Why are freight forwarders so scared to give away their secrets? Quite simply it’s because they’re inefficient. They rely on their perceived expertise and many hidden costs to turn a profit at your expense.
I’m Don Malcolm, Managing Director of Malcolm Total Logistics, and with 30+years in the industry we’ve seen some weird and wonderful things (I got my Customs Brokers licence in ‘84) . It’s unbelievable how little tricks most of our clients eventually adopt end up saving them a lot of money in the long term and let them focus on their core business rather than admin. Most companies that import and/or export have dreams of scaling well beyond their own walls and all will need help with freight at some stage. It’s often the big name brands you see sponsoring global rugby competitions that get the first call but it won’t take long to realise you're a small fish in a big sea (million dollar sponsorships don’t come cheap).
What over three decades in the industry has taught me is that international events can displace a company’s growth cycle for a decade or more and create new costs that get passed down to you (an example is 9/11 that added significant compliance costs). With a few simple tricks the costs can be minimized and deferred.
1) Get a quote, inclusive of EVERYTHING, before you start
No surprises or hidden costs. This is such a simple concept but so often overlooked or not offered. If your freight forwarder can’t do this you might be losing out. FOB (freight on board) or Ex works – never CFR (cost & freight). We haven’t always been able to do this, it’s not always the industry standard, but advancements in technology allow for accurate quotes every time so there are no excuses.
‘I can’t believe people still do it this way!’
Like petrol, international freight is a commodity, with very little variation between brands. Unfortunately freight companies don’t compete as publicly and can hide costs. It’s up to you to compare quotes regularly. Recently major international forwarders (Panalpina, Geologistics, Bax, EGL, Schenker, Kuehne & Nagel,) broke the law and colluded to raise freight prices (read how they were punished here).
2) Deferred Payment
New Zealand Customs (govt) offers a free credit facility to regular importers who pass a credit check. Credit of up to 50 days is available (depending on where in the cycle shipments arrive). For further information on their website or contact Ricky@malcolm.co.nz or DDI 09 255 1706.
‘So many importers have no idea about this facility and it’s just another case of their forwarder denying their client the little perks of NZ business.’
Quite often it’s the deferred payment option determining whether a shipment will go ahead (this month or the next based on cash flow).
3) Pay all charges in $NZD
Many shippers, particularly from Asia, will offer to pay the freight, which will then appear on the invoice with the goods to the importer. In reality, the forwarder is often paying the shipper a ‘back-hander’, with a far greater ‘collection fee’ being imposed when the shipment arrives in New Zealand.
‘There’s often 50%+ added to the total shipment costs, turning what started as a great deal into a nightmare.’
A true lack of transparency has tainted the industry with ‘smoke & mirrors’ tactics. Achieving a reduction in cost by 40% is common. Over $5bn is spent on freight by NZers each year,in 2010, that was about 2.7% of our GDP.
4) Use a Local Customs / Freight Broker
Preferably one with no vested interests. An independent broker should be able to offer a number of options, sailings, transits, allowing the client to choose what suits them best. Think of it like cherry picking, you only want the best, not just what’s easily available. Typically, a multi-national forwarder will offer a few options that suit THEM best, never mind what is best for the client. Local brokers buy freight space together and consolidate to save time and space. If there are containers coming from China with space enough for your shipment(s) then why not take advantage of the time and cost savings. Larger freight forwarders often operate in their own bubble and don’t assess all the options for their clients.
In the event anything goes wrong (for example a claim or a missed vessel), the client really benefits from a dedicated broker in New Zealand, someone who will pick up the phone and chase the freight as if it were their own. They will have organised the shipment with reputable forwarders and should be able to quickly sort out any issues. Conversely, if the shipment has been arranged at origin, there is almost nothing that can be done - you are on your own.
5) Why the delay? - a little secret
Having just paid to fly or ship product from the other side of the world, many importers face a delay greater than the transit time for delivery from the airport or port to their premises. Why?
There are several reasons, including bottlenecks and areas of great inefficiency at some devanning stations, often requiring many hours of waiting around. We consider the ‘total transit’ when planning shipments, and may avoid options that end up at specific devanning yards –there is no point getting a great deal on the international leg if the time and cost of 3-4 hours truck hire waiting at a freight depot in Auckland changes the outcome.
‘During times of crisis or during the busy seasons it pays to have strong existing relationships in place with influencers at the air and sea ports.’
Someone has to pay for waiting time and this is inevitably the client. We have a fleet of curtainside trucks (most with tail lifts) that operate differently to the usual transport model. Traditionally carriers do multiple pick-ups from depots, then deliveries to multiple clients. We tend to specialise in ‘point to point’ work – each truck going as directly as possible, reducing delivery time, and time is money. Our staff are well respected, connected and experienced dealing with front line staff at all local ports and have no hesitation in picking up the phone for any client to get things moving.
‘We’ve consistently seen 10-40% reduction in associated costs when reviewing a client’s freight costs based on the above and more.’
To get a review of a past shipment or discuss any of these further, contact Don Malcolm, firstname.lastname@example.org, 09 255 1711.
We don’t work with just any company and you’ll have to answer a few questions (but we are passionate about helping NZ businesses grow).
Malcolm Total Logistics have been a service partner since 1991. I have been with Blackwoods Paykels for just over 9 years and during this time have had many dealings with MTL, often several times a day, and have always found them to be very helpful and professional.
One of the key advantages of dealing with MTL is that they are a Company that values their people, and as such, have many employees with long service and hence have a high level of skill and an intimate knowledge of our business and requirements and are continually putting forward suggestions to simplify processes allowing us to reduce internal costs
At any time we are able to pick up the phone and speak to MTL and seek independent and unbiased advice. MTL is always willing to help
Dealing with MTL gives us guaranteed rates and a very high level of service and at the end of the day, a Peace of Mind that our shipments are in very good hands
I would have no hesitation in recommending MTL to other prospective clients and would be happy to be referred to further if required.