cartons coming, best believe these will be unpacked onto pallets at the CFS - Container Freight Station. Our Australian depots do this to ensure their warehouse staff and our courier drivers remain safe and follow work health and safety legislation as best as possible. 🦺 CHEP pallets are the industry norm for Sea Freight / Container unpack depots to utilise when unpacking goods out of shipping containers. If your goods have been unpacked onto a CHEP pallet and you don't have a CHEP account or a CHEP pallet to swap, then you'll need to unload your packages off the CHEP pallet and return the CHEP pallet back to the driver on delivery. If this is not workable, then we can arrange for your cargo to be unpacked onto plain pallets prior to delivery; however, there will be additional costs for labour and the plain pallet supply. There are some other solutions to get around this, such as palletising the cargo at the point of origin, sometimes this can be an economical choice when you have large quantities of cartons or packages to ship and a fork lift at delivery point to unload the pallets off the truck. Importers work with suppliers to arrange plain palletising as a part of their ordering process; however, this will result in higher freight costs due to the increased cargo capacity (cubic meters) within the shipping container. #toptip - Make sure that if wooden pallets are used, they are heat treated to meet the ISPM 15 standards or request plastic pallets to mitigate any biosecurity concerns. If a supplier is unable to palletise the cargo at the CFS (container freight station) of origin, we can also arrange for this at destination, albeit it would incur additional costs such as labour and the supply of each plain pallet. It is important to consider the benefit of cargo being palletised from origin to destination, it allows a safer movement of the goods in and out of warehouses, as well as less possibility of cargo damage while on the rough seas. Having a CHEP account is another option to explore. You can find out how through CHEP's web page here .
The khapra beetle, is a tiny beetle that eats stored produce, rendering it inedible, by infesting grain shipments or silos. Originally from India, it has since expanded throughout the Middle East, Asia, Africa, and Europe. It is now considered Australia’s 2nd most threatening plant pest. In this guide, we will be exploring the measures in place and the effects this pest has on Australia's import scene. Infestation: The Impact on Australian Trade Many of our trading partners would refuse stored produce from Australia if the beetle were to establish itself here. Australia's economy could be negatively impacted by the beetle because a large portion of the grain we grow is exported. Populations grow quickly in warmer weather, which results in substantial losses to produce, kept in storage, such as grain in silos. Additionally, beetles and the hairs and cast skins from larvae pollute-infested stores, posing a health risk. The hitchhiker pest is known to be capable of thriving in shipping containers for several years. Because it is small, can live for long periods without food, and prefers to live in the cracks and crevices, staying hidden under floors and in seams and crevices within the shipping containers. In suitable conditions, beetle populations can grow swiftly and infect any items stored in the container. Measures for Importation of Shipping Containers at Risk We will briefly touch on the measures implemented by DAFF (Department of Agriculture, Fisheries, and Forestry) for sea containers that have been exported from khapra beetle target risk countries. Containers that are packed in a country that is at target risk for infestation and are intended to be delivered at an Australian rural khapra risk postcode require offshore treatment, before export, using an approved method by an approved treatment provider. A list of approved treatment providers can be found here . A list of Rural Khapra Risk Postcodes can be found here . For a visual guide on whether treatment is required on your container import, check out this flowchart provided by DAFF. The shipping container needs to be treated before packing unless methyl bromide fumigation is being used. If methyl bromide fumigation is used, the container can be treated either empty or packed (if it meets DAFF specifications) and treated no later than 21 days before shipping, along with the required paperwork. If these conditions are not met, the container will be exported as soon as it gets to Australia. For more information, please visit the departments' page dedicated to the khapra beetle here . The below countries are a target risk area for the khapra beetle *Please check the above link for the most up to date list as these can change without notice. Afghanistan Albania Algeria Bangladesh Benin Burkina Faso Côte d’Ivoire (Ivory Coast) Cyprus Egypt Ghana Greece India Iran Islamic Republic of Iraq Israel Kuwait Lebanon Libya Mali Mauritania Morocco Myanmar Nepal Niger Nigeria Oman Pakistan Qatar Saudi Arabia Senegal Somalia South Sudan Sri Lanka Sudan Syrian Arab Republic Timor-Leste Tunisia Türkiye United Arab Emirates Yemen Source List Department n.d., Department of Agriculture, Fisheries, and Forestry, Agriculture, Australian Government.
The world of international shipping can feel overwhelming, especially for new importers. With all the different options and terminology, it's easy to get confused. But fear not! Through our blog posts, We'll guide you through the three main modes of international transport: air freight, sea freight, and international courier services. 1. Air Freight: Imagine your products soaring through the air, delivered to your doorstep in a flash! That's the magic of air freight. It's the fastest option, ideal for urgent shipments, time-sensitive goods like perishables or seasonal items, and smaller packages. Pros: Speed: Get your goods quickly! Tracking: Enjoy real-time tracking for peace of mind. Cons: Cost: Air freight is the most expensive option due to its speed. Weight & Size Restrictions: Be aware of limitations on package size and weight. 2. International Courier Service: Similar to Airfreight, International courier services are a true door to door delivery for documents, small packages and urgent shipments. Pros: Fast delivery times, excellent tracking options, convenient door-to-door delivery. Cons: Cost: Similar to air freight, based on volumetric weight or actual weight, whichever is higher Weight & Size Restrictions: Can be expensive compared to other options, weight and size limitations. . Volumetric Weight: Your Secret Weapon for Cost Estimation Ever received a shipping quote higher than expected? You might be encountering the difference between volumetric weight and actual weight. Both air freight and international courier services consider not just the physical weight of your package, but also its size when calculating the costs. Actual weight = the physical weight (Kg's) of your items, including packaging. Volumetric Weight = the space your items take up Chargeable Weight = the highest of the two (Actual vs Volumetric) Here's a simple formula to calculate volumetric weight: Multiply the length, width, and height of your package in centimeters. Length (cm) x Width (cm) x Height (cm) Divide the result by 6000 for air freight or 5000 for international courier services. Round up to the nearest half kilogram. This is your volumetric weight! The shipping company will use whichever weight is higher to determine your final cost. Knowing your volumetric weight helps you estimate shipping costs more accurately and avoid surprises. 3. Sea Freight: For large shipments and cost-effectiveness, look no further than sea freight. Imagine your goods sailing across the ocean in giant containers! This is the most economical option for bulkier items like furniture, machinery, or large quantities of non-urgent goods. Pros: Cost-effective: The most economical option for large volumes. Capacity: Can handle significant cargo volume. Cons: Slowest Delivery: Sea freight takes the longest, so plan accordingly. Limited Tracking: Tracking options may be limited compared to air freight. Understanding Container Options: Sea freight utilises shipping containers for larger shipments. Here's a breakdown of your options: Full Container Load (FCL): Have an entire container dedicated to your goods, ideal for large quantities. Less than Container Load (LCL): Share a container with other importers, a budget-friendly option for smaller shipments. To calculate the cubic meter (CBM) for a sea freight shipment: Number of items x Length (m) x Width (m) x Height (m) Knowing the CBM helps determine your shipping cost based on either weight or volume, whichever is higher and will also determine weather your cargo will be shipped as LCL of FCL. Choosing the Right Mode: So, how do you decide between air and sea freight? Here are some key factors to consider: Delivery Speed: How urgently do you need your goods? Cost: Air freight is faster but more expensive, sea freight is slower but more economical. Cargo Size & Weight: Consider weight limitations and if volumetric weight might be a factor. Tracking Visibility: How important is real-time tracking for your peace of mind? Beyond the Basics: The world of international shipping goes beyond these core modes. Incoterms, which define delivery responsibilities, play a crucial role. Understanding who pays for what during the shipping process is essential. Remember: When navigating international shipping, getting quotes from different freight forwarders can help you find the best price and service for your specific needs. Stay tuned for future posts where we'll delve deeper into topics like Incoterms, customs clearance, and navigating the ever-changing landscape of international trade!