Tag Archives: transportation

transportation tag explains article as related to most common issues of movement of goods

Planning of an airfreight shipment

In our last blog we have discussed the elements of the freight quote. Today we will move forward. Assume the quote is accepted and load is tendered to the shipping agent. What happens next?

I would split air shipping in three main stages:

1.    Before arrival at origin airport
2.    Between origin and destination airports
3.    After arrival at destination airport

Nevertheless type of goods – flippable bars or live elephant the first thing the forwarder does, after your confirmation call is a routing plan.  This plan includes

•    How and when to arrange pick-up
•    What paperwork is needed
•    Which airline shall be used
•    Booking with the airline
•    Organizing of the destination service
•    Scheduling all of the above

Though the steps seem equal the details make the whole difference.

We can schedule pick-up of our two flippable bars easily with consolidation service or with a dedicated loading depending only on the urgency of their shipping. From the other side planning for movement of the elephant includes always special transportation from its cage in the circus to the airport. And this transportation should respond to very specific requirements taking into consideration such factors as type of the elephant, its size and weight, its training and acclimatization, length of travel, drainage for the urine and I am sure thousand of other factors.

Paperwork needed for our bars is only one commercial invoice and eventually a packing list but for the elephant we need a whole War and Peace trilogy of paper in order to be able to move our friend to fly to the place of its performance.
Booking an airline for the bars will take only two considerations – does the carrier operate to the country where we want our bars delivered and what is the price.  Elephant shipping requires that we firstly find an airline which is specialized in transportation of live animals and not every airline does this.  And this airline might not be near us. Imagine the elephant is in Sofia, Bulgaria and this airline can move from Frankfurt only.  Than the pick-up becomes very complex issue which should take into consideration many factors including crossing several countries with differences in their regulations for transport of live animals.

Organizing of destination service means that someone should meet your load in the destination and arrange all of the formalities as well as physical delivery of the goods to the final destination.  In any way the origin forwarder should previously know what the destination organization will be.  Is it the consignee who will take care for destination airport processing or it will be another forwarder who will be operating on behalf of the consignee.  And if for the flippable bars it can be decided on the move the destination organization for the elephant should be put in place well in advance before elephants departure from the origin.

And at the end – all of the above tasks – no matter it is about movement of nice logo printed flippable bars or a live elephant in order to have perfect service – we need to have perfect timing of performance of the above procedures. And perfect timing actually makes the difference.

If you care how your loads will move, no matter what is the commodity , please do not hesitate to contact us.

For more information on KG CARGO freight forwarding service please contact us.

Beware prepaid freight and shipments from China

Recently, I have joined an interesting discussion in LinkedIn concerning the “Chinese system of prepaid LCL Shipments”

I am sure the majority of you have experience with this system which cannot be called Chinese at all because it is also applied in India and all over the world where there is no transparency of cost.

Regrettably none of the participants of the discussion has spoken about one very important point.

Chinese freight market is in principle FOB market – which means driven by the consignees not the shippers.

Normally the deals in China are made on FOB terms.  If any other terms of delivery are used – be careful.

If the Chinese supplier provides you and EXW rate for the products that they want to export that, in most of the cases, means that they do not have proper export license so when it comes to the export you need to “buy” such a license – which cost between 100-200 dollars.  This is the easier part because normally the consignee gets the proposal from their forwarder and knows in front all the costs involved – from warehouse where the goods are loaded up to the warehouse where the goods need to be finally delivered.

The difficulties come with the CPT, CIF, C&F quotations.  Than the buyer must be very aware of all the costs related to the delivery of the freight to them.  And here the system of hidden costs come in full power.  Chinese shipper goes to the forwarder and negotiates with them a very low rate – FCL, LCL, air – no matter the system is the same.  This rate is under priced – 15 usd w/m obviously can not cover the cost of LCL filled 40′ container and is very very low rate which does not cover the service.  The rate is normally to port or CFS and – now beware – “all local costs are for the account of consignee” The moment the buyer sees such a definition they should know that most probably the overall cost for getting the goods to their warehouse will be twice as high as the cost if the shipment has been moved FOB. Unless, the buyer has a clear quotation from his Chinese colleagues on DDU charges – my recommendation is – do not buy that “cheap” rate.  Because it is not “cheap” at all.

Rarely, it appears, and we should admit this, that the shipper and consignee have agreed to split the transportation terms – this is done only between longterm partners who trust each other and who know – both sides – how much the cost is from door-to-door.  But this situation has nothing to do with the unethical system of hidden costs.

How to avoid it.  It is simple. Whenever you buy from China and India – never ask local forwarders for a quotation. Turn to a forwarder at your end and ask for proposal which includes not only the ocean freight or airfreight cost to the nearest destination port or airport. Ask them to quote you to your door. Then you will  have a clear picture of what how much the delivery of the purchased goods costs.

For shipments into Bulgaria please do not hesitate to contact us for a airfreight  price or ocean freight quotation.

For more information on KG CARGO freight forwarding service please contact us.

The Resources of Small Size Forwarders

I would like to continue the topic about the small sized forwarders.  We all agree that the SME forwarders are more flexible than the bigger forwarding companies however they lack the resources and the buying power of the bigger forwarders. But is this the real case.

Should the SSF maintain a warehouse?

Should the SSF pay huge ammont for CRM and Order processing systems ?

Should the SSF pay huge software license fees for Microsoft products?

Should the SSF maintain huge employees department in order to have dedicated employees for various activities – like customs brokerage, inland deliveries, airfreight operations etc. ?

NO, NO and NO !!!

Believe it or not but a clever designing and planning of operations can compensate for the lack of various resources.

Here you are several advises and examples:

Bonded Warehouse

I am sure that all of you know what is the price to establish and maintain warehouse operations. In Bulgaria for example if you want to establish and maintain  the smallest bonded warehouse – for example to handle your inbound airfreight traffic you need to plan at least 60 000 eur annually – this is the smallest ammount. And it is a fixed cost. That means that whether you have traffic or not you are to plan these funds. But here comes the trick with the transformation of the fixed costs to variable cost. How, very easy – outsource this activity to a company which operates such a warehouse and which is relatively neutral.  Doing so you will pay only on a per shipment basis which makes you very flexible and competitive.

Customs brokerage department

In order to maintain a steady and smooth customs brokerage for your customers you would need to hire at least two customs brokers who know very well the procedures and daily follow the changes in this dynamic matter. I leave to you to calculate how much this costs – for salaries, social and medical insurances, training, hardware and software and other equipment. And you never know how long these employees will work for you.

If you sub-contract this specialized activity to several highly seasoned customs brokers you can easily transfer their professional experience into processing of your customers orders. Again on per shipment cost but not per employee cost. And the quality of your service will increase. If you monitor and control the process of course.

You can apply the above approach even to the level that you have a special company to handle your exports – physically at the airport.

Software and hardware

CRM, OMS, ERP etc. all these abbreviations bring the accossiation with payment of high license fees. Yes, correct … but only if you are MS dependend.

My advise – avoid Microsoft products as much as you can. This will save you huge money. Let me give you some examples:

Choice of Operation system – Ubuntu vs Windows –

after I get aquainted to the Ubuntu Linux distribution I should admit that Windows is no more.

Ubuntu is much lighter operatinal system than any MS operational systems (any of MS crap).

Ubuntuworks perfectly even on older hardware (especially on older hardware).

Ubuntu is very stable.

Ubuntu is far more secure than the MS expensive dirt.

and

Ubuntu is FREE. You pay zero for licenses. The only funds you would eventually pay are for the installation and training and this is only if you are not able to do it by yourself.

And Ubuntu comes fully equiped with the last Open Office distribution which I preffer to the heavier and more expensive MS Office.  For e-mail client you have a very wide choice but I recomend you choose between Evolution and Thunderbird.

CRM (Customer Relations Management)

There are many CRM solutions on the market but I will recomend you ZOHO CRM.

This CRM system has very good free version which in many of the cases will do a perfect job for your busines and will automize and streamline your marketing and sales processes. And  if you operations are not very sophisticated even your operational processes.  Though it has been made mostly for the computer services industry, it can be easily accustomed to your needs in freight forwarding.  I am using it and I ready to assist any of you in implementing it in your daily job.

I hope the advises here will work well for you and your business. And I want you to never forget one thing:

Forwarder is a Designer. Never stop to be one !!

Your comments, sharing and recommendations as well as critics are more than welcome !!!

For more information on KG CARGO freight forwarding service please contact us.

Cooperation between Small Forwarders

Mr. Mark J Willis from AFL Ambassador has commented on the post Small Size Forwarders that one of the ways for the SME Forwarders to stay at the market is to unite in some form of consortium.  I would agree to some extend but we should admit that cooperation between businesses is not an easy task.  Though the positive effects of such a cooperation are obvious especially for SME Forwarders, for one reason or another it is very difficult to build partnership in an integrated manner.  What I understand in integrated manner it is that you and your partner work like you are same offices but not two different companies,  sharing the costs, problems and at the end the benefits of course.

And believe me it is not only with two small forwarders. Same is valid when two offices of the same big company work to each other.  And in the bottom line it is – lack of trust.  So the question is actually not How to build successful cooperation but should be – How to build trusted relations.

Here are some ways to cooperate and increase your business.

1. Becoming agent of a big company

One of the ways for a SSF to benefit from wider network, eventually centralized billing system, sales leads generation and additional business generation is to become exclusive or official agent of some of the big guys. This however has its negative sides. Majority of the big guys sees the agents like potential competitors and cooperate with them on an adversary mode. I can share quite an experience here. Well there are also exceptions but they are very few.  At the end the big guys either want to buy the SSF for peanuts or simply enter the already explored and matured market.

2. Join a Forwarder Network.

This is a good approach for a SSF to increase its global reach without loosing its independence.  There are several things, however, which the SME should consider before joining such a network:

* Check the network site and find how reliable the network is.
* Try to assess whether the annual network fee will be justified by the potential business you might generate by joining it
* Find out whether the network can issue their own HBL and HAWB and how members can use this opportunity
* Check whether there are some strict ethic standards
* Check how payment among members is arranged – is it no member to member basis or there is clearance procedure in place.

Checking all this will save you the unpleasant feeling you might experience if you find that you have paid 2500 USD annual fee for a membership in a network where the number of members for certain area is unlimited, you still have to issue your own HAWB and HBL and network can not assist you in a dispute you might run into with another FFN member.

3. Build own partnership network

Another way is for SME to start building up its own network of partners.  Very tough and time consuming process.  But this at the end can benefit you with very good partners – again SSF in their locations – with whom you can start building integrated network based on trust.  The third approach is good one but it is very time consuming. So if you want to have a network build on trust – start it now

4. SEKO approach

I really like it. Connecting independent forwarders under common brand. I think this is the most integral way of cooperation where the strengths of SME forwarder are combined with the strengths big forwarders have.

I would appreciate your input and your comments.

For more information on KG CARGO freight forwarding service please contact us.

The Small Size Freight Forwarders

I am receiving a good deal of news concerning the freight forwarding and logistics. In all this news however, the word is about only the big names in our industry.  Yes, exactly  the guys that boast with their hundreds of millions or billions dollars of annual revenues who handle big traffics for big manufacturers and traders worldwide. I understand this as these big players at the end are the industry leaders. But what about the small sized forwarders. Those with up to 5 employees personnel. Shall we continue underestimate them.

The small size forwarders (SSF) – these guerrillas at the market battlefield, carry more value than you can imagine. Most of the big guys were SSF’s ones. Have you forgotten this. The SSF presents very important part of the freight forwarding market. Well, they are not the market leaders, but very often they are the niche developers. And often niches become markets, sometimes big ones.

But what stops the SSF to become bigger?

SSF’s are so much operationally concentrated that they often forgot to look around and miss the big picture. In order to save money they have cut some important activities like knowledge interchange.

Being on a tight budgets they often neglect the opportunities the new technologies present to them. And for a very stupid reason – the SSF believes that new technologies are available only to the big guys as only the big guys can afford them. Which is absolutely wrong.

The SSF readily accepts new customer orders but rarely makes pro-active efforts in attracting new customers.

I believe that if the SSF succeeds in overcoming the above three issues it will grow to an extend where the big guys must pay them respect.

And to the big forwarders I would say – beware the SSF because they are much more dangerous than your main competitors. The day the SSF realizes how to grow further is the day the big forwarders will loose big market share.

Your comments and discussions on the topic are more than welcome !!

For more information on KG CARGO freight forwarding service please contact us.

Freight Forwarder is a Designer

In nowadays international transportation of goods is a complex activity where many players participate in what the customer sees as one service.

This is where the freight forwarder steps in in the role of an architect of the transportation chain by coordinating, monitoring and managing the set of activities, responsibilities and liabilities which at the end result in successful delivery of customer loads.

Imagine a Bulgarian seller has a contract with buyer in Shanghai for delivery of milk analyzers.  The contract is on CPT Shanghai airport commercial terms which means that the seller is responsible for delivery of the goods to the airport of Shanghai and undertakes all risks untill landing of the goods at the airport. The Seller is based in Pleven some 130 kilometers from the main airport of Bulgaria Sofia and there are no direct flights from Bulgaria to China.

That means that the goods must be delivered to the airport, customs cleared and delivered to the airline for further transportation to Shanghai and the Seller has to contact at least 4 suppliers:

– domestic linehaul carrier – for arranging the pick-up
– customs broker – for customs processing of the freight
– the airline handling agent at the airport – to deliver goods ready for carriage
– the airline cargo office or GSA to arrange the booking of the freight

Well, except for the airline handling and booking the Seller could arrange for local pick-up and customs clearance but in the majority of cases the only thing the Seller should do is to place the order to the Forwarder engaging them with the organization of the whole transportation.  Thus Seller, saves time and respectively money and what is very important – headaches with multi-supplier communication and coordination.

All this together with the risks related to the transportation is transfered to the Forwarder, who accepts the order from the Seller to organize the overall transportation and all accompanying activities.

That was a simple example. Now imagine that you have more complicated moves where goods need to be delivered door-to-door with special customs requirements in destination  etc.

Can the goods owner do this by themselves? I doubt it.
It is the Forwarder who designs the whole chain coordinating and managing various sub-contractor activities and risks. This is what the main role of the forwarder is – Designer of the transportation chain.

For more information on KG CARGO freight forwarding services, please contact us.