THE FIRST TIME..!!
In anything that we do in life, the first time is a scary thought – first time on a bike, first time driving a car, first time swimming, first date, first kiss ……………….. etc..
So why should shipping your first container be any different..??
It could be a scary thought if you are a first-time exporter or importing for the first time, but like everything else, if done and handled correctly, shipping your first container can be a good experience as well..
Here are some tips to assist you in shipping your first container..
Understanding your product and the market that you are going to ship your container to is KEY.. This is key because each market works differently even for the same product.. If you are shipping wine for example, it may require a permit for import into a specific market but may not be required in another market..
Conduct a research of the market that you are going to ship to.. This will help you reduce risks and increase your success rate..
Is the market easy to deal with, or are their linguistic or cultural barriers, what would be the demand and how long will it hold..
Many trade departments in governments around the world provide research assistance for new markets as part of their trade promotion initiatives.. Use them wisely..
Part of knowing the market also involves choosing a route to market.. Route to market means identifying what is the best means to get your cargo to a specific market and what is most beneficial for your product.. To some markets it is most beneficial to sell directly whereas to other markets it may be beneficial to use a distributor or sales agent..
Ensure that you make your terms of sale CLEAR with your buyer and without any ambiguity.. Discuss it down to the smallest nitty gritty and smallest cost, make sure you cover it all and that it is all in writing with the agreement of both parties..
Do your due diligence on the buyer especially if you are selling on C or D terms from within the Incoterms® rules stable, because a lot of risks and costs are that of the seller under these terms..
Re-check and verify ALL information you can on the buyer especially information relating to their general reputation, products handled, financial and trade references..
Ensure that all your commercial documentation is aligned with these terms of sale and reflects the correct information so as to avoid any delays at export stage or at import stage..
Understand who pays for what in a sea freight shipment as you could end up paying for charges that you need not have really paid for under the terms of your sale or contract of carriage..
Know and understand the characteristics, distinctiveness and vulnerabilities of your cargo because only once you know the this, you can identify which type of damage your cargo may be susceptible to or cause and take preventive measures to avoid cargo damage..
For example, if you are shipping cargo that is sensitive to movement like glass, certain machinery, artwork, vehicles etc then you need to know what type of damages can occur due to the movement of the sea, truck etc and take suitable precautions to protect your cargo against such damages..
A few important factors to consider when packing your cargo is to
- plan the stowage of the cargo in the container
- ensure that all container weight limitations of the container are met as per the markings on the container as there are consequences of weight misdeclaration
- distribute the weight equally inside the container taking care not to exceed permissible weight concentrations per square foot of deck
- avoid concentrating heavy weights at one side or one end
- stow heaviest items on the bottom for stability
- box, crate or place on cradle the heavy items
- ensure that incompatible cargo is not mixed in the container (like mixing clothing with chemicals)
- ensure that cargo that is susceptible to leakage or spillage is not stowed on the top of other cargo
- observe hazardous packing guidelines
The Essential Guide to Cargo Damage provides you further information on how to pack your cargo..
If you have any doubts on the best practices to pack your container, you should use a professional packing warehouse or packing company to do this job and ensure that your cargo withstands all of the above and reaches its destination safely..
Which brings us to the role of service providers or vendors who will be assisting or handling your shipments..
Apart from the above mentioned packing warehouse, there are several entities that you may be employing, contracting or using to assist in shipping your container
- Truckers
- Clearing Agents
- Freight Forwarders
- Shipping Lines
- Surveyor/Tally company
- Insurance Agent
- Fumigation company
- Weighbridge for SOLAS VGM
These are just a few entities depending on the type of cargo being shipped and container used..
Using the right vendor for the right job makes a HUGE difference and can be the difference between the success and failure of your shipments..
Understand the role of each of these entities so you know who to contact if anything does go wrong or you are stuck at some point in time with your shipments..
Identify the strengths and weaknesses of each of the entities and in some cases you may use multiple vendors (say truckers) to carry out the movement..
There are several rules and regulations involved in the export of goods.. While you might have looked at it or studied it pre-shipment, the acid test is when you start with shipping your first container..
YOU have to make sure that all rules and regulations relating to the cargo (permits, licences, acceptance etc) are checked and confirmed, ensure that country regulations both at POL and POD are followed and that the carrier’s regulations for the carriage of the goods are complied with..
If you are shipping hazardous goods, those special regulations needs to be followed as there are several consequences of misdeclaration or improper shipping of goods..
A KEY aspect of any export.. Documentary requirements related to your shipment must be followed strictly to avoid additional costs..
Incorrect, delayed or incomplete documentation is one of the major pains that new exporters face all the time.. Don’t make this mistake.. Create a check list of all documentation required for your shipment way before you start with it..
Some of the standard documents you need to familiarise yourself with for your shipment may include
- Commercial Invoice
- Packing List
- Certificate of Origin
- Letter of Credit
- Bill of Lading
- VGM Certificate
- Customs Clearance and Port Documents
- Export Permits/Licences
- Phytosanitary Certificates
Read and learn all about the various types of payments and its implications..
There are several forms of payment each with its own element of risk.. A graphical representation of the element of risk in relation to the buyer and seller is shown below..
The buyer and the seller must come to an understanding on which form of payment terms suits them both and work according to that..
When in doubt, obviously consult a reliable Trade Finance consultant or your bank..
Another point to consider is the impact of Rate of Exchange on your shipments.. Constantly monitor the same and where possible, schedule your shipments so as to get maximum benefits out of Rate of Exchange fluctuations or stability..
Understand where and how to save costs
Although cheap is not always best, saving costs when shipping your goods is also important.. There are various processes and procedures involved in shipping but that doesn’t mean that you cannot save a few $$$ in the process..
It pays to get into this habit right from your first container..
For example, know the free time that your trucker offers for the packing of your goods at the warehouse and plan your warehouse operation/planning accordingly so you can complete the packing within that time..
Many shippers do not pay attention to this aspect and end up paying truck detention or standing time unnecessarily simply because they didn’t check with the trucker on this aspect or did not convey same to the packing station.. This delay could impact also other areas like stacking the container at port in time etc..
If your packing area or cargo source is a little far out of the port area and may need additional time for transportation, you could negotiate with the shipping line for additional container free time to avoid demurrage or detention..
Understand what a freight quotation involves and covers and also read up on strategies and tips on securing the best sea freight rates that can help your business..
Depending on the importer, type of contract of sale or Incoterms used, you could use an Express Bill of Lading instead of a Negotiable Bill of Lading or an Electronic Bill of Lading can save you costs of couriering..
The risk and costs associated with losing an original bill of lading could be quite damaging especially if it is the first container..
There are also various technology platforms that could assist you in reducing costs, cutting down time frames and increasing shipment efficiencies.. I have reviewed a few such platforms on this site..
In some cases you could also save costs by shipping goods on FCL than on LCL/Groupage basis even if the container is not full or will not be full.. LCL is not always cheaper than FCL even if you don’t have enough cargo to fill a container..
Cargo Insurance
This is one area where several new shippers go wrong by shipping their goods on the assumption that if they take all precautions and follow guidelines, everything will be fine and that they don’t need to insure their cargo..
Or the assumption that when they hand over the goods to the freight forwarder or carrier, the goods are insured..
Wrong..
Cargo insurance is the responsibility of the seller or buyer depending on the Incoterms® used.. In a lot of the cases, while there may be every intention by the buyer or seller to insure the goods, incorrect interpretation of the terms of sale or Incoterms chosen could lull you into thinking that the other person has insured the goods or it is the other person’s responsibility to insure the goods..
You may also have faced a situation wherein you might have been misguided by your service provider(s)..
If your cargo is not covered sufficiently by insurance and cargo damage or total loss happens due to any of the above movements, you as the buyer or seller will be sitting with the loss..
In your own interest and the interest of your business, you need to ensure that your cargo is sufficiently covered by cargo insurance..
In this very useful article, Muthu Jagannath says that while insured cargo interests are able to deal with both Salvage and General Average expeditiously through their insurers, uninsured cargo interests generally face difficulties as they would not only have to make various arrangements but also provide securities as may be demanded for Salvage and General Average..
These securities can run into thousands or millions of $$$ which clients may not have..
Conclusion
International trade, and shipping your first container could be quite daunting, but there is definitely assistance at hand and there is a lot of experience in this area – both from seasoned exporters through export forums, Governmental initiatives or from experienced logistics services providers who can guide and assist you with your requirements..
YOU ARE NOT ALONE.. So chin up and go ahead and ship that first container and conquer the world of exports.. All the best..
If you are about to ship your first container or willing to share some of the experiences you had in shipping your first container, please do so in the comment section..
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