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EXPORT FREIGHT

Regardless of the Incoterms that  you  have negotiated with your customer, both the exporter and their customer should take an active interest in getting your products to their export market. Many exporters say, “I only sell FOB, that is my customers problem,” but ultimately being actively involved will ensure a hassle free relationship with your customer.

Take the example of a wine exporter to Europe. Your customer purchases FOB Adelaide, but wants to ship your wine on a transhipment service via Singapore. Do you really want your product potentially sitting in Singapore for 1 or 2 weeks in humid conditions? Whether you are paying the freight or not, being involved in the process may lead to less problems down the track.

So what options do you have for transporting your goods? There are endless amounts of freight forwarders you can speak to, but where do you start? Speak to your customer, and other people in your industry about who they use and the best methods for transporting your goods. The Australian Federation of International Forwarders or the Customs Brokers and Forwarders Council of Australia should also be able to assist by providing a list of their members.

Sea freight services are available for both full container loads (FCL) or less than container loads (LCL), if you only have small volumes. If your goods are perishable, airfreight may be required. Or you may need to consider a refrigerated shipping container?

When it comes to looking at the shipping or airfreight services, understand exactly how your products will be transported to their export markets. What is the transit time? Are there transhipment or stop over points? How long will they be there for? For perishable products, it is critical to leave no stone unturned to ensure you know how your product is handled. Even for non-perishable products, understanding the best way to get your products to their destination and managing your transport risk should form part of the value offer you are providing your customers.

Freight rates for both sea and airfreight services can constantly change. Even if your customer is paying the freight, be aware of how it may change, as it will ultimately affect the competitiveness of your products in the export market. So how are freight rates charged?

FCL (Full Container Load) Seafreight: Is charged per 20’ or 40’ container, and normally quoted in US Dollars (USD). Rates will then generally be converted to Australian Dollars (AUD) at the time of shipment.

LCL (Less than Container Load) Seafreight: Is charged per cubic metre (cbm) or 1,000kgs, whichever is greater. A minimum of 1cbm normally applies. Rates may be quoted in either USD or AUD, depending on the freight forwarder.

Airfreight: Is charged per kg or based on the volumetric weight, whichever is greater. A minimum charge will also apply. To obtain the volumetric weight, multiply the cubic measurement by 167. For example a package weight 50kgs, but has a cubic measurement of 0.5cbm. You will be charged on the volumetric weight of 83.5 kgs (167 x 0.5 cbm). Rates may be quoted in either AUD or USD, depending on the freight forwarder.

When assessing the charges by a freight forwarder, airline or shipping line, assess all the ancillary costs as well. Commonly there will be other charges such as fuel and security charges, port, handling and documentation fees. Some freight forwarders may offer a low base freight rate, but higher ancillary charges, so assessing all of the costs is very important.

Some freight forwarders and shipping lines are strong to some regions, but not so in others. While it is important to shop around and ensure you are getting value, price isn’t the only thing to consider. Develop a long term relationship with freight suppliers who understand your business and your needs. Ensure they have the right resources and network, and can provide value added services to assist in the management of your export business.

By taking a proactive approach to the transport of your products, you will ensure your products remain competitive in their export market, and arrive in the condition in which they left.

The information provided is to be used as a guide only, and without warranty of any kind. We recommend that you contact Export Assist ™
to discuss your individual situation.