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Freight and logistics

Transporting your products overseas

For goods exports, transporting your product to an overseas market efficiently and competitively is crucial. Using a good freight forwarder is very effective, but it is also essential to understand the basics of shipping terms, pricing and documentation.

Where do I start to learn about shipping and service delivery?

Using a good customs broker and freight forwarder is the most efficient way to ship your goods. These companies are expert in documentation, freight rate negotiations and finding the most economical way to get your product to the buyer.

Your product may be suited only for ocean shipping or for airfreight. It is important to understand the basic principles of both sea and air cargo as rates can vary when new capacity is offered on trade routes and when new markets are serviced, often with a range of intermodal services.

What do all these shipping terms mean?

Sea and airfreight have a well-ordered series of conventions and these need careful study. A good starting point is to learn what are known as INCO terms (International Commercial Terms). Introduced in 1936 and modified since, INCO terms are critical for the consignment and payment of goods shipped internationally, and have precise definitions.

Letters of Credit (L/C) are a common form of payment, known as a documentary credit, established by the buyer and guaranteeing payment to the seller providing all the documentary terms of the instrument are strictly adhered to. Your bankers will provide you with detailed background information, essential for any exporter.

How do I negotiate the best freight rate for my cargo?

Freight forwarders will provide you with a range of options to find the most cost-efficient rate, but be familiar with freight markets so you can gain the most competitive rate.

Your overseas buyer will often specify the preferred option and this could depend on ease of customs clearance at the port of discharge or the frequency and reliability of sailing. Transhipment is a common feature of liner shipping.

‘Hub’ ports such as Singapore, Hong Kong and Dubai distribute containerised cargo to other ports by ‘feeder’ vessels. Make sure, however, that the transhipment hub is efficient so your cargo does not suffer delays.

Most freight forwarders have space and freight rate deals negotiated with sea and air carriers. What’s important is to locate a forwarder who caters for your business profile – both in scale of operation as well as geographic coverage.

Isn’t export documentation complex?

Export documents require careful preparation to avoid delays in customs clearance at their port of discharge and also to comply with documentary letters of credit that specify conditions such as precise product descriptions, packing lists and attestations including quarantine certificates and certificates of origin. Electronic documentation has made a complex process much easier, but mistakes can be costly. It is imperative to understand the export documentation process and to ensure that the preparation of documentation is carried out with meticulous accuracy.

Finding a freight forwarder

See the websites below for listings of freight forwarding companies.

For more information, please call 13 28 78 or email info@austrade.gov.au.

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Useful websites

Where do I start to learn about shipping?

The Australian Freight Councils Network – www.freightcouncils.com.au
Provides references to state and territory-based freight organisations covering both air and sea cargo. Check the websites of members for information on services.

The Australian Trade and Shipping – www.australiatrade.com.au/Shipping/index.htm
Provides useful background information, as well as data on the company’s services.

The Logistics Association of Australia – www.laa.asn.au
Provides some useful background on logistics.

What do all these shipping terms mean?

International Chamber of Commerce (ICC) – www.iccwbo.org/index_incoterms.asp
Has a detailed review of Incoterms.

Isn’t export documentation complex?

The Australian Institute of Export – www.aiex.com.au
AIEX provides hands-on training in export practice.

Finding a freight forwarder

Sensis Australia – www.sensis.com.au
Sensis provides access to a range of databases, including the Yellow Pages, which lists about 1000 freight forwarding companies, many of them offering international services.

Tradegate – www.tradegate.org.au
The site has details on a range of export transportation services.

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Checklist 

Freight and logistics

Establishing a relationship with a good freight forwarder is key to building your business.

Learning INCO terms is critical to your business. Incoterms are crucial to the way you quote your prices for delivery.

Your bank is a good source of advice.

Keep abreast of the range of logistics options that is now available.

Become familiar with shipping times, routes and modes so you can offer your buyer a range of options.

Precise documentation is critical.

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Austrade makes no warranty, express or implied as to the fitness for a particular purpose, or assumes any legal liability for the accuracy or usefulness of any information contained in this document. Any consequential loss or damage suffered as a result of reliance on this information is the sole responsibility of the user.