Logistics

The logistics involved in exporting goods can be complicated and time consuming. In Western Australia, you may also face additional transport issues due to our state’s size and the demands placed on the existing infrastructure. Obtaining and correctly completing the relevant documents to facilitate clearance and delivery of the goods, is a specialised area requiring up to date knowledge and expertise.

It is strongly advised that new exporters seek the services of an experienced international freight forwarder to look after cargo transport logistics and documentation.

International Freight Forwarders

Freight forwarders specialise in providing the most economic transport solutions around the world. Other services usually offered by international freight forwarders include:

Speaking to a freight forwarder early on in your research stage is advised in order to be forewarned of their procedural requirements and operation time frames.

back to top

Customs Brokers

Customs brokers help clients find the most cost-effective ways to move trade consignments around the world. They have comprehensive knowledge of customs law and practice and are licensed by the Australian Customs Service. For a list of Western Australian members of the Customs Brokers and Forwarders Council of Australia Inc, visit the Members Directory.

There are four methods you can use, or a combination, depending on which is the cheapest and most practical.

back to top

Postal

This method can be effective if the consignment is small or the profit outweighs the cost of postage. This is especially true for products such as electronic components that are usually small, but are worth more money than, for example, an equal volume of strawberries. There are three main postal services:

back to top

Sea Freight

Whilst sea freight is the cheapest mode of transport, it is a slow method of exporting goods. This is due to both the length of time it takes for a ship to travel to another country and also because of the length of time taken to handle and tranship consignments and to clear them from wharves and container depots. If your delivery schedule is tight, you will need to discuss with your freight forwarder the exact timetable you are working to and also allow for delays. The Fremantle Port Authority can provide shipping schedules.

Most goods are carried on ships in containers. If you use a whole container this is called a “Full Container Load” (FCL) shipment. If you do not have a full container load and share with one or more exporters, this is called a “Less than Container Load” (LCL) shipment. Generally, the cost of shipping FCL cargo is cheaper than LCL cargo. Freight forwarders/consolidators are often able to provide cheaper freight rates because of both their greater buying power and their ability to combine LCL cargo into container loads to various ports enabling them to obtain FCL rates.

The rates that apply to freight of your goods are broken down into several components. The basic service rate or the ”Ocean Freight Rate” is the pure freight component. Added to this may be port charges, currency adjustment factor (CAF) and/or bunker surcharge (BSC) or bunker adjustment factor (BAF). The rate depends on whether the goods travel LCL, FCL or non-containerised. In addition, some goods have individual commodity or tariff rates or rates for goods with special handling requirements such as bulk commodities, refrigerated cargo and hazardous cargo.

back to top

Airfreight

Airfreight is more expensive than shipping, however there are a number of methods you can utilise to decrease the cost. Rates quoted by the airline, or retail rates, are the most expensive. Working closely with airlines, freight forwarders can normally provide discounted air cargo rates through consolidation of consignments.

On high volume routes there may be the option to hold your cargo over a number of days to fly on a day when there is less cargo volume. This is referred to as the “deferred service rate” and is effective if a delay in delivery is not critical.

Another option is to use a transhipment service over an indirect route. This option is feasible if the combined rates of the indirect route are cheaper than the direct route. The disadvantage of using this option is the increased risk associated with transferring cargo between flights. The cargo may not make a connecting flight in time due to delays or a lack of capacity on the connecting flight.

CargoConnect allows you to track your cargo through a large number of airlines using your air waybill number.

back to top

Road and Rail Transport

Road and rail transportation is something that you may need to consider to not only deliver your goods to the buyer, but also within Western Australia in order for your goods to reach a port. Local freight operators will be able to advise on delivery timetables to ensure your product reaches the port or airport on time.

Once your consignment has arrived at the country of destination it will need to be transported to the distributor or end-user by road or rail. Generally, road transport is more versatile and cheaper, however, as the size and weight of the consignment increases it becomes more cost effective to use rail transport.

back to top

Packaging

During transit your export goods may be handled more haphazardly than goods destined for the local market. Therefore, you should pack your goods to ensure that the weight and measurements are kept to a minimum, breakage is avoided, the container is theft proof, and that the goods are protected from excess moisture during ocean shipment and atmospheric pressure changes during air shipment.

You also need to be aware that some countries require that the country of origin be marked on the outside of the container and even have regulations determining how this mark should appear. The weight and dimensions should be visibly marked and any special instructions should be shown. You may also wish to repeat the instructions in the importing country’s language.

For successful shipping it is vital that you are fully informed about the packaging requirements for your product and destination market, as well as the requirements of anyone handling your product such as shippers, customs offices, trade unions, depots and warehouses. If you are unsure, check with a freight forwarder.

back to top

Warehousing

Warehousing facilities used by wholesalers and distributors vary greatly. For some businesses using public warehousing is more cost effective than owning, renting or leasing their own. The fee depends on the amount of space you use and the level of service provided and includes a significant profit margin for the proprietor. If you own, lease or rent your own premises however, you maintain a greater degree of control.

The way you use your warehousing facilities depends on your type of business. If you can store larger amounts of stock (which increases the cost of warehousing) you are protected from interruptions in supply, you can provide discounts for larger quantity purchases and you can shorten the time taken to respond to customer demand. On the other hand, if you store just enough stock to fulfil customer demand you can save considerable money through using less space.

back to top

Fees

There are many stages involved from the production of your goods through to their placement on shelves in an overseas retail outlet. At each stage a different set of fees or costs are involved that must be factored into the costing of your product to ensure that your profit margin is left intact.

The following is a sample of the list of fees you may encounter in the process of moving your goods overseas:

BAF (Bunker Adjustment Factor)
BSC (Basic Service Charge)
BSR (Basic Service Rate)
BSRA (Basic Service Rate Additional)
CAF (Currency Adjustment Factor)
Cartage
Collect Charges
LOLO (Lift-on/Lift-off fees)
PSC/APCA (Port Service Charge/Australian Port Charge Additional)
TACT (The Air Cargo Tariff Rules and Rates)
Wharfage

Your freight forwarder is best placed to advise you on which charges are relevant to your shipment.

back to top

Distribution Options

A key consideration when exporting is the type of distribution network you need to establish to not only support the consistent and timely supply of your product to your buyers or clients, but also the manner in which it is promoted and “backed-up” in-market. This section deals with the mechanism through which your product is placed within the market place, not the means by which it reaches its destination, i.e. road and rail logistics.

As a first time exporter, you may feel more comfortable dealing with just one buyer who arranges all the in-market sales activities, at least in the first year. However, there are several other options open to your business to further your market presence and these include:

Essentially you will need to determine what type of in-market representation best suits not only your product and service, but also suits your budget and your export growth plan. The entity that you choose to work with will be instrumental in determining your success - therefore choose carefully. As a guide, you need to consider some of the following issues:

Completing a background check on any potential agent or partner demonstrates good business sense. It is also crucial that you seek specialised in-market legal and accounting advice before signing any agreements.

back to top