DOOR TO DOOR FREIGHT SERVICES TOP TEN TIPS
There are plenty of ways that you can save money, increase your efficiency and drive productivity – simply by covering the freight basics well. It also helps to use a company that does its best to get your goods to their destination on time, in tip top shape and for the lowest possible cost.
Our top 10 tips are just some of the ways that the Door to Door Freight Services team can help your business thrive. Contact us today – and we’ll make sure you get the right service at the right price.
Always check that the volume or weight of your consignment agrees with what has been declared on the Waybill or Bill of Lading. Measure or weigh your consignment as soon as it is received into store. You may find the volume or weight of your consignment has been over declared to increase revenue. Sometimes volume can be subjective, due to the shape of your consignment, and it is industry practice to use the extreme dimensions - but if you find a variance of 5 - 10% over and above the actual weight or volume, and it’s happening on a regular basis, you should certainly raise this with your forwarder and ask for a credit.
It is often more economical to send a large LCL consignment as FCL even though the volume of the consignment may only be half or less than the maximum volume of the container. NZ local costs or other costs can easily exceed the possible extra ocean freight costs you may be paying to ship as FCL. It is important to know when your forwarder should be suggesting FCL shipment as opposed to LCL, so you can save as much money as possible. Not all forwarders will offer FCL shipment - unless you ask.
When receiving your cargo make sure you or your staff actually count the number of pieces and only sign for what you have actually received. Never assume that the carrier will let you know if there are any shortages at the time of delivery.
This can be difficult and time consuming when a large number of cartons are shipped as loose cartons but delivered on a shrink-wrapped pallet. You should remove the shrink wrap to get an accurate count and only sign for what you have received. Some drivers may advise you to sign for the goods with the notation, S.T.C (Subject To Count). They may claim that you are covered if there are any shortages, but this is not true and this does not give you the right to claim on your forwarder or his carrier if there was a shortage. Any shortages should be clearly noted on the delivery docket and a copy kept for your records. If you sign for the total number of cartons in the shipment and then find you are short you have no recourse on your forwarder or their carrier. And don’t forget any damage however minor should always be noted on the delivery docket and a copy kept for your records.
All freight movements are subject to weight-to-volume calculations to obtain a volumetric weight versus the actual weight. Freight is then charged on the larger of the two weights to ensure a minimum yield for the movement of the freight.
With air freight every cubic metre (m3) of freight is considered to have a minimum weight of 167 kg, so volumetric weight = m3 x 167kg. Some Express Courier companies have recently increased this to 1m3 = 200 kgs so the volumetric weight = m3 x 200.
If you find that you are being charged on the volumetric weight for your air freight consignments you may be paying more than necessary due to the low density of your consignment. Check that your consignment has been packed by your supplier or forwarder to ensure maximum density of the consignment.
There are some simple checks you can make:
- Have the cartons been packed so that they are full or is there a lot of extra space in the carton?
- Has your supplier used an excess amount of packaging in the cartons such as polystyrene chips?
Of course you need to protect your product but in some cases this can be excessive and ends up costing you more on your freight.
- Has your supplier used appropriate packaging for your product? Sometimes a supplier may use a square box when a cylinder or tube may be more appropriate as it would minimise the volume of the consignment.
- Of course for some cargo, especially fragile goods, it is unavoidable for the volumetric weight to exceed the actual weight but in a lot of instances it would really pay to investigate how you can reduce the volume to save you money on your freight.
This is the other side of paying extra freight on lightweight volumetric cargo. If you are air freighting low volume dense cargo such as bearings or gears, your forwarder should offer an air freight rate based on density, not on the weight of the consignment. Most air freight rates are based on a sliding scale as the weight of the consignment increases. Your +300 or +500kg rate will be cheaper than your +100kg rate, which will in turn be cheaper than your +45kg rate. Because your forwarder’s air freight consolidation will almost always reach its maximum volume before it reaches maximum weight, low volume dense cargo offers a better yield on your forwarder’s consolidation. As such he should pass this benefit onto you as the shipper of this type of cargo.
So instead of offering a +100 or +300 kg rate he should offer a density rate of +300kg or +500kg per m3. This means that you are paying a +500kg per kilo rate even if you only have 45kg provided your consignment exceeds 500 kgs per m3. Even on routes where freight rates are usually quoted on a flat rate with a minimum, such as Trans-Tasman, your forwarder should still be offering you a better rate for dense cargo than he would for general cargo. Please note that a density tariff may not be possible on some routes due to the lack of regular cargo to enable consolidations.
In most instances freight costs for a slower transit time or an indirect route costs less than the quicker transit or direct route. For instance air freight ex Los Angeles to Auckland on Air New Zealand direct would usually be more expensive than Los Angeles to Auckland via Tahiti on Air Tahiti Nui. The same is true for sea freight. Hong Kong to Auckland on a direct sailing would generally be quicker and more expensive than Hong Kong to Auckland via Malaysia where the cargo would be discharged from the vessel from Hong Kong and loaded onto another vessel for shipment to Auckland.
If you do not need your goods to arrive as quickly as possible and can afford a few more days’ transit or the possibility of an off load with a transhipment service, then why pay for the more expensive service when a slower service would suffice?
Of course the opposite applies as well. It’s all very well going for the cheaper route and slower transit to save money on freight, but if it absolutely has to be here by a particular date then there is an opportunity cost of missing a delivery deadline or holding up production.
You may find the quote you have is based on the quick transit or direct service but your shipment has been booked on the slower or less direct service. Sea freight transit times are usually approximate and can stretch out, while some indirect flights can be as quick as a direct flight, provided the cargo meets its connection as expected.
Have your forwarder quote the airline or shipping line that they use so you can check transit and routing. Then you’ll be sure that you’re not paying a premium rate for a deferred service. Most shipping and airline schedules are readily available online.
Exchange rates can vary even in the course of a day but it still pays to check the exchange rate used by your forwarder when charging freight or, better still, to agree on a method of establishing the exchange rate before shipment. You may find the exchange rate used for your shipments is much lower than the bank rate to maximise freight revenue as there are no hard and fast rules regarding establishing an exchange rate when calculating freight charges. Do not assume your forwarder will use an exchange rate in line with bank rates.
Another thing to check is the Collection Fee or Currency Adjustment Factor (CAF) used by your forwarder. This is a percentage added to the currency conversion calculation to supposedly offer the forwarder a buffer when paying freight and to cover bank fees. You may find you haven’t been quoted a CAF but you are being charged it anyway. A reasonable CAF would be 2.5% to 3% but many forwarders will charge 5% to 8% or even as high as 10%. Therefore an unfair exchange rate coupled with a high collection fee will result in a freight rate that costs you a lot more than expected.
In some instances your overseas supplier may offer you a freight rate that is a lot lower than your Kiwi forwarder. What they don’t tell you is that the forwarder overseas is able to offer a cheap freight rate because they charge a commission or portion of the freight rate to their NZ agent who then hides this commission in their destination charges. So instead of charging reasonable destination costs such as Port and Unpacking Charges of say NZ$55.00-NZ$65.00 per m3 they charge NZ$85.00-NZ$95.00 per m3 to cover the commission they have to pay to their overseas agent. So, what initially seems like a cheap freight rate ends up costing you more at the end of the day. You may also find that these cheap sea freight rates are based a slow transit which may include transhipment at two overseas ports before your goods are loaded onto a vessel for NZ.
Express courier company rates are very hard for a forwarder to beat on small low weight door-to-door consignments. To send these consignments with your forwarder as consolidated air freight will often end up costing you more than if you were to ship with an express courier company. Depending on where you are sending your goods to, consignments up to approx 50 kg or more can be cheaper to send with an express courier company. The express courier company bases its rates on a per kg basis, whereas a forwarder has to pay and charge you lump sums for such services as Customs Clearance regardless of how small the consignment is.
Some forwarders will send your 5 or 10 kg door-to-door consignments as consolidated air freight even though they know it would be a lot cheaper to send a consignment of this size with an express courier company. Reputable forwarders who utilise express courier companies on a regular basis can offer cheaper rates with these companies than if you were to contact them directly on a one-off basis. If you are sending a small low weight shipment overseas ask your forwarder if an express courier would be more appropriate. If you regularly send small consignments talk to an express courier company about getting an account.
It’s pointless saving money on freight by reducing volume or shipping on a slower transit if your consignment arrives damaged due to inappropriate or insufficient packaging, or is lost, and you consignment is uninsured.
Take care of the basics. Check your outer packaging, inner packaging, labeling and sealing method. Not adequately sealing or labeling cardboard cartons is the biggest cause of damage and loss.
Insurance is your safety net if anything goes wrong. Your forwarder should always check that you have adequate insurance and offer to insure you if you don’t. All freight movements are subject to limited liability or owner’s risk, so if you don’t have insurance you will have limited or no recourse on your forwarder.