Tips, Tricks for the everyday Forwarder
Posts tagged shipping
A customs broker’s life
Apr 27th
Interesting how I’ve come across this post, pretty amusing and rather interesting read! Talks all about customs brokers and their sufferings! This might be a case in the US, but it probably is also applicable worldwide. 
Let’s start from square one and there is not nearly enough for me to write otherwise we would be here for the next 10 years.
For one, the exam is extremely difficult. And with no real world experience? You are almost guaranteed to fail. For instance the April 2003 exam had a national passing rate of 2%! And up to 80% of licensed attorney’s (people who passed the bar exam) fail the brokers exam. And guess what? Passing it is just the start. Afterwards you have to apply to the Department of Homeland Security to actually become a Customs broker for CBP.
They will do an intensive background investigation and you will be interviewed by an special agent from the DHS who will recommend “yes or no” on the license. Remember when you skipped class and were arrested at 16 years old for smoking a joint in the high school bathroom? Your dad hired a $500/hr lawyer and the court “expunged” the arrest from the records. Or did they? Application DENIED. How about your credit? Everyone has some credit disputes or even delinquencies these days. Just look at the foreclosures going on. Do you have less than average credit? Application DEINIED. Get the picture? They look for ANY and EVERY reason to deny your application.
They don’t want you or anyone else to become a Customs Broker. It’s that simple. And assuming you are Mr. or Mrs. perfect and you are granted the license you face a competitive “mature” market with falling salaries and entry fees nationwide. Everyone is competing on “price” just like in a 3rd world country. As result wages and salaries are falling nationwide. You would be better off working for Customs. In this field you carry a high degree of professional risk and low reward (income). And that’s not all – the entire time you are licensed Customs Broker Management looks for ANY EXCUSE to revoke your Customs Brokers license.
You see, Customs regulations are bigger than the biggest bible you have ever seen. For Customs Brokers (as well as importers) they exist SOLEY as a means to an end of total and complete control by the government (Customs) where they may issue fines, and revoke your license AT WILL. If you think these regulations were written by Customs to “facilitate rights, fairness, and due process” you are sadly mistaken. People become dedicated experts in this field, (as a Customs Broker) then one day they get into an argument with the wrong person, and it’s all over. And because NOBODY is perfect (not even the women down the hall with 30 years of experience) Customs will always find something. Always. No matter what. That’s how it starts.
Then they start looking at you, and grind away until they find something. It’s called selective enforcement. This is basically an “abuse of discretion” that you cannot prove under any circumstances. Ironically (actually it not) one of the few “defenses” you have if they try to disbar you is that it’s an “abuse of discretion”. Which you then must “prove” which nobody can or EVER has. If you look at all the cases in the court of International Trade not ONCE has a Customs broker ever won a case against Customs trying to revoke their license (aka: destroy their life) for ANY reason. This is because they have total control and UNLIMITED resources from the USA taxpayers. It costs you everything but it costs them nothing! You will see teams of government prosecutors funded courtesy of our tax dollars against one lone attorney for the Customs broker who is charging the Broker $500/hr to defend himself against the government. It’s a pointless battle.
Think twice before you make becoming a Customs Broker your life. The license is as valuable as many college degrees, yes. But one day you will make an innocent mistake, or negligent oversight, and Broker Management will latch on like a great white shark and shake their jaws until there is nothing left but your life’s career/work shredded into pieces laying in shambles. They will destroy your entire life then cite a *regulation* to back it up. Why? Because they can. Or more precisely because of a naïve oversight, innocent mistake, or other “violation” you made simply because you forgot one of the 1 million and 500 thousand regulations you are supposed to remember This is the truth. And that is just the start of it. If you lose your license you’re essentially banned for life from the only thing you know how to do! Then.. surprise, surprise, you discover you are worthless in the outside job market.
Proceed with extreame caution in this occupation. It is hard enough to get the license, let alone keep it. And when all you know is Customs brokerage, and that is taken away from you; your life is essentially over.
Regards,
A Customs Broker.
Read more: http://wiki.answers.com/Q/What_are_the_problems_encountered_by_a_customs_broker#ixzz1KhQgI8fA
TEU. Sounds rude.
Jan 23rd
Frankly, what’s a TEU? Sounds strange..
A TEU actually stands for Twenty-foot Equivalent Unit. Which, actually stands for the regular 20′ containers you find in container ports all over the world.
More on TEU here.
Officially: it’s a 20-foot (6.1 m) long shipping container. What about those 40′ containers? They are referred regularly as 2 TEU instead.
The economy of a country is usually viewed from the container ports of the country, with respect to import/export business. Therefore, TEU is a way to judge the profitability of a container port, based on the quantity of containers every year.
Here’s a list of the world’s busiest ports.
Make sure you learn this, because this term is used fairly regularly in the shipping business! Don’t show your weakness by asking ‘what’s a TEU?’ You’ll thank me for saving your day 
Incoterms – In Depth
Nov 18th
Incoterms or international commerce terms are a series of international sales terms, published by International Chamber of Commerce (ICC) and widely used in international commercial transactions. These are accepted by governments, legal authorities and practitioners worldwide for the interpretation of most commonly used terms in international trade. This reduces or removes altogether uncertainties arising from different interpretation of such terms in different countries. Scope of this is limited to matters relating to rights and obligations of the parties to the contract of sale with respect to the delivery of goods sold. They are used to divide transaction costs and responsibilities between buyer and seller and reflect state-of-the-art transportation practices. They closely correspond to the U.N. Convention on Contracts for the International Sale of Goods. The first version was introduced in 1936 and the present dates from 2000.
Group E – Departure
EXW – Ex Works (named place)
The seller makes the goods available at his premises. The buyer is responsible for all charges. This trade term places the greatest responsibility on the buyer and minimum obligations on the seller. The Ex Works term is often used when making an initial quotation for the sale of goods without any costs included. EXW means that a seller has the goods ready for collection at his premises (Works, factory, warehouse, plant) on the date agreed upon. The buyer pays all transportation costs and also bears the risks for bringing the goods to their final destination.
Group F – Main carriage unpaid
- FCA – Free Carrier (named places)
- The seller hands over the goods, cleared for export, into the custody of the first carrier (named by the buyer) at the named place. This term is suitable for all modes of transport, including carriage by air, rail, road, and containerised / multi-modal sea transport. This is the correct “freight collect” term to use for sea shipments in containers, whether LCL (less than container load) or FCL (full container load).
- FAS – Free Alongside Ship (named loading port)
- The seller must place the goods alongside the ship at the named port. The seller must clear the goods for export. Suitable only for maritime transport only but NOT for multimodal sea transport in containers (see Incoterms 2010, ICC publication 715). This term is typically used for heavy-lift or bulk cargo.
- FOB – Free on board (named loading port)
- The seller must themself load the goods on board the ship nominated by the buyer, cost and risk being divided at ship’s rail. The seller must clear the goods for export. Maritime transport only but NOT for multimodal sea transport in containers (see Incoterms 2010, ICC publication 715). The buyer must instruct the seller the details of the vessel and port where the goods are to be loaded, and there is no reference to, or provision for, the use of a carrier or forwarder. It DOES NOT include Air transport. This term has been greatly misused over the last three decades ever since Incoterms 1980 explained that FCA should be used for container shipments.
Group C – Main carriage paid
- CFR or CNF – Cost and Freight (named destination port)
- Seller must pay the costs and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods have crossed the ship’s rail. Maritime transport only and Insurance for the goods is NOT included. Insurance is at the Cost of the Buyer.
- CIF – Cost, Insurance and Freight (named destination port)
- Exactly the same as CFR except that the seller must in addition procure and pay for insurance for the buyer. Maritime transport only.
- CPT – Carriage Paid To (named place of destination)
- The general/containerised/multimodal equivalent of CFR. The seller pays for carriage to the named point of destination, but risk passes when the goods are handed over to the first carrier.
- CIP – Carriage and Insurance Paid (To) (named place of destination)
- The containerised transport/multimodal equivalent of CIF. Seller pays for carriage and insurance to the named destination point, but risk passes when the goods are handed over to the first carrier.
Group D – Arrival
- DAF – Delivered At Frontier (named place)
- This term can be used when the goods are transported by rail and road. The seller pays for transportation to the named place of delivery at the frontier. The buyer arranges for customs clearance and pays for transportation from the frontier to his factory. The passing of risk occurs at the frontier.
- DES – Delivered Ex Ship (named port)
- Where goods are delivered ex ship, the passing of risk does not occur until the ship has arrived at the named port of destination and the goods made available for unloading to the buyer. The seller pays the same freight and insurance costs as he would under a CIF arrangement. Unlike CFR and CIF terms, the seller has agreed to bear not just cost, but also Risk and Title up to the arrival of the vessel at the named port. Costs for unloading the goods and any duties, taxes, etc… are for the Buyer. A commonly used term in shipping bulk commodities, such as coal, grain, dry chemicals – - – and where the seller either owns or has chartered, their own vessel.
- DEQ – Delivered Ex Quay (named port)
- This is similar to DES, but the passing of risk does not occur until the goods have been unloaded at the port of destination.
- DDU – Delivered Duty Unpaid (named destination place)
- This term means that the seller delivers the goods to the buyer to the named place of destination in the contract of sale. The goods are not cleared for import or unloaded from any form of transport at the place of destination. The buyer is responsible for the costs and risks for the unloading, duty and any subsequent delivery beyond the place of destination. However, if the buyer wishes the seller to bear cost and risks associated with the import clearance, duty, unloading and subsequent delivery beyond the place of destination, then this all needs to be explicitly agreed upon in the contract of sale.
- DDP – Delivered Duty Paid (named destination place)
- This term means that the seller pays for all transportation costs and bears all risk until the goods have been delivered and pays the duty. Also used interchangeably with the term “Free Domicile”. The most comprehensive term for the buyer. In most of the importing countries, taxes such as (but not limited to) VAT and excises should not be considered prepaid being handled as a “refundable” tax. Therefore VAT and excises usually are not representing a direct cost for the importer since they will be recovered against the sales on the local (domestic) market.
Every drama starts from the price…
Oct 11th
Guess what, instead of convincing yourselves that the sales pitching, the sales process, and the sales close matters that much, think about it. Most of the decision from a customer actually starts AND ends right when they see/hear the price. $$$$
Imagine yourself shopping for a shoe, you are looking for a durable, good, yet not a so-damn-expensive shoe. Most likely you will look around, and find one or two suitable ones to your liking. Then, you see the price tag, and in your brain, you make an instant decision whether this shoe is acceptable or not. That’s it.
Shopping Spree
Applying it to shipping, or in fact, any other industry is the same thing. When a customer actually walks to your doorstep and enters your shop, the war is already 50% won. They like your shop, they know what they are going to buy/order, and being at your place they feel it’s right. All they now want, is the price. In their brain there’s a secret price level, and if the “PRICE IS RIGHT!“, done deal! give yourself a pat.
The Price is Right
CIF, CNF, FOB
Sep 27th
Ever heard of the terms on the title? If you are into shipping, you are bound to encounter these 3 words. What do they represent? Check out the information below:
Terms of shipment
Common trading terms used in shipping goods internationally include:
- Freight on board, or free on board (FOB) - the exporter delivers the goods at the specified location (and on board the vessel). Costs paid by the exporter include load and lash, including securing cargo not to move in the ships hold, protecting the cargo from contact with the double bottom to prevent slipping, and protection against damage from condensation. For example, “FOB Kunming Airport” means that the exporter delivers the goods to the airport, and pays for the cargo to be loaded and secured on the plane. The exporter is bound to deliver the goods at his cost and expense. In this case, the freight and other expenses for outbound traffic are borne by the importer.
- Cost and freight (C&F, CFR, CNF): Insurance is payable by the importer, and the exporter pays the ocean shipping/air freight costs to the specified location. For example, C&F Los Angeles (the exporter pays the ocean shipping/air freight costs to Los Angeles). Many of the shipping carriers (such as UPS, DHL, FedEx) offer guarantees on their delivery times. These are known as GSR guarantees or “guaranteed service refunds”; if the parcels are not delivered on time, the customer is entitled to a refund.
- Cost, insurance, and freight (CIF): Insurance and freight are all paid by the exporter to the specified location. For example, at CIF Los Angeles, the exporter pays the ocean shipping/air freight costs to Los Angeles including the insurance.
- The term “best way” generally implies that the shipper will choose the carrier who offers the lowest rate (to the shipper) for the shipment. In some cases, however, other factors, such as better insurance or faster transit time will cause the shipper to choose an option other than the lowest bidder.
In case you don’t understand a gibberish about what’s said above, here’s an extreme-simplified version:
FOB = Free on Board. Exporter does not pay the freight costs, he/she only brings the cargo to the port and perhaps pay loading fees. Buyer actually pays the freight costs.
CNF = Cost & Freight. Exporter pays for almost everything, except insurance. (Anything wrong happened, don’t blame exporter on CNF terms!)
CIF = Last but not least, Cost, Insurance & Freight. Exporter pays everything. Buyer just needs to pay one lump sum to the exporter. Simple, quick, happy. Of course though, buyer will have to pay extra hidden costs. Exporter most likely will mark up the shipping prices and forward the fees to the customer, earning some extra profit.
Demurrage = Hell
Sep 8th
Have you ever did a shipment, and encountered demurrage fees? If you do, you sure as hell know that you should avoid it, evade it, run away from it, and just totally stay away from the D word as much as possible.
Why? Why the fear of this simple yet cool word?
Let’s just focus on the example of shipping a container. Sending a container and the container got ‘stuck’ at the port for some reason or another? Yeah that sure as hell suck. Why would a container get ‘stuck’? It really depends. On some occasions its because of Customs, some others might be due to some issues with the container or the goods themselves.
Whatever the case, demurrage fees are incurred when the container stays in the port for too long. The port will then charge a ‘fee’ for putting the container over the -free parking duration provided-, and they charge a fixed rate per day. If you think the fee is nothing, think again.
There are cases where they can’t settle the payment for the container, and therefore cannot obtain the Bill Of Lading document from their supplier. (Read more about Bill Of Lading here.) This is one of the worst cases that can happen to you.
Lets do a simple example: Buyer A requests for shipment from Supplier B, and Supplier B does a CIF shipment to Buyer A. Supplier B waits for Buyer A to complete full payment before the item is released to Buyer A. Buyer A then has some problems with their company, and thus can’t afford the payment. Assuming demurrage fees for Buyer A’s port is $100 per day, a month delay will therefore costs approximately $3000 extra for a shipment. Now think about it, a full container might costs about 2000-4000 for a delivery to anywhere in the world. Now add another extra $3000 and the fee just doubled. Throw in Sales Tax and Import Tax, and add the price of your goods themselves, thats a whole whopping figure.
If Buyer A delays for too long, the demurrage will keep going up. It will reach a point where the price becomes so expensive that the container just stays stuck in the port with the goods! Yes, that happens everywhere, everyday, all the time. It’s really common. Now looking at those ports with many containers, have a self doubt and think about how many containers are left-over containers instead.
Tip: Always make sure everything is planned well ahead for any shipment!
Marine or Cargo Insurance?
Sep 7th
They appear to be the same identical thing. Just the name messes us up!
Marine Insurance or Cargo Insurance is the insurance policy coverage of your shipment from origin to destination. The fact that it covers the whole journey makes it one of the most valuable piece of document in logistics.
Frankly, it’s really important. Especially for shipping of FCL or even LCL freight, having insurance coverage will alleviate all issues and mishaps that are encountered unluckily during a freight trip. Don’t blame the freight companies, they usually don’t know what happened. It could be natural disasters, driver negligence, and other factors taken into consideration.
Covering your cargo for insurance ensures that you have a piece of mind in the shipment while it’s being delivered. You don’t have to frantic anymore about shipments taking toooooooo long to deliver; rest assured that nothing will happen, and if anything unlucky does happen (touch wood), your insurance will cover the costs incurred.
Go to your local insurance agencies and ask about marine insurance/cargo insurance for more information.
Price, Speed, Service Quality
Sep 7th
In every quote request by customers, they always ALWAYS have these 3 requirements in mind: Price, Speed, and lastly service quality.
PRICE
Most of my customers tend to be very concerned with PRICE. This is usually because I normally deal with SMEs, and for SMEs their utmost priority is the P word!
As part of a freight broker sales team, you need to be fully aware of the mentality of your customer. Ever watched Inception? Something like that. Through NLP, Covert Persuasion art, etc, you need to enter into your customer’s thoughts and find out what they are looking for: “Extraction”.
No, I’m just kidding. Don’t be so serious! But seriously though, you need to know what they are thinking, at least slightly. Note their company, their voice tone, their posture, their behavior, understand whether this guy is hoping for a dirt cheap good bargain, or the other 2 requirements.
SPEED
Some customers want it fast. That’s where this word comes into our head. Couriers! Couriers are dedicated companies that ensure that your items are delivered as fast as possible, without you delivering it. Of course, with the speed, they almost always compromise PRICE. So speed is a factor to reckon. Again depending on your customer, their urgency on the delivery will mark the priority of delivery speed.
SERVICE QUALITY
Service Quality is the effort your freight company provides to ensure that your customer is always informed about his/her shipment, always knowing the latest info. Or providing them 24/7 response, whenever they have any inquiries regarding the shipment. Before sales service, after sales service, and every other service your shipper required. Endurance against bad customers is part of it!
Frankly, customers don’t always look for just 1 criteria. They tend to have 2, or even 3 of them, balanced in a delicate manner. Always know their priority!
Some want: 1) Cheap Price, 2) Relatively Fast 3) Standard Service.
Others might want: 1) Speed. (By Air) 2) Super good service. << This is where DHL dominates.
Even others might want: 1) Guaranteed delivery (Service), 2) Affordable (Price), 3) Take its time to arrive (Speed).
Price and speed are almost always in tune! So does Price and Service Quality! Higher fees usually = faster delivery / better service. Just look at how DHL works.
To make the sale, always know the balance of your customer! Then try to adjust your shipment in such a way that you can cater your customer’s needs.
Actually, this almost always applies to every other business in the planet, so its a good advice to all!
Asiatic Freight
Sep 7th
Asiatic Freight! Fancy name, shipping wonder.
We Asiatic Freight Brokerage, are bringing logistics into the world wide web. The best thing about AF is, you don’t have to do a thing. Just let us do the job of searching through the entire shipping mess (it’s really a mess, the shipping industry), and we will get you the quotes you need.
Follow us on Twitter!
Check us up on Facebook!
Shipping is always cheap
Sep 7th
Did you know, shipping is actually a cheap thing to do? Any transportation, the fees are cheap! You can see it. Look for OCF(ocean freight rates) in ocean shipping, or transport charges for trucking. The fees are always nice and low.
*Hey, but I don’t see that in the total! It’s so much more!*
Yes, that’s where the extra charges come in. Let’s just talk about the major extra charges in shipping shall we?
BAF
BAF stands for Bunker Adjustment Factor. This crap usually pokes your freight rates in the as* because it is a supposed added rate due to increased fuel prices. And no, the amount ain’t low. You will be surprised. Many times you see BAF that costs much much more than the ocean freight rate itself. Amazing ain’t it?
Local charges at both ports import and export
This is lame. And this is why owning a port is one of the most lucrative businesses in the world. Just look at Singapore! Local charges imply charges coming from ports and the related stuff done at the ports. There’s THC – terminal handling charges: charges made for handling your cargo, there’s forwarding charges: charges you pay for letting others go through customs for you, and so on and so forth. This again, usually exceeds many folds on your actual shipping fees.
There are other fees too, but their amount is not as bad as these two. So always make sure you ask your forwarder about each individual charges! Learn and understand. Then do a comparison against other forwarders. Some forwarders mark up prices for every damn fee, leaving a bad reputation for all other forwarders. Most fees are supposed to be fixed!!!!!!
BonoKo
