Monthly Archives :

September 2020

when-to-use-a-freight-forwarder

When to use a Freight Forwarder?

When to use a Freight Forwarder? 2560 1920 tgl_editor

Do you need help coordinating and transporting your goods? Are you time poor or inexperienced when it comes to logistics? Then a freight forwarder is for you. 

They are the experts in logistics when it comes to moving your goods from A to B. Freight forwarders have the knowledge, networks, and equipment required to manage your shipments.

Whether you are looking to import or export goods, a freight forwarder can deal with all parties involved in the supply chain and in the overall process. Therefore, ensuring that your goods arrive at their intended destination as quickly and safely as possible. Freight forwarders are your go-to for transporting goods anywhere in the world.

Having a freight forwarder company is an asset, as they can save you unnecessary headaches and time as they provide reliable transportation of your goods at a competitive price that keeps you happy.

What is expected of a Freight Forwarder?

A freight forwarder must be able to understand your requirements and identify the best transportation method and move your goods within the timeframe that you set as well as competitive pricing.

Below are some of the services that are provided by freight forwarders:

  1. Cargo Transportation (SeaAir, and  Domestic)
  2. Warehousing and Storage (3PL)Customs Clearance and Customs advisory services.
  3. Insurance Solutions (Internationally, and Domestically)
  4. Packing solutions that are relevant for shipping standards
  5. Inventory Management solutions
  6. Shipping Documentation (Bill of Lading, Commercial invoicing, Certificate of origin, Inspection certificates, Export licenses and packing lists).
  7. Consulting Services
  8. Real-time tracking of transported goods.
What are the Benefits and Disadvantages of using a Freight Forwarder?
Benefits:
  • Freight forwarders have built strong relationships with transporters, allowing for better pricing and smoother communication. Through these connections, they can develop the best solution to deliver efficient, cost-effective, and reliable services.
  • They have in-depth industry knowledge and expertise.
  • A freight forwarder allows you to focus on growing your business, while they handle the transportation and customs of your goods.
  • Leveraging volume and buying power to reduce transportation costs.
  • Freight forwarders can safeguard your company from any potential lawsuits, customer complaints, and severe losses.
Disadvantages:
  • Within Australia, the freight forwarding industry is unregulated, which allows anyone to start their own company within this industry. In addition, it is wise to spend some time and research into the freight forwarder you choose to work with 
  • Due to the industry being opaque, it can become difficult to identify between good and bad freight forwarders.
Sources:

https://www.pjscustoms.com.au/news/2020/2/3/do-you-need-a-freight-forwarder-or-customs-broker#:~:text=When%20Should%20I%20Use%20a,knowledge%20to%20manage%20your%20shipment

www.opentoexport.com/article/advice-for-exporters-should-i-use-a-freight-forwarder/

https://www.customsclearanceworld.com.au/why-use-a-freight-forwarder/

https://6digitscargo.com/2019/11/21/advantages-and-disadvantages-of-using-a-freight-forwarder/

MUA offers peace deal to Patrick Terminals

MUA offers peace deal to Patrick Terminals 150 150 tgl_editor

The Maritime Union of Australia (MUA) has offered a peace deal to Patrick Terminals that could bring an immediate end to the damaging industrial action.

The deal offered by the MUA is conditional on Patrick Terminals agreeing to a 2.5% pay rise for workers and continuity of existing terms and conditions. The parties are set to negotiate with the Fair Work Commission as the mediator at a conciliation hearing.

The dispute raged as the MUA wanted a 6% increase in wages for wharf workers.

“When the MUA and Patrick sit down for a conciliation hearing before the Fair Work Commission today, the union will be putting forward this genuine, reasonable, and fair peace offer that could bring the current dispute to an immediate end,” MUA National Secretary Paddy Crumlin said.

The protected industrial action and strikes have caused major impact to the nations wharves by decreasing available workers and overtime workers which has lead to port congestion, major delays, shortage of containers and increased fees and charges.

Patrick Terminals CEO Michael Jovicic said the industrial action had reduced the company’s operations in Sydney to 50 or 60 per cent of usual levels and has caused a backlog of 90,000 containers.

“I’m getting phone calls every day and night from importers and exporters complaining about this industrial action,” he told the ABC on Tuesday.

Mr Crumlin said if Patrick was serious about resolving the dispute in the interest of customers and the broader community, it would accept the union’s offer.

To learn more about the Protected Industrial Action impacting Patrick Terminals, please read our update.

We will continue to monitor the landscape and provide updates where necessary.

 TGL Team

Patrick applies to the Fair Work Commission to intervene to end the national industrial action

Patrick applies to the Fair Work Commission to intervene to end the national industrial action 150 150 tgl_editor

Patrick Terminals today applied to the Fair Work Commission (FWC) seeking to end the Maritime Union of Australia’s (MUA) protected industrial action which, is “crippling” Australia’s major container terminals.

With their Port Botany terminal “running three weeks behind schedule” and their Melbourne terminal running “more than a week” behind, the stevedore is looking for assistance from the FWC to terminate the industrial action immediately before the situation worsens.

Patrick lodged an application with the FWC seeking to terminate protected industrial action which, has been impacting their terminals in Sydney, Melbourne, Brisbane and Fremantle. The company is seeking an urgent hearing this week.

Patrick CEO Michael Jovicic said the MUA industrial action in pursuit of 6% annual pay rises is inflicting serious harm on the business, customers, importers, exporters and shipping lines.

“Frankly enough is enough. We have been in talks for seven months on a new enterprise agreement and the MUA have been inflicting strikes, go slows and work bans on the company for nearly a month,” Mr Jovicic said.

“The union is threatening to ramp up the industrial action this week and has notified of a 24-hour strike at Port Botany on Friday.”

“As a result of the MUA action there are now 40 container ships off the Australian coast waiting to come into port. We now have close to 90 thousand containers being held up and there’s no end in sight.” he said.

“Many of our employees have told us they don’t want to be a part of the industrial action but are fearful of retribution by the MUA. This is completely understandable, but the reality is they are damaging the business and their own livelihoods,” he said.

The Freight and Trade Alliance and Australian Peak Shippers Association has offered their assistance to be an ‘expert witness’ in supporting Patrick’s claims of there being significant economic impacts to Australia because of this action.

To better understand the new enterprise agreement, detailed below is a summary of the MUA Claims for the new enterprise agreement and current pay and conditions:

  • 6% wage increase per annum for four years
  • A guarantee (no loss of jobs) for the term of agreement
  • The productivity scheme to be pooled across all employees regardless of whether they contribute to the task
  • Each employee to receive a $2k sign on bonus for the new enterprise agreement
  • A further 60 claims for changes to conditions across terminals in Sydney, Melbourne, Brisbane and Fremantle.

The claims will add an additional $40m per annum to operational costs across the Patrick business.

Patrick has offered guaranteed pay rises of 1.5% and 2.5 % over four years.

For more information regarding the current industrial action impacting Patrick and the details for each Port, please read our update.

We will continue to monitor the landscape and provide updates where necessary.

TGL Team

Sydney Waterfront Industrial Action - Wharf Strike September 2020

Waterfront Industrial Action Update

Waterfront Industrial Action Update 2560 1355 tgl_editor

An update on the current waterfront industrial action facing the major stevedores at the Port Botany terminal in Sydney.

Due to the recent congestion experienced in Sydney’s Port Botany terminal, the Freight & Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA) have seen an influx of serious concerns regarding the impacts of the congestion on the New South Wales (NSW) supply chain and logistics industry as a whole.

The FTA explained it is essential for the three Port Botany stevedores to resolve all ongoing industrial action to begin to ease port congestion and diffuse all further impacts to the NSW supply chain. By resolving this, it will “prevent a domino-effect of congestion at other ports”, the FTA said.

Continuing will detail the recent developments of each major organisation.

DP WORLD AUSTRALIA (DPWA)

As stated in our previous update, DP World Australia advised that the Maritime Union of Australia (MUA) will not be taking industrial action of any kind at their Port Botany terminal before 1 November 2020.

Operations for DPWA will be resuming and will continue to work to decrease congestion as of today.

HUTCHISON

The FTA was in contact with Hutchison Port who acknowledged the adverse impacts of industrial action however, they are confident that through further upcoming negotiations, they will be able to address the areas of concern soon and return to their regular state of service.

PATRICK

Following our previous update, Patrick terminals are in need of urgent resolution due to their large market share at the Port Botany terminal.

Due to recent industrial action at the Patrick Port Botany terminal, the congestion has continued to gridlock their operations with an estimated 58 thousand TEU in the system and delays reaching 18 days.

The FTA explains Patrick cannot operate at anywhere near capacity as a result of the Protected Industrial Action against them.

To understand more about the Protected Industrial Action currently impacting Patrick terminals, read here.

We will continue to monitor the landscape and provide updates where necessary.

 TGL Team

air vs sea freight

Airfreight vs Sea Freight

Airfreight vs Sea Freight 2560 1440 tgl_editor

There are two options for businesses and individuals to transport their goods overseas. These two options for international freight are air and sea. Airfreight has in recent times become more popular in international freight shipping.

To ship internationally efficiently tends to require tremendous knowledge and experience. International logistics introduces a different set of rules, regulations and implemented practices. These make the transportation of goods even more challenging. As such, many factors must be considered for an individual or company when choosing which method in transportation they should use for their goods. Furthermore, this includes the cost, speed, reliability and in some cases even environmental impact.

Speed:

International air freight is considerably faster than its alternative, which is sea freight. Air freight is primarily used for instances that speed is the most important factor in the transportation process.

Sea freight transportation takes longer than airfreight as its speed is naturally much slower. In addition, vessels tend to have more stop overs and potentially require refuelling during transit to the final destination. Moreover, the average speed of sea freight movement is 2 weeks to 3 months, depending on the distance.

Cost:

The charges gained by either air or sea can vary greatly depending on the amount of weight for air freight and volume for sea freight that you are intending to transport. For heavier and bulkier cargo, it is often cheaper to ship by sea. However, when shipments are smaller, margins between the prices of sea freight and air freight reduces, resulting in air freight becoming less expensive and the more efficient method. Furthermore, depending on the agreed Incoterms between the shipper and importer; each party should also consider destination charges, where both methods of transportation will incur customs and destination fees.

Reliability:

Air transportation can be affected by bad weather, as well as other circumstances such as, strikes, that can result in delayed times. Although, air freight is one of the safest ways for international cargo transportation – It is fairly reliable especially if the air carrier has extensive operations and a large number of flights daily.

Whilst air transport is one of the safest ways to move cargo, Sea transportation is also relatively reliable. The vessels undergo inspections and confirmation on the condition of the vessel, if it is safe and in good condition to depart from the port. Most ships are designed to overcome difficult weather conditions, although more harsh weather may induce unforeseen delays. In addition, port congestions tend to become a big issue for sea transportation (especially during peak seasons each year).

Regardless of which method you choose, it would be wise to ask your international freight forwarder about insurance coverage for your own peace of mind.

Environmental Impact:

A report from the Guardian newspaper suggested that shipping creates 2.5 times the amount of emission that airplanes create, thus making air freight the more environmental option. This article by the Guardian doesn’t count that although shipping does contribute more emissions than airplanes, they also carry much more cargo than planes can. Therefore, planes have to make additional trips or increase the number of planes used for transporting the same amount of cargo, in comparison to that of a vessel, which subsequently results in a less environmentally friendly option.

Limitations of Air and Sea Freight:

Although these methods are great to use, there are some limitations that come with each of them.

Air Freight:
  • Airlines have stricter regulations when shipping hazardous materials.
    • Hazardous materials includes gases (lamp bulbs), all things flammable (perfumes), toxic/corrosive substances (batteries), magnetic substances (speakers), public health risks (untanned hides), oxidisers/biomedical products (chemical medicines).
Sea Freight:
  • Routes and timetables of sea freight are usually inflexible
  • Basic freight rates are subject to fuel and currency surcharges

Sources:

www.freightos.com/freight-resources/air-freight-vs-ocean-freight-making-the-decision

www.globaltrademag.com/airfreight-vs-sea-freight-which-works-better

www.allworldlogistics.com.au/sea-freight-vs-air-freight

Patrick Terminals and DP World Industrial Action Update

Patrick Terminals and DP World Industrial Action Update 150 150 tgl_editor

UPDATE: PATRICK TERMINALS WATERFRONT INDUSTRIAL ACTION

Patrick Terminals Port Botany delays and the implementation of further industrial action in other terminals nationally are continuously growing. 

Further delays are impacting Patrick terminals in Sydney Port Botany and Melbourne, with new industrial action imposed on Fremantle and Brisbane terminals causing mounting delays.

Explained in Patrick Terminal’s media release, “Currently, our Sydney Terminal is currently 12-14 days behind schedule, and it is forecast that the delays will increase due to the ongoing Protected Industrial Action. It is estimated that there are 35,000 containers backlogged, waiting to be loaded or discharged at Patrick Terminals – Sydney. Patrick Terminals in Brisbane and Melbourne also have berthing delays over five days.”

“Last week, the Maritime Union of Australia (MUA) notified Patrick Terminals of its intention to take further Protected Industrial Action at Patrick Terminals – Fremantle and Brisbane in addition to the industrial action already notified.”

The impacts of industrial action are detailed below.

New Action
Brisbane
  • 4-hour stoppages at 03:00 am, 11:00am and 07:00pm on Friday 25 September 2020
Fremantle
  • A ban on the performance of work on the Swan River Bridge for 31 hours commencing from 12:01 am Friday 25 September 2020;
  • 24-hour stoppage of work commencing 07:00 am Tuesday 29 September 2020
Previously Advised Action
Patrick Terminals – Melbourne
  • 24-hour stoppage of work commencing 06.00 am Friday 18 September 2020. 
  • 1-hour stoppages at 6.00am, 2.00pm and 10.00pm every day for 14 consecutive days commencing on Monday 21 September 2020. 
  • 1-hour stoppages at 6.00am, 2.00pm and 10.00pm each day from Monday, 14 September 2020 for an indefinite period;
  • A ban on the performance of overtime commencing from 06.00 am from Monday, 14 September 2020 for an indefinite period;
  • A ban on the performance of work on the vessel, Spirit of Auckland, for a period of 4-hrs commencing at 05.00 am on Monday 14 September 2020.
  • 8-hour stoppage of work commencing at 07:00 am on Monday 7 September;
  • A ban on the performance of work on the vessel Maersk Semakau for a period of 8hrs commencing at 07:00 am from Monday 7 September 2020;
Patrick Terminals – Brisbane AutoStrad
  • 4-hour stoppages commencing at 07:00 am Friday 11 September 2020 and 07:00 am Friday 18 September 2020;
  • 4 hour stoppages commencing at 07:00pm Friday 11 September 2020 and 07:00pm Friday 18 September 2020;
  • A ban on the performance of shift extensions commencing at 07:00 am Friday 11 September 2020 for an indefinite period;
  • A ban on attending work on days an employee is rostered as “off/avail” from 07:00 am Friday 11 September 2020 for an indefinite period;
  • A ban on attending work on days an employee is called into work after being placed on the standby list from 07:00 am Friday 11 September 2020 for an indefinite period;
  • A ban on attending for work after being called into work when not allocated from 07:00 am Friday 11 September 2020 for an indefinite period;
  • A ban on the performance of work on vessels that have been subcontracted or outsourced to Patrick by another stevedoring company from 07:00 am Friday 4 September 2020 for an indefinite period. 
  • A ban on the performance of upgrades and/or work in higher levels (except for Leading Hand Lasher) from 07:00 am Friday, 4 September 2020 for an indefinite period;
  • 24 stoppages commencing 11:00 pm Thursday 1 October 2020 (UPDATE as of 25/09/2020)
Patrick Terminals – Fremantle
  • Ban on the performance of work on the Margaret River Bridge for 32 hours, from 11:00 pm Thursday 17 September 2020 to 07:00 am Saturday 19 September 2020
  • A ban on attending for work on days an employee is called into work after being placed on the standby list from 07:00 am 17 September 2020 for an indefinite period;
  • A ban on attending for work on days an employee is called into work when not allocated from 07:00 am 17 September 2020 for an indefinite period;
  • A ban on the performance of work on the vessel Swan River Bridge commencing at 12:01 am from Friday 11 September 2020 and continuing until 7:00 am on Saturday 12 September 2020;
  • Ban on the performance of upgrades and/or work in higher levels from 07:00 am Friday 11 September 2020 for an indefinite period;
  • A ban on attending for work on days an employee is rostered as “off/avail” from 07:00 am Monday 14 September 2020 for an indefinite period;
  • A ban on the working of shift extensions from 07:00 am Friday, 4 September 2020 for an indefinite period;
  • A ban on the working of overtime from 07:00 am Friday, 4 September 2020 for an indefinite period;
  • A ban on the performance of work on the vessel Margaret River Bridge for a period of 24hrs commencing at 07:00 am from Friday, 4 September 2020;
  • 24-hour stoppage of work commencing at 07:00 am Friday, 4 September;
  • A ban on the performance of work on vessels that have been subcontracted or outsourced to Patrick by another stevedoring company from 07:00 am Friday, 4 September 2020 for an indefinite period.
  • 1-hour stoppages of work at 5:00 am, 6:00 am, 1:00 pm 2:00 pm, 9:00 pm, and 10:00 pm each day commencing on Friday 2 October 2020 and continuing for an indefinite period (UPDATE as of 25/09/2020).
  • Patrick Fremantle Terminal regret to advise that due to industrial action, R&D operations on Saturday 26 September DAY shift has been canceled (UPDATE as of 25/09/2020).
Patrick Terminals – Sydney AutoStrad
  • A ban on the performance of overtime commencing at 06:00 am Friday 11 September 2020 for an indefinite period; 
  • A ban on the performance of shift extensions commencing at 06:00 am Friday 11 September 2020 for an indefinite period;
  • Ban on the performance of upgrades and/or work in higher levels from 06:00 am Saturday 5 September 2020 for an indefinite period;
  • A ban on the performance of work on Project SABRE (Port-side Rail Project) commencing at 06:00 am Friday 4 September 2020 for an indefinite period;
  • 4-hour stoppage of work commencing at midday on Friday 4 September;
  • A ban on the performance of work on vessels that have been subcontracted or outsourced to Patrick by another stevedoring company from 06:00 am Friday 4 September 2020 for an indefinite period. 
  • 24-hour stoppage commencing 06:00 am Friday 2 October 2020 (UPDATE as of 25/09/2020)

UPDATE: IMMEDIATE WITHDRAWAL OF INDUSTRIAL ACTION DP WORLD SYDNEY

The Maritime Union of Australia (MUA) has withdrawn all industrial action at DP World Sydney effective immediately, ensuring all normal services at the terminal may resume. 

DP World made an urgent application to the Fair Work Commission to intervene on threatened industrial action at the Port Botany Terminal, due to the serious impact it could have on the already weakened New South Wales supply chain. 

The Maritime Union has confirmed via written undertaking that they will not be taking any industrial action of any kind at the DP World Port Botany terminal before 1 November 2020. 

With the above update from Patrick terminals, close eyes are watching Hutchison to see how they continue operations to manage the peak season and backlog of work already created due to the congestion at the terminal. 

We will continue to monitor the landscape and provide updates where necessary.

 TGL Team

CMA CGM Port Congestion Surcharge Update

CMA CGM Port Congestion Surcharge Update 150 150 tgl_editor

Following their surcharge update on the 14 September 2020, CMA CMG has announced they will be retracting their Sydney Port Congestion Surcharge. 

The surcharge will not be applied to any Trans-Tasman shipments both East and West bound. 

The surcharge will only be applied as per the below guidelines;

  • Export cargo for all vessels (non USA trades) departing Sydney on or after 17th September 
  • Import cargo to Sydney for all vessels (non USA trades) departing origin on or after 17th September 
  • Export cargo for all vessels (USA trades) departing Sydney on or after 10th October 
  • Import cargo to Sydney for all vessels (USA trades) received at origin on or after 10th October 
  • This will not apply to Trans-Tasman, Sofrana ANL and ANL Coastal trades. 

The surcharge of USD $285 per TEU for Full Container Loads and USD $13.00 per w|m for Less than Container Load shipments. 

To read more about the current Sydney port congestion, click here.

We will continue to monitor the landscape and provide updates where necessary.

TGL Team

Sydney Waterfront Industrial Action - Wharf Strike September 2020

Sydney Waterfront Industrial Action

Sydney Waterfront Industrial Action 2560 1355 tgl_editor

Major ports in Sydney, Australia are in utter chaos as wharf workers have stopped work resulting in shipping lines reporting almost two-week delays and heavy congestion in delivering vital supplies.

This industrial action appears to be the root cause for the waterfront strike and the existing operational issues, including empty container park congestion, vessels by-passing Port Botany and the massive shipping line surcharges imposed on exporters and importers.

Patrick stevedore’s have been conducting indefinite bans on work upgrades whilst a “go-slow” attitude has hit Hutchinson at the Port Botany terminal.

Overtime bans have also restarted at DP World adding to the increase of delays.

Shipping Australia said ships docking at Port Botany are experiencing five to 10-day delays with an estimated cost of $25,000 a day, forcing one ship to drop off its goods at Melbourne instead.

With these additional delays and docking fee’s, the introduction of a strike tax from some of the major shipping lines has shifted the costs from themselves to their clients, importers and exporters.

Major international shipping lines such as MSC and CMA CGM have started charging clients a “congestion surcharge” fee of USD $300 and USD $285 per TEU respectively. This is to account for any delays and port charges as a flow-on effect from the wharf strike.

The Morrison-McCormack Government has urged all parties involved in the Sydney waterfront industrial dispute to work together to minimise the impact on workers, freight, and the nation.

Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development Michael McCormack said the Government understood the frustration felt by Australian shippers and operators with the increase in stevedore fees and charges but actions that disrupt the operations of the industry are not the solution.

“During this pandemic, the entire nation has seen just how much we rely on our freight industry to keep shelves stocked and our economy running and how tirelessly all operators – including shippers – have been working to make this happen,” the Deputy Prime Minister said.

“Australia relies on shipping with 99 per cent of our trade moved by sea, so it is absolutely vital we see a quick resolution achieved between all parties.”

Fletcher International Exports founder Roger Fletcher said as the pandemic has already imposed restrictions on air freight, sea freight is a vital part in keeping Australia moving.

“At a time when regional Australia’s farmers have the chance to bounce back after years of crippling drought and devastating bushfires, they are being held over a barrel by a few hundred waterfront workers,” he said.

The Dont's of Sea Freight specifically in Less than Container Load modes of sea freight transportation.

The Don’ts of Sea Freight Shipping

The Don’ts of Sea Freight Shipping 1200 627 tgl_editor

A discussion on sea freight specifically less than container load (LCL) modes, and the hidden fees the majority of the time follow this mode of shipping.

At the time of writing, I had just concluded a phone call that I have been getting throughout my 20+ year career in the logistics industry. Each time I hang up the phone, I have always been motivated to make this post although, in the earlier years before blogging and social media posts, it was more of a ‘thought bubble’ that remained in my head. I always thought “How can I get this education out to the market so people will not get trapped in such a ruthless fashion”. Today is the day it all comes to life.

Okay, so let me start the article explaining the Don’ts of Sea Freight specifically for Less than Container Load (LCL) shipments.

The LCL Rebate Game (or RANSOM SCAM in my view) exiting ASIA, namely China.

So what is the rebate game? For those of you who are familiar with the term LCL, I am pretty sure you have been a victim of this game in one form or another. For those of you who are newbies when it comes to international shipping please read on, as it will save you much angst, confusion, and frustration.

Think for a minute…

For example, you are the buyer of goods from China. The discussion of freight will invariably come up between you and the supplier. If it’s a new supplier or if it’s your first time shipping goods internationally, it is always tempting to accept the freight offer from your supplier, since the idea that the supplier should know best is an automatic logic. So the conversation continues and your purchase/goods need to move via Sea freight. The quantity you ordered does not fill a full shipping container so, therefore, the only other option via Sea freight is a Less than Container Load (LCL) mode.

What is LCL mode?

This simply means that you will share a container with other shippers who also don’t have enough goods to fill a container. A freight forwarder will then need to consolidate the goods into a container for it to placed on a cargo ship. Once that container arrives at the destination country, the corresponding agent of that freight forwarder will need to take the delivery and organise each party’s goods and then arrange the dispatch accordingly.

Think about a rideshare concept. The driver picks up passengers and then organises their final destinations and arranges for the passengers to be dropped at their individual destination.

The rebate game

Straight forward enough so what is the game you ask? Well to attract cargo from your supplier easily the freight forwarder at origin point (start location) will give your supplier a REBATE. So instead of the supplier paying the freight forwarder for moving the goods to you, they will get a payment from that forwarder. For example, the supplier may charge you USD 50 for freight but in reality, they are getting paid USD 150 from the freight forwarder. So that supplier actually GAINS USD 200 by simply giving the freight forwarder your freight to move. Sounding dodgy yet? It absolutely is! (Ok, I am sure not all suppliers are aware of this angle but I can assure it does happen).

Because you may not have studied or learned logistics incoterms yet (ALWAYS know your INCO terms!). You accept the cheap freight offer from your supplier to ship your goods. But I have never encountered a supplier that will go out of their way to tell you that the freight quoted to you only covers the movement up to the destination port and not your DOOR!

Almost always, whenever a supplier quotes you a freight rate, it will be under Cost and Freight (CFR) terms. Learn more about CFR here. But here lies the catch (not by the supplier but by the freight forwarder). Due to the terms of CFR, you as the buyer still need to source a local freight forwarder to complete the Customs clearance and final delivery to your door.

The real kicker…

But that’s not the main problem, the real kicker is that your freight is in the hands of this freight forwarder. Because the freight forwarder has paid to get their hands on your goods, they now will go to town on you, the buyer, to recoup the payment they have made to your supplier. They regain this payment by charging you overly inflated arrival fees in the form of deconsolidation or handling, that are sadly unavoidable and unexpected. This is where you (the buyer) is scammed as you were not prewarned about these additional fees/charges as you thought the freight quote from your supplier was to cover everything. Surprise!

In my experience, the buyer will normally be charged 2-4 times the market rate. This effectively blows out any margin the buyer had planned for those goods. The freight forwarder also receives a nice bit of cash flow without any risk at the expense of the buyer. Since the buyer must pay the additional fees or their goods will not be released to them. Here lies the RANSOM.

At TGL, we offer fixed pricing on all freight and customs clearance services to ensure transparency and complete understanding from the client. We have no hidden costs that could deter your international shipping from going ahead. Using TGL as your freight forwarder also includes a dedicated solutions specialist that can guide you from the start to the end of the shipping process. Get a QUOTE today.

So how can I avoid this from happening?

Follow the below steps and you will never be caught in this rebate trap.

  1. Read, study & understand logistics Incoterms.
  2. Negotiate Free on Board (FOB) terms with your Asian/Chinese supplier/s.
  3. Choose the same freight forwarder that will be in charge of the international shipping along with Australian Customs clearance and final delivery.
  4. Receive an upfront quote that is ALL INCLUSIVE under FOB terms.
  5. Gather advice from your trusted freight forwarder every time you build a new supply chain/source.

Through this, I hope you now have a solid understanding and foundation steps on how you can tackle the LCL “quicksand” rebate situation.

-La Chang
CEO

Back to top