Freight and logistics

Checklist

  • 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.

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.

International Chamber of Commerce (ICC) – has detailed information on Incoterms.

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, however, 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.

How can I find applicable duty and taxes in an overseas market?

You will need the Harmonised Tariff Code (HTC) to search for import tariffs on the Tariff Download Facility on the World Trade Organisation website. If you don’t have the HTC, this can be obtained by visiting the Department of Home Affairs website or contacting them on 1800 053 016.

Your freight forwarder may be able to assist in finding the applicable duty and taxes in overseas markets.

The Australian Government’s FTA Portal provides tariff information on China, Japan, South Korea, New Zealand and Malaysia. Tariff data on more markets is being added to this portal.

You can also download export and import statistics for a specific product using the HTC on Australian Bureau of Statistics website.

Free Trade Agreements signed by Australia provide preferential tariffs to Australian exporters in certain markets. The Department of Foreign Affairs and Trade publishes the full text and related documents of Australia’s Free Trade Agreements.

Finding a freight forwarder

The Customs Brokers and Forwarders Council of Australia Inc. (CBFCA) Member Directory contains an up-to-date listing of international freight forwarders located in Australia.

Where do I start to learn about shipping?

The Australian Freight Councils Network – 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 Logistics Association of Australia – Provides some useful background on logistics.

How do I learn more about export procedures and documentation?

The Export Council of Australia – deliver practical education programs to companies in Australia and overseas, upskilling thousands of importers and exporters over years.

Whether you’re just starting out on your international business journey or you’re a seasoned exporter, there is a pathway of programs and services available to assist you to develop your skills and knowledge.

For further information please visit: ECA Skills Development team on 02 8243 7490.

Disclaimer

Austrade does not endorse or guarantee the performance or suitability of any introduced party or liability for the accuracy or usefulness of any information contained in this Report. Please use commercial discretion to assess the suitability of any business introduction or goods and services offered when assessing your business needs. Austrade does not accept liability for any loss associated with the use of any information and any reliance is entirely at the users’ discretion.

Why You Need To Know About Foreign Bribery and its Implications:

Bribing, attempting to bribe or facilitating bribery of a foreign public official is a serious crime and amendment to the Australian Criminal Code in 1999 makes acts of this nature overseas punishable in Australia. Companies can also be held criminally responsible for the acts of their agents. The extraterritorial nature of these penalties reflects the serious criminal nature of bribery and the detrimental effects it has on Australian trade and reputation, and international governance.

It is no defence that such acts may be common practice in some countries. You must be aware of the types of activities that are legal and illegal when interacting with foreign officials. The offence applies regardless of the outcome or result of the bribe or the alleged necessity of the payment: companies and individuals may be held liable regardless of whether or not the bribe obtains the advantages sought and whether or not the bribe was considered necessary to do business. Refer to Attorney-General’s Department Foreign Bribery website.