When preparing your export shipment, for instance, in the event you are sending out samples to potential international customers/buyers, you should be aware of a few things. One such element would be the shipment weight and the documentation required. In this blog, we look at these important items on your to do list when preparing your export shipment.
Preparing Your Export Shipment: Weight
it should be noted that by regulations of the IATA, in the event that the volumetric weight is greater than the actual weight of the export shipment, then the cost of the export shipment is calculated based on the space that the consignment will take up in the aircraft carrier. The way you calculate your volumetric weight is simply by multiplying the length by the height and then the width of the shipment in centimeters, and thereafter dividing it by 5,000.
Preparing your Export Shipment: Required Documentation
One thing that is needed in any type of shipment would be the required shipping documentation. In an instance of preparing your export shipment by air, there are two types of documentation required; the waybill and the invoice.
When preparing your export shipment by air, you are required to have a fully completed waybill and thereafter a label fixed to the consignment. This will ensure the successful movement of the export shipment and be able to track its progress effectively. If you have more than one item in your consignment, each item will be numbered accordingly.
Your shipment will also require customs documentation such as a commercial or a pro-forma invoice. This is compulsory when you send an export shipment that contains items other than documents to other countries. This is essentially a declaration of the export shipment’s contents which will help authorities assess the duties and/or taxes that should be levied against it. A commercial invoice is needed for any export shipments that are intended for commercial transactions/resale, whereas a proforma invoice is used when export shipments with goods of no commercial value are sent (such as in the case of samples).
Stay tuned for next week’s blog, Breaking Down a Commercial Invoice.
It’s no surprise that the constant back and forth between the US and China have raised concerns with the rest of the world. If you stop to think about it, there are many potential impacts on the shipping industry that have been caused by the US and Chinese tariffs, along with Europe thrown into the chaos. In this blog, we look at what these potential impacts on the so shipping industry are.
To give a little insight into the China-United States Trade War, it began last year in 2018 via the increase of US and Chinese tariffs amongst other things. The background for these disputes comes to the fact there were several disagreements with the Trump administration that preceded to what the US is now calling defensive measures. The imposition of tariffs on Chinese goods was said to be a result of the so-called unfair Chinese trade practices over the course of several years. This includes tariffs set for over 1,300 Chinese products. Thereafter, China responded by imposing tariffs on nearly 130 US imported products.
These were followed by different trade talks whereby in August of 2018, exactly one year ago, China made a formal complaint to the World Trade Organisation whereby the tariffs imposed on Solar Panels will destabilise the international market for solar related products. However, during the G20 Osaka Summit, the Chinese government stated that they would call a truce on the trade war with prior tariffs remaining in place but no future tariffs will be applicable with negotiations restarting. During this time, the Trump administration allowed US companies to deal with Huawei but the company will remain blacklisted. However, earlier this month, Trump went on twitter to declare that a further 10% tariff will be levied on the balance $300 billion of goods, and the Treasury has declared China a Currency Manipulator, which has then resulted in China ordering state-owned companies to put a halt in purchasing US agriculture products.
When the US and Chinese tariffs first came to effect in July 2018, there was a positive reaction as it ended the uncertainty that the global market was expecting. However, by early August, China was the first to experience the fallout by stepping down to the third largest market capitalisation player. Thereafter in December of 2018, the Dow Jones Industrial Average fell declining by 600 points. There were potential impacts to the shipping market caused by the trade war especially when it came down to the import of products to China, with shifting their focus from the US to Brazil for their import of soybeans (which had a 25% tariff).
Despite the imposed US and Chinese tariffs, China declared a record high annual trade surplus ($323.32 billion), whereas in March 2019, the US declared a record high trade deficit of $621 billion; the highest since a decade ago. China also hit back by reducing tariffs for non-US exporters thus putting the United States at a competitive disadvantage due to the US and Chinese tariff trade war.
The way in which the China – US Trade War has played out from the first quarter of 2018, many of the global players have been paying close attention to how this would affect other global markets and the potential impacts on the shipping industry players as well. In this edition of the Transco Cargo blog, we look at the potential impacts on Shipping Industry by the China-US Trade War, along with what to expect in the coming months.
The China and US Trade War has had many players in the world on edge, due to the uncertainty it has brought forward, mostly due to the hindering of the free flow of goods. Due to the fact that there are so many tariffs being imposed by the China-US Trade War, there will be instances where alternates will have to be chosen, thus posing potential impacts on the shipping industry players due to different trade routes being required. One of those concerns would the US imposed tariffs on EU and Chinese goods. These includes 25 percent tariffs on steel, 10 percent tariffs on aluminium for the EU along with imposed 25 percent tariffs on US$200 billion worth of Chinese goods.
Potential impacts on the shipping industry can be anticipated for the dry bulk shipping sector, however not severely in terms of volume. It’s expected that when it comes to Chinese exports with eastbound shipments on the Asia-North America route will incur potential impacts. It’s also expected that potential impacts on the shipping industry can be expected for crude oil exports from the US as it was demand driven with China in the forefront.
Whilst we have highlighted the US and China in terms of the trade war, the EU has also jumped on the bandwagon with declaring tariff regulations on US products. This would mean that US exports such as bourbon and motorcycles might be affected. Back in 2017, the US exported 1.24million tonnes of goods to the EU, all of which have now been tariffed. Furthermore, it should be noted that Canada and Mexico have also imposed tariffs, but it has not made much of an effect to cause potential impacts on the shipping industry.
Potential impacts on the shipping industry are mostly on the transatlantic and transpacific shipping routes, but other shipping routes such as via Europe and Asia remain as is. The China and US trade war has strengthened trade relations between the likes of Europe and Asia. This was further deepened by China allowing independent investments without the need for joint ventures.
The China-US Trade War has many potential impacts on the shipping industry; however, if you were to look at it from a global standpoint such as European and Asian trade, it would mean more cargo in waiting for maritime shipments between this part of the world. This means that the effect of potential impacts on the shipping industry caused by the China-US trade war would mean that there would be greater Asian significance to the global economy as well as the maritime shipping industry as a whole.
Packing away your contents in a shipping box is important but making you seal and label them correctly, is also vital. In this blog, we look at sealing and labelling your shipping box in order for it to retain its shape and protect the contents within during its journey. It is important to choose the right sealing type and how you seal the shipping box too is as important.
The tape you choose and the way you seal your shipping box makes a great difference in the way your shipping box behaves whilst in transit. We recommend the use of pressure sensitive tape, as they are known for its strength and durability. The types of adhesive tapes that you should use when sealing your shipping box would be the following.
Brown Plastic (Polypropylene) Tape
Electrical (Vinyl adhesive) Tape
Duct (Fiber-reinforced paper) Tape
You should avoid using tapes such as kraft paper tapes, cellophane tapes, masking tapes and string/ropes. Once you have the tape sorted, you need to ensure that you tape it the right way. The way you go about sealing your shipping box will also ensure the intergrity of the box and protect the contents within. Transco Cargo recommends the use of the H-taping sealing method for your shipping boxes so that all seams are closed up and the edges are also protected as depicted below
Instructions for H-Tape Sealing your Shipping Box
- Place one strip of tape along the centre seam of the shipping box
- Place two strips of tape across both of the edge seams
- If you are including heavier contents, apply more tape over the H-taping
- Repeat the same for the bottom, to ensure a proper seal all around
We do not recommend the use of strapping as it will damage the shipping box for those that are less than 30kg.
When it comes to labelling your shipping box, especially if you require the shipping box to maintain a certain orientation during transit, or if they are fragile, ensuring that you have the right shipping labels will allow shipping handlers to make conscious efforts to handle them based on your requirements.
The shipping market is one that is constantly changing, whereby the economy that surrounds merchant based shipping is considered a cyclic market. This cycle occurs through four stages; the trough, recovery, peak and collapse.
Shipping Market: Cycle – Trough
This stage of the cyclic market of shipping shows signs of capacity surpluses, and freight rates plummeting to meet the operating costs of ships that the least efficient. This would in turn lead to lay-ups and financial pressures because of the negative cash flows due to the lower freight rates.
Shipping Market: Cycle – Recovery
This stage of a shipping market cyclic state is called the Recovery due to the fact that it will attempt to make a comeback. You will find that freight rates increase slightly higher than that of operating costs as well laid up tonnage falls. However, the temperature of the market will remain somewhat uncertain but confidence will gradual grow.
Shipping Market: Cycle – Peak
At this point in the cyclic nature of the shipping market, the rates for freight shipments will rise (close to two or three times above that of the operating costs). This will lead to an eventual over trading. Furthermore, this will lead to new building orders increasing as well.
Shipping Market: Cycle – Collapse
This stage brings the cyclic market full circle, with supply overtaking demand. This will cause the market to collapse with freight rates plummeting.
The following chart, courtesy of KPMG, breaks down the stages.
In the past, we have approached explaining the ins and outs of consolidation in different ways. If you refer back to some of our former blog posts, such as “Consol Box – The Pros Choosing Shipping Consolidation”, you will be able to see why it’s a popular choice for many.
If you aren’t sure what consolidation means and how consolidation works, let us recap for you. How consolidation works is by means of taking a shipment deemed as a “consolidated shipment” that combines many less than truckload (LTL) shipments from many shippers into one full container (at times referred to a s a multi-stop truckload) shipment. An LTL shipment refers to the fact that shipments due to that fact that multiple truck shipments were utilised to accumulate the needful to fill one single container. Consolidated shipments allow shippers the advantage of preferential shipping rates and optimise supply chain logistics via means of reducing savings of time and costs.
In this blog post, we look at the importance of shipping via consolidation. It’s the perfect solution for shippers looking to ship a few small shipments (be it boxes, crates or pallets) that have different origin locations. These shipments may arrive from different location and suppliers, and these shippers will have the option of consolidating their different shipments into one single shipment to avoid paying a higher rate. There are many benefits to consolidation in shipping which include cost efficient, reduced damage risk, and improved quality control.
Whilst consolidation may happen at a warehouse level, do not forget that if your freighter is making stop along the way, for example at MCC ports which stand or Multi Country Consolidation ports, such as Singapore or Sri Lanka, that means that some of the cargo in your shipment will be unloaded at that destination. This means deconsolidation occurs and is handled on your behalf. This is one of the reasons why there aren’t many consolidation freight forwarders out there – as this is a large task to undertake. It is also true that stops along the way will mean time spent at each port, but often, the costs are reduced compared to that of a single FCL container for one shipper scenario, and for many shippers – this is agreeable.
Nevertheless, if you take Colombo Port which is a major multi country consolidation (MCC) port, you get many suppliers from various countries sending their cargo from which at this point, they will be consolidated and loaded into one FCL container to be send off to the next destination. The following image showcases how this is done.
Contact Transco Cargo, your Melbourne based consolidation freight partner for a quote on a consol box shipment.
One of the most common issues we see in the personal shipping sector is that incorrect use of packaging and packing based on the contents you are shipping. The empty space within these packaging can cause a lot of damage to the contents during shipment and transit, as it can cause not only structural damage to the boxes but cause the items to move around.
Choosing packaging that suits your shipment requirement goes a long way, and making sure that the packaging is of an acceptable quality is also vital to ensure you prevent damage. Whilst we do retail shipping boxes and crates online via the Transco Cargo website, we are open to the idea of repurposing card boxes at hand, as long as they are structural sound. Consideration for choosing packaging to suit your shipment requirement is as follows.
Choosing Packaging: Weight
The durability and the strength of the box or crate to be used for packaging, whereby it should be able to securely handle the weight of the contents within and maintain its structural ability whilst being shipped.
Choosing Packaging: Size and Shape
When choosing packaging for your shipping contents, the contents in itself should not fit snuggly into the box or crate, but should have a gap from the outer wall. If you are shipping items that are of an odd shape, then you should take caution to use packaging/stuffing materials.
Choosing Packaging: Form of Contents
If you are planning on shipping liquids or powders, there will be the need for special considerations when choosing packaging and different techniques too.
Choosing Packaging: Value of Contents
When choosing packaging for items of high value, you should also consider opting for extra cushioning and protection
Choosing Packaging: Fragility
Choosing packaging for fragile items needs to be done with care, where not only is extra cushioning and protection is required but also a special label is needed for the exterior of the shipping box/crate to ensure that freight handles do take care during transport.
Choosing Packaging: Final Use
If you are planning on choosing packaging that it meant to go straight to retail, you may need to consider aspects such as presentation and whether you want to avoid any markings on the box.
Choosing Packaging: Regulations
When shipping regulated items, please speak to us at Transco Cargo for special consideration required for choosing packaging when shipping such items.
If you take a bill of lading document when you are dealing with sea freight for your shipments, you will find terms such as FCL/FCL or LCL/FLC to name a few. These are the basis of container service types available in the market when it comes to maritime logistics.
In our previous blog, we looked at Consol Boxes which essentially are cargo sent via LCL shipping where different shipments are grouped together and loaded into one container by a consolidator who is someone other than the shipping line. The main difference between LCL and consol boxes is the party who loads the shipments.
Container Service Types – Full Container Load
Full Container Loading shipping is also abbreviated as FCL cargo, whereby one single customer is loaded onto one single container which will be utilized exclusively by that said customer.
There are many conveniences when choosing FCL out of the other container service types available for sea freight. The container (be it a 20ft or 40ft container size) will be sent to the customer’s origin address and the cargo will be methodically loaded. Similarly The container will be sent to the destination address for unloading. Usually, with FCL container service types, the client undertakes responsibility and liability for the packing and condition of the cargo.
Container Service Type – Less than Container Load
Less than Container Load as we have detailed in the blog before, involves the process of grouping together shipments from different shippers or consignees into one cargo shipment. The process involves clients transporting their cargo to the Container Freight Station which is the lines packing point, and the cargo is then packed by the shipping line on behalf of the client.
With this container service type, the shipping line takes on the responsibility as well as the liability for the cargo in terms of packing and delivery. But it should be noted that the LCL container service type is not a facility that is available in all countries around the world.
Container Service Type – Groupage
The Groupage container service type may be very similar to that of the LCL container service where the only difference would be that the cargo is controlled by a Groupage operator. How this is done is simple; the groupage operator will book the container (be it a 20ft or 40ft sized container) based on the sizing need. Once the cargo is packed, the groupage operator will issue their own House Bills to the clientele and collect from the shipping line a Master Bill of Lading.
A point that should be kept in mind when considering these container service types for your next cargo shipment, is that the following Terms of Shipment in container shipment are possible indicating how the cargo is packed.
- FCL/FCL – One Shipper to One Consignee
- FCL/LCL – One Shipper to Multiple Consignee
- LCL/FCL – Multiple Shippers to Single Consignee
- LCL/LCL – from Multiple Shippers to Multiple Consignees
Apart from the above Terms of Shipment, there are also Delivery Terms such as the following to indicate where the responsibility of the carrier/customer starts and/or ceases.
- CY/CY – Container Yard/Container Yard
- CY/CFS – Container Yard/ Container Freight Station
- CFS/CY – Container Freight Station/Container Yard
CFS/CFS – Container Freight Station/ Container Freight Station
“Consol Box” may sound a little foreign to you if you are not aware of the terms used in the logistics or maritime industry. To explain the concept of a Consol Box, we need to understand the process of shipping consolidation first. In this blog, we look at the history of shipping consolidation, the processes, and thereafter, the pros of choosing shipping consolidation and a consol box for your cargo freight.
The concept of containerization has been around in the 1950s and since revolutionized how shipping worked. It pushed the ceiling on traditional means of trading, pushing globalization to the forefront of commercial trading making shipping easier, faster and safer. As the containerization evolved, different sizes (20ft and 40ft), different types and services (FCL/LCL/Groupage) of containerization came to be. The common containerization types were FCL and LCL, which stand for Full Container Load and Less than Container Load. We will elaborate on these in a future blog post.
The process of consolidation goes hand in hand with the act of “consolidating”. It is often called “Grouping” in certain industry circles thus describing the process simply. The cargo is delivered to the packing station (referred to as a Container Freight Station (CFS)) by the client and thereafter packed into the container. The CFS can be carried out either by the shipping line or a consolidator (who is a firm that is tasked to group together various cargos (boxes/crates) into one shipment. A freight forwarder can often fill in for the role of a consolidator if needed. Now, when the process of consolidation is done under the care of the shipping line and own warehouses, this is known as “LCL Consolidation”. However, if the consolidation is carried out by the consolidator, then the container being loaded is termed as a “Consol Box”.
There are many pros of choosing shipping consolidation service. One would be not needing to incur as many costs or having to carry out certain activities normally associated with FCL shipments. When utilizing a Consol Box, you only need to pay for the space/weight you take up. When you opt for this type of service in your business model, you end up only stocking inventory based on your needs as opposed to maintaining a large inventory at all times which can rack up warehousing costs.
Whilst there are many advantages to choosing a consol box, do remember that there are no “one size fits all” shipping solutions. If your cargo is more than 12014 cubic meters, or is a heavier cargo, then you may find that FCL is the best shipping solution for you. Contact Transco Cargo for your freight forwarding needs, be it a Consol Box or FCL!