Monday, May 6, 2013

Using your own freight forwarder...? Why that may not work out as you'd expected...

Following is a reply letter to a customer who's entertaining the possibility of doing the importing on his own.

Due to the relatively longer turn-around time involved in overseas sourcing, he's planning to fly in a portion of the products in order to meet his own deadlines while leaving the majority to ocean freight.  He's solicited quotes from freight forwarders to bring in the products from China.  While it is technically feasible, it is not our common practice to do so.

Customer politely asked us to use a freight forwarder he's never met, the lowest price he'd received from the Internet searches, for the pending order, and all future orders for other customers...

Thank you for the referral.  We’ve been working with our select five freight forwarders for over 10 years.  We used to shop around for the best price, but logistics really doesn’t work that way.

You are welcome to use someone else for your air shipments; however, like I said previously, we only do CIF or DDP on the products.  So, your ocean will be stuck with us.  That is, unless you are going to fly everything over.

The quote you received from this freight forwarder includes both air and ocean shipping.  However, in the logistics world, you'd usually get better price and service from specialized freight companies who specialize in either of the transportation mode.

Our prices to you, for both ocean and air, is a price based on the future cost of shipping.  When you shop around, you get a quote if you were to ship within the next few days.  In our business, we need a crystal ball to gaze into the future one to two months and come up with a shipping charge at that time.  So, whatever you get quoted now by others doesn’t really mean what you’ll be paying when the product is ready to ship, especially air freight where fluctuation is almost on a weekly, if not daily basis. 

Please do keep in mind, if you should decide to use your own air freight, once we hand over the product in China to your freight forwarder, we will no longer be involved for that shipment.  You’ll need to work everything out with your freight forwarder on your own that may include all the paperwork and customs issues. 

I also want to warn you about using your own freight company.  Certain product issues may involve shipping.  When such an issue arises, it’ll be very difficult, and time-consuming, to decipher what exactly went wrong and who’s the responsible party.  When that happens, you, as the customer, will usually end up to suffer the most since nothing will get fixed until the responsibility is fully assigned.

There are always hidden charges and many unexpected events that’ll take place.  For example, your other quote email had a fine print that said something about customs exam.  These do happen.  It happens for us, but definitely less common than for you as an occasional importer.  If you get selected for inspection, there’ll be additional costs and time, not to mention tons of other hassles that you may possibly have to handle on your own.

Another hidden charge that wasn't clearly specified in the quote is the need for an import "bond."  For this order, you'd be better off paying an one-time annual fee of $450+.  However, on his quote, he only stated "$5/1000 of Total Inv."  Do you really see that you'll be paying more than $500 on this item alone? 

Furthermore, he specified a MPF charge of: "$0.003464%."  Do you really understand what it means...?  This is obviously stated erroneously since MPF is 0.3464%.  But for an average unsuspecting customer, there is no reason you'll see the finer details.

Please also make sure your quote reflects the exact departure and arrival ports.  I only see "China" marked on the quote, but which port in China makes a difference in freight charge.  The freight forwarder you've found obviously did not make that distinction, this means you are really just getting a rough number, not something you can readily use.

The laundry list of fees found on the quote you shared with me, when all added up, is just about as much as our fees.  The biggest difference is that we did not list all the items that goes into importation since this is part of our services, and that we believe our customers shouldn't be bothered with it.

In importation, you can't just focus in on the cost of ocean freight as the singular cost you'll pay.  Our charges to you is all-inclusive -  DDP (delivered duty paid) to your door.  You do not have to lift a finger or be bothered by customs and paperwork, everything is taken care of by our expert staff.

We insist on shipping on our own instead of letting customer handle it is because of all the issues pointed out above.  Amongst our customers are many very experienced importers.  For them, like for us, importing is just another daily routine.  However, even under those circumstances, they still gladly give up the importing duties to us.  There is something to be said about that.

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