chinasourcingagent2019-blog

[chinasourcingagent2019-blog]

These 12 freight forwarder traps you must know

When doing business with China, it’s important to note that purchasing products from China Manufacturing Companies is not the end of the line. Next comes the task of getting the product from the factory to whatever final destination you have in mind. This might sound simple enough. But when you’re dealing with international trade on an industrial scale things can become complex quickly. This is where freight forwarders come in.

Freight forwarder’s job is to move products from point A to point B by any means necessary. But this doesn’t mean that the forwarder is physically moving the goods themselves. Freight forwarders are logistics managers who arrange and oversee the transportation process. They act as a sort of travel agent for inanimate objects.

Whether you are looking to act as your own freight forwarder or hire someone to do the work for you, it’s important to understand the involved risks in the process. Shipping products internationally is a complex task that has plenty of potential risks. Don’t let your business get derailed by a simple mistake. If you watch out for these twelve freight forwarder traps then you’ll greatly increase your chances of success.

1. Incomplete bills of lading

The bill of lading is a document that carriers issue to shippers detailing exactly what is being shipped and where it is being shipped to. It’s an absolutely essential document to fill out precisely.

When an order is ready to be completed consignees are asked for the complete information of bill of lading before shipment. In addition to information about the shipped goods, the consignee must provide their ZIP code, enterprise code, or tax code. Which you need to provide will depend on the regulations of different trading countries.

Filling out a bill of lading properly is one area where an experienced freight forwarder can be a huge help. However the shipowner won’t tell you anything about complete bill of lading information you need provide. So if you don’t know what to fill in you need to find someone who knows. Making changes after the fact can be a costly process. Because all changes after the submission of supplementary materials will result in amendment fees. Things can get even worse after the delivery of the manifest, when changes may need to be approved by the port of destination. This can lead to penalties on top of the basic amendment fees. Avoid all of these issues by making sure that the bill of lading fills out correctly from the start.

2. Shipping across the month

Shipping out your goods as soon as they are ready to move may seem like the obvious choice to make, but it can actually cut into your profit margins. The cost of shipping goes up and down over time according to certain patterns. It is very common for shipowners to raise prices in the beginning and middle of the month. They will reduce the price if they don’t receive goods or even they don’t receive goods well. This fact frustrates many, but if you use it to your advantage you can increase the profitability of your shipments.

Always keep an eye out for a shipping window that is as safe and affordable as possible. You can also choose different routes based on their stability. The ocean lines through the waters of Europe, the Caribbean, South America, the United States, and Canada, and parts of the Middle East tend to be more volatile. On the other hand, the waters of Southeast Asia, South Korea, Japan, and other Asia-pacific regions tend to be relatively stable.

3. Discrepancies between shipment and arrival dates

Sticking to a shipping schedule is incredibly important. If a product needs to reach its final destination as soon as possible then you shouldn’t be cutting corners and opting for the cheapest shipping method. Remember to keep the big picture in mind, late arrivals are costly in their own way.

While it can be tempting to choose the least expensive option available at any given time, it is important to look at big images. Take the example of furniture being shipped to a hotel that is about to open. The person might want to save money during the shipping process, but what if slow shipping means that the furniture will arrive at the hotel past its opening day? This has happened in the past and resulted in fees worth thousands of Australian dollars, greatly surpassing the amount that they saved in shipping time. You must always weigh the cost of shipping against the cost of a late arrival.

4. Confused subdividing ports

Ports are large and busy places. This is why you need to be precise about exactly where your goods will be within a port. It isn’t enough to simply state that a shipment might be in a port like JAKARTA, since a port like that will be packed with countless shipping containers from all across the globe. Ports are subdivided for this reason and you must always be precise about listing exactly which subdivision your shipments will be in every step of the way.

Take the port of KARACHI for example. This giant port breaks down into subdivisions with names like PICT, KICT, SAPT, and QASIM. If the correct subdivision name isn’t written down or tracked properly then shipments can get delayed or even lost directly. Small typos or disorganization can waste time and money. Don’t let this happen to you, make sure you know exactly where your shipment will be within the different ports it goes through.

5. Unrecorded container damage

Shipping containers are not disposable goods, they are designed to be used over and over again. Each time a container ships from one port to another it will take on some sort of damage. Dents, scratches, water leakage, stains, and other types of damage happen all of the type. The important thing is keeping track of these damages. So you can prove what condition the container was in when you first got your hands on it.

Photographic proof of the condition of a container is very important. Take container photos before loading as well as display the time and license plate. These photos should then be sent to the shipowner for record by the agent. This shows that you know what condition the container is in and you’ll be able to prove who is responsible for any additional damages that might occur. If you don’t take these photos then it can be argued that new damages were actually old and had simply gone unrecorded.

6. Uninsured shipments

Insurance is always a good choice. Many people think that insurance isn’t legally required then it is just an unnecessary expense that should be cut to increase profitability. But this is the epitome of short-sighted thinking.

International shipping involves risks. Even with all of the latest advancements in technology, there are still mistakes that happen which result in damaged or lost goods. If you’re operating on narrow margins then these sort of losses can be devastating. The way to mitigate these risks is by sharing the burden with an insurance company.

A secondary trap is dragging your feet with insurance claims. Just having insurance isn’t enough, you need to make claims in a timely fashion. As soon as you spy a problem you need to contact the insurance company to check on-site and provide the complete claim information according to their instructions. The more time you let pass before making your claim, the less likely it is that you’ll get the money you deserve.

7. Brand infringement

The legalities around branding and copyright are serious business. Before shipping anything across borders you need to be confident that you can prove that you have the legal right to do so. This is especially important when dealing with the original equipment manufacturer, or OEM services. In these situations, the company that produces the product is different from the one that markets it, which can be confusing to customs officials who don’t understand the situation. It is further complicated by differences that might exist between two different countries. Make sure you do the research necessary to sort out these issues before you start shipping to prevent disasters.

Even if everything you do is completely legitimate you still might run into troubles if you are unprepared. Issues can arise if customs agents make an unexpected inspection and have questions that the manufacturer can’t answer. If you haven’t provided the factory with a letter of authorization, that factory might have its goods confiscated. Communications can quickly break down when the two parties are separated by thousands of kilometers and plenty of time zones. Don’t wait for issues to arise, make sure that all potential branding issues address before you try to ship your product out.

8. Incomplete transshipment clauses

Sometimes the most efficient way to move goods from point A to point B is by making a stop at point C along the way. This is referred to as transshipment, where goods visit an intermediary point in between the place they were manufactured and their final destination. Including such a stop in your route is a smart idea, the problems arise when you don’t let the authorities know about these stops.

Returning to the top of the bill of lading, you need to pay special attention to the transshipment clause if you have opted for transshipping. If you don’t fill out the form to include all destinations then you can get in big trouble. Due to various problems, most consignees will choose to ship their goods to MERSIN/BANDAR ABBAS and then have them transshipped by a local agent. This wouldn’t be a problem, except many forget to include this information in the bill of lading. The solution is as simple as adding CARGO IN TRANSIT TO *** VIA *** BY *** to the transshipment clause. This shows that the consignee is taking on the risks of the transshipment process. But that’s the price you must pay. Only after adding this information can the cross-border transport be carried out.

9. Improper time management

Time is of the essence through every step of the shipping process. The more steps added to the process, the more variables you need to account for in your planning. Transshipment adds new variables and new risks. When using transshipment 21 days free time is indispensable. Without this, the consignee could be stuck paying for an overdue container rental.

This is one area where experience comes in handy. Many forms include a default free time, but that time limit is rarely enough. An experienced agent will know to apply for additional free time to avoid costly overtime fees. The best agents will get their clients the free time they need, whether they ask for it or not. Still, it is in your best interest to be proactive and see to it that your shipping agent is customer-oriented, whether or not the client asks for it.

10. Incorrectly valued goods

You never want to give customs agents any reason to cause you trouble. Because one of the most sources of problems is improperly valued goods. Taxes are levied based on the value of the goods. So imagine what a customs agent might think if they see a suspicious value. They could believe that you are trying to steal from their government. It should be easy to see how this can lead to trouble.

You should always be as scrupulous as possible when valuing your goods. Even if you think your numbers are obviously accurate you should still prepare to provide evidence to support your numbers. If a customs agent believes you are undervaluing your goods then you could be facing fines or more serious legal actions. Remember that trying to earn a little bit more money with each sale through questionable tactics might end up costing your business.

11. The importance of cargo weight

Another critical factor to account for is cargo weight. To begin with, your shipment will need to be an acceptable weight before they can be loaded onto ships and trailers. Going above the maximum weight can result in fees, rejections, and delays. There will also be officials who are looking for discrepancies between the weight you’ve provided. They measure the weight on the ship or in customs. Even honest mistakes can lead to questions that cost time and trouble. Save yourself the hassle by taking the time to calculate and document the weight of your cargo ahead of time.

12. LCL fees

While trying to fit too much into a container can be a problem, you may also get in trouble for not filling up a container enough. When a container doesn’t fill to a certain point you have what is called a less than container load, or LCL. Sometimes you need to ship your goods before you’ve received enough orders to fill a whole container. In this case, you will likely have to pay LCL fees. But these fees are not equal from one location to another.

In areas like Europe, Japan, and India, LCL fees tend to be higher. This is why a good freight forwarder will carefully compare different shipment paths, bypassing ports in these territories when shipping LCL. It could be that a full container might make sense to ship through India while an LCL might be better off going through Sri Lanka or Bangladesh. With every changing variable the profitability of a shipping route changes. Make sure you consider the possibility of LCL fees when charting a course for your next shipment.

Moving freight efficiently and affordability

After examining these twelve traps you should now have a better idea of what freight forwarding entails. There are still many other potential issues to look for. But with these in mind, you will have an easier time spotting problems before they arise.

The most important takeaway should be the value of an experienced partner. The world of importing and exporting goods is a complex web of logistical and legal issues. When you are working in a sector where business runs on tight margins you need to do everything you can to avoid any mistake that could cut into your profits. A experienced trade agent with freight forwarding knows the lay of the land. It can help keep your business moving forward.

Forward-looking research, meticulous paperwork, and careful time management are the keys to successful freight forwarding. If you can master these skills, or hire someone who already has, then you can ensure that your shipments will go as smoothly as possible.

The article comes from: https://www.chinasourcingagent.com/