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How to Save Freight Cost?

One of the most important factors with international sourcing is how to reduce costs, specifically shipping costs.

Whether you own a small business, or a big company, whether you are new to importing, or already veteran there, managing shipping and saving freight cost directly affects your business’s bottom line.

save-freight-cost

Every dollar saved in transportation translates to an equal improvement in financial performance. Overpaying in logistics means you can’t provide consistent and cost-effective delivery to your customers.

1. Plan Ahead

Last minute shipping is always expensive. If you require an express freight with short deadlines, chances are you will be charged extra.

By planning in advance you can not only avoid overpaying, but also take advantage of some nice discounts. This can give you time to plan for storage when it’s needed and overall make you more flexible in terms of choosing a carrier and tariff.

save-freight-cost-plan-aheadPlan ahead means you will have enough time to choose the suitable transportation method, find a good freight forwarder and leave you and your customers better preparation. All other shipping strategies for saving cost are based on this.Nonetheless, importers looking to move product during the holidays are advised to allow extra lead time and book early.

 

2. Find Suitable Shipping Method

There are several cargo types. Transporting goods by sea or air, courier or air, can be a complicated operation for business owners who haven’t explored every transportation ways and the costs associated with them. Some of the most common mistakes are not knowing which freight means to choose.

By Sea or By Air?

Sea freight is predominantly utilized for large international shipments that are not overly time critical.

Air freight is typically utilized for emergency shipments, small and light quantities, and items that require higher security.

Air shipment charges are often the most expensive; however, on occasion, you might find that additional spendings will save you millions in customer satisfaction during urgent situations.

FCL or LCL?

We strongly suggest FCL (full container load) if possible. LCL (less than container load) charges more than FCL in unit price. The workload is actually higher when managing LCL shipment. But please note, the LCL charges maybe too much higher than you imagine. 

Also, choose FCL can avoid the hidden Fees in international shipping. There are many items in LCL charges. Some of them are not uniform standard. The sad thing is that you can’t distinguish. So the best solution is trying to avoid LCL.

Air Freight Airport to Airport or Express Courier to Door?

Airlines and courier provider (UPS/DHL/FedEx) both will use chargeable weight.

Adjust your packing sizes to avoid dimensional weight (DIM) and oversize surcharges. These extra fees are calculated on the relationship between package weight and package size. Once you understand how these billing rules work, you may be able to adjust the length, width or height of your packing solutions to eliminate the extra costs. Common tips:

  • Choose courier service if the chargeable weight is under 45kg.
  • Choose courier service if the chargeable weight is under 100kg at most times.
  • Choose air freight if the chargeable weight is at least 100kg.

3. Find A Local Transport Company

Choose the incoterm FOB and find a local freight forwarder to manage your cargo transportation will benefit you a lot.

The lower labor cost, lower exchange rate, lower expenses and other factors, make forwarders’ service charge much cheaper. The situation here allows them to work out the best pricing based on your requirements.

Not just cheaper, go and discover more advantages when you buy fob.

Besides, your international logistics providers should be your partners. You should work with one another to improve the sustainability and viability of both businesses. If your cargo agent is only trying to get something from you and not willing to give you something in return, within reason of course, perhaps it is not the right partnership for you at that time.

Special note: For businesses that don’t often send larger shipments of several pallets at a time, please don’t afraid you can’t afford to hire a logistics provider to manage your shipping services. There’re local freight forwarders, like us, providing one-stop international transportation services for all kinds of any small shipment, whether it’s documents, parcel, cartons, pallets, or containers.

4. Properly Packing and Insure Your Shipments

All this money-saving will be for nothing if your goods aren’t wrapped properly to avoid damage, or if they’re damaged beyond use and uninsured. Ensure that your goods have proper outer packaging, as well as inner packaging; that the boxes are sealed properly and labelled correctly.

Besides, if you don’t have cargo insurance, you forwarder should at least suggest it to you and if he offers this service, like we do, negotiate the best deal with him.

Summary

  • Leave yourself enough time to plan and comply
  • Use air delivery only if necessary
  • Find suitable shipping method based on cargo volume&weight
  • Find a local freight forwarder
  • Well packaging
  • Insure your cargo

Source: https://cargofromchina.com/

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Mobile phones exported to South Korea increased by more than 100%

VCN- While mobile phones exported to important markets slightly increased or decreased, mobile phones exported to South Korea sharply increased by 107.7%.

xuat khau dien thoai sang han quoc tang hon 100
Illustrative photo.

According to the latest statistics of the General Department of Vietnam Customs, in January 2017, Vietnam exported mobile phones to 37 countries and territories.

Notably, compared to the same period in 2016, South Korea has surpassed the United Arab Emirates (UAE) to become the largest export market of Vietnam in the field of mobile phones and components.

Specifically, in January 2017, mobile phones and components exported to South Korea reached $US 229.6 million, an increase of $US 125.6 million compared to the same period in 2016, equivalent to an increase of 107.7%.

Meanwhile in the UAE market, exported mobile phones of Vietnam fell from $US 365 million in January 2016 to $US 228.5 million in January 2017, equivalent to a decrease of 37.4%.

By the end of January 2017, mobile phones and components continued to be the largest export item of Vietnam with a turnover of $US 2,329 billion, an increase of 2.6% compared to the same period in 2016.

In addition to the 2 big markets South Korea and the UAE, in January 2017, the largest import markets of mobile phones from Vietnam with a turnover of more than $US 100 million included: the United States with an import turnover of $US 206.8 million; Austria with an import turnover of $US 163.3 million; Italy with an import turnover of $US 144.8 million and Hong Kong with an import turnover of $US 112.3 million.

By Thai Binh/ Hoang Anh

Source: http://customsnews.vn/

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Imported Iron and Steel from China increase nearly 50 %

VCN- Although the volume of imported Iron and Steel from China sharply reduced compared to the same period in 2016, the total value of turnover increased, leading to the average imported price of these commodities soaring by 48%.

imported iron and steel from china increase nearly 50
The chart compares volume and total value of turnover and the average price of imported Iron and Steel from China in January, 2017 and January, 2016. Chart by: T.B

According to the latest information from the General Department of Vietnam Customs, there was 678,865 tons of all kinds of Iron and Steel imported from China with a total value of turnover of $US 343 million in January 2017.

Compared to the same period in 2016, the volume of imported Iron and Steel fell 224,048 tons, equivalent to 25%. However, the total value of turnover increase by $US 34 million, equivalent to 11%.

Thus, the average price of imported Steel and Iron from China in January was $US 505/ton, increasing by 48% compared to the average price of January, 2016 ($US 342/ton).

Besides the notable information mentioned above, the statistical results of the General Department of Vietnam Customs showed that China still remained a stable volume of imported goods to Vietnam between January 2017 and January 2016.

Specifically, the country’s total imported goods from China in January, 2017 was $US 3,943 billion turnover which was $US 9 million higher than the import turnover of $US 3,934 billion in the same period last year.

In particular, the stability of turnover value of imported goods from China took place in January, 2017 which included the Tet holidays (from January 28, 2017), meanwhile Vietnam’s import and export activity still took place normally in January 2016, because the Tet holidays of 2016 started from February 6, 2016).

imported iron and steel from china increase nearly 50 Iron and steel imports from China accounting for 59.1%VCN- According to the statistics on import and export goods from the General Department of Customs, iron …

To the end of January, 2017, besides Iron and Steel, other imported commodities with large turnover value are: Machine, equipment, tools and instrument were $US 857 million; telephones, mobile phones and parts thereof were $US 493 million, computers, electrical products and parts thereof were $US 482 million and fabric was $US 374 million.

By Thai Binh/Hoang Loan

Source: http://customsnews.vn/

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How to Use Free Time to Reduce Detention and Demurrage

Free time is the most important cost factor in ocean shipping that most companies ignore.

 
How so? Not considering free time contributes to unnecessary detention and demurrage costs on up to 25% of ocean freight shipments, according to one of the world’s largest NVOCCs.
 
This growing issue affects logistics services providers and shippers alike, and is exasperated by the current state of the ocean cargo markets – specifically with regards to the ongoing problem of port congestion.
 
Free time is a contract line item just like any other fee or surcharge, yet it is rarely considered when making routing decisions. The reason is that it’s hidden in contracts and typically overlooked thanks to all the other everyday complexities of ocean freight rate management – like tracking updates to carrier surcharges and GRIs. Free time is seldom front of mind when ocean rates get calculated and shipments are booked. Yet few of the industry’s 1,300+ ocean surcharges that garner most of the attention can add 11% to a shipment’s cost each day.
 
 
Free time is crucial and should be considered with every routing decision, right along with a shipment’s all-in rate and transit time.
 
Contributing Factors to Increased Detention and Demurrage
 
The average free time is about five days, providing precious little time to pick up, unload or load, and return a container to the depot.
 
Despite our stance that shippers must take accountability for better understanding and using free time, there are legitimate market conditions that make this difficult.
 
Among the biggest is that vessels are getting larger and taking longer to discharge. At the same time ocean carriers, ports, and terminal operators are not providing additional free time willingly. Ports will continue to get more congested, and, unfortunately, there are no free passes when a container is late.
 
Adding to the challenge is chassis availability. This market has changed, and the chassis is no longer supplied by the operators. Again, no sympathy if the chassis leasing companies run out during busy periods making it impossible to move a container.
 
 
There will always be situations where shippers simply cannot access cargo or return a container, and as a result exceed free time. Still that’s no excuse for failing to take steps to address the problem.
 
While the issue itself is simple enough, the solution is not. Without a new approach, demurrage and detention charges will only increase.
 
Solutions for Preventing Unnecessary Free Time Violations
 
Market forces aside there are tactics for managing free time to minimize costs. Two solutions with the greatest impact include using data for better decision making, and improving communication within your operation and with carriers.
 
Using this information is required for good decision making, but the challenge remains in how to go about accessing it. With most shippers having multiple carrier contracts and no good way to find and compare free time, how realistic is it to expect it will be used on a consistent basis? You need to find a way. The solution starts with an organized approach to freight rate and contract management, and continues with technology that supports your current workflows for calculating rates and quotes accurately including free time.
 
A less obvious upside to better free time visibility is that when you have additional time, you can use it. Extra free time makes it possible to avoid expenses such as storage, handling costs, or other accessorials at the point of pick up or delivery. But you have to know your free time to take advantage.
 
It is important to note that application of the terms demurrage, detention, and combined demurrage/detention varies from country to country, but the concept and workings mostly remains the same.
 
With up to 25% of all ocean shipments incurring detention or demurrage, free time should be considered with every routing decision. Don’t allow market conditions and outside factors like port congestion be an excuse for not addressing the problem.
 
Knowing free time and the potential for additional charges helps shippers make the best routing decisions. It requires diligence on the part of shippers and freight forwarders to understand their free time tariffs and consider those constraints with every routing decision.

 

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Why You Should Always Choose FOB Shipping With Your Supplier?

We are assuming you have learned the basic rules of Incoterms, now it’s time to move forward.

Which incoterm (aka shipping term, freight term or trade term) should I choose?

An importer need to look into the options of buying the goods under the terms that are more favorable to his or her expenses. We suggest you should always choose FOB shipping between you and your supplier. But why?
The short answer is by doing this, it will greatly reduce your shipping costs and give you more control over the shipment.
Let’s list the most commonly used terms first:
  • EXW
  • FOB
  • CFR or CIF
  • DAP
  • DDP
We can divide them into three types.
  • EXW – You only pay the goods value.
  • FOB – You pay the goods value and inland transportation cost.
  • CFR, CIF, DAP, DDP – You pay the goods value, inland transportation cost, and sea/air freight cost (or more)

1. NEVER EXW.

Quite a few buyers come to us and ask our comments about choosing EXW for the max control of the goods. We strongly don’t suggest this term for any sourcing, not including small samples.
If you have ever looked into the meaning of EXW, you may change your decision. When the truck arrived at the warehouse or the manufacturer, the supplier even has no obligation to loading on it. Not mentioning the customs declaration at the loading port.
All export clearance documents and procedures are included in the FOB price. Importers are wise to avoid hassle and simply stick to FOB.
Yes, we can do all the stuff for you if you insist on EXW. But clearly it’s costly and time consuming. Things should be easier.
So again, NEVER EXW.

2. Freight cost is cheaper when FOB shipping.

As we know, CIF or CNF means your supplier would arrange the cargo to your destination port or airport, while DAP or DDP means to your destination place.
The supplier told you the logistics cost, and you paid it. It is a more convenient way of international transportation, but you must realize that there’s a big chance that you are paying a lot more to get the goods than you should.
So here’s the question.

Why my supplier charges me more?

Three cases.

2.1 Some suppliers try to mark up the freight cost offered as an additional way of making profit.

The first reason is easy understanding.

2.2 Most suppliers quote you higher just in case.

Most manufacturers are made-to-order. They need time to get the production done. They don’t be sure about what’s the shipping cost will be after 2 weeks or 1 month or much longer, when the goods are ready to delivery.
The total amount has to be settled down before that. So hundreds dollars added in reserve for future changes.

2.3 Some suppliers quote you the same as they got, but the price itself is not the cheapest one.

Suppliers get logistics cost, but they don’t compare often. The price is very likely not the cheapest one. A professional cargo agent knows the carriers’ advantage and can get cheapest price.

3. FOB means the logistics solution will be better.

We will quote the best price and provide more than one solution. Besides, special-purpose advice for you to check and decide easily. The response time to any delivery issues will be shorter, because you don’t have to wait your supplier paraphrased.

Through experience and relationships with top-tier carrier partners, we negotiate the least cost rates available.

4. FOB means better control and work efficiently.

You have better control of your cargo and your budget. The cost is always important and you will have a better chance of gaining a more competitive freight rate.
Using your own forwarding agent will help you obtain more accurate information in a timely manner. We can assist you better once a problem arises. The logistic partner you choose always works together with you for YOUR best interest.

Wrapping Up

If your shipment is small (less than 200 kgs or less than 1 cbm), EXW is better. For such a shipment, door-to-door courier is the best choice.

Maybe you are new to international trade, we suggest FOB + to-door delivery for your trail order or small shipment. Because handling international logistics may be too detailed or complicated for a new importer.
If you have a good freight partner, hopefully us, always use FOB when negotiating with your supplier. No matter what your freight specialty or shipping needs, you will always find a best-in-class shipping solution that fits your budget and specifications with us.
It’s always the right time to complete our quote form and start working together.
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Reports: Hanjin Shipping Liquidation Set for Feb 17

The rehabilitation process for the former South Korean shipping giant Hanjin Shipping is set to end on February 17, Yonhap News Agency cited the Seoul Central District Court.

The decision was made on Thursday by the South Korean court, some half a year after the cash-strapped carrier was put under court receivership as it succumbed to the prolonged depression in the shipping market.

The company filed for court receivership in late August 2016 as its creditors, led by the state-run Korea Development Bank (KDB), said they would not provide additional financial support to Hanjin starting from September 4.

In an effort to collect enough cash to pay back its creditors, the company opted to sell a number of its assets, including its entire Asia to US route network and operations on the routes, a number of containerships, as well as its overseas businesses.

Earlier this week, Hanjin’s stake in Total Terminals International (TTI), the operator of two facilities in Long Beach and Seattle, was sold to Swiss-based Mediterranean Shipping Company (MSC) and South Korean Hyundai Merchant Marine (HMM).

The acquisition, undertaken by MSC’s subsidiary Terminal Investment Limited (TIL) and HMM, includes all of Hanjin’s equity and shareholder loans in both TTI and the associated terminal equipment leasing company Hanjin TEC Inc.

World Maritime News Staff

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CMA CGM Modifies Asia-West Africa Coverage

French container shipping major CMA CGM plans to reorganize services on the Asia-West Africa route, starting from the first week of March 2017. 

The firm said it has introduced the changes “in line with the West Africa market trend.”

CMA CGM intends to withdraw the WAX 2 service, which was operated with ten vessels with a capacity from 4,500-5,400 TEU.

Additionally, CMA CGM will reshuffle three services on the Asia-West Africa route including WAX, WAX 3 and AFEX.

The WAX service, operated with twelve 4,350 TEU vessels, will discontinue South Africa and Nigeria calls. Instead, the service will add Abidjan Westbound to its current export call with an improved transit time of up to 5 days. Abidjan from Shanghai will be reached in 37 days, according to the firm.

Port rotation of the WAX service will be as follows: Shanghai, Ningbo, Chiwan, Nansha, Tanjung Pelepas, Singapore, Walvis Bay, Cotonou, Abidjan WB, Douala, Abidjan EB, Pointe Noire, Colombo, Singapore, Shanghai.

Furthermore, the WAX 3 service, a weekly service operated by CMA CGM’s partner with twelve 4,500 TEU containerships and dedicated to Nigeria, will have an added call in South Africa.

The WAX 3 service will include the following ports: Xiamen, Shanghai, Ningbo, Nansha, Singapore, Tanjung Pelepas, Cape Town, Apapa, Tin Can/Lagos, Onne, Apapa EB, Tanjung Pelepas, Xiamen.

In addition, the AFEX service will drop Abidjan call and replace it by Cotonou. The service is operated by CMA CGM’s partner with twelve 4,350 TEU containerships.

Port rotation of the AFEX service will be as follows: Shanghai, Ningbo, Fuqing / Fuzhou, Nansha, Singapore, Tanjung Pelepas, Lome, Tema, Cotonou, Walvis Bay, Tanjung Pelepas, Shanghai.

The company added that port coverage of the ASAF service on the same route remains unchanged.

Operated with twelve ships of up to 9,350 TEU, the ASAF service has the following port rotation: Qingdao, Xingang / Tianjin, Pusan, Shanghai, Ningbo, Nansha, Tanjung Pelepas, Singapore, Pointe des Galets, Cape Town, Pointe Noire, Luanda, Cape Town, Port Kelang, Singapore, Qingdao.

Image Courtesy: CMA CGM
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Incoterms 2010

EXW: Ex Works                  FCA: Free Carrier       FAS: Free Alongside Ship   FOB: Free On Board
CPT: Carriage Paid To     CIP: Carriage and       CFR: Cost and Freight         CIF: Cost, Insurance and
                                               Insurance paid to                                                             Freight
DAT: Delivered at              DAP: Delivered At       DDP: Delivered Duty
.       Terminal                              Place                              Paid