Sticker Shock: Avoiding Added Charges to Your Shipping Invoice

Avoid Unpleasant Surprises

There is nothing felt more acutely by a business owner than unexpected costs. Margins are always a concern, regardless of any underlying economic conditions. Business costs must be tightly controlled to ensure the best possible margins. Whether you or your customer absorb the cost of shipping, there are some simple things you can do to mitigate any unpleasant surprises and they all revolve around clear communication.

Accurate Dimensions

Providing accurate dimensions to your carrier, freight broker, or freight forwarder is the single most important thing you can do to mitigate your overall shipping costs. Material objects take up physical space. The space on any vessel (ship, truck, rail car) is finite. Knowing and relaying accurate dimensions of your shipment is crucial as each square foot, square meter, or linear foot on a conveyance vehicle costs money and is billed out accordingly. Be as accurate as possible. If you have measured twice, measure one more time. And remember that the standard practice in North America for road freight is to provide measurements in the form: Length x Width x Height. Units of measure are metric and/or US customary units. If you are shipping to Europe, the units of measure are metric.

Accurate Weights

All conveyance vehicles have maximum loadable weight restrictions. In addition to costs, accurate weights are an important part of safety considerations as an overloaded vehicle is a dangerous vehicle. The mass of your shipment is also intimately connected to the dimensions of your shipment and both measures are used to determine an accurate shipping quote. Consider a load going from point A to point B weighing 300kg. If this is the only measure relayed to your shipping broker, you may be unpleasantly surprised with your shipping invoice if the truck pulls up to the pick up location and the 300kg commodity is several hundred inflated helium balloons in a net measuring 50ft x 8ft x 8ft! Always relay an accurate weight and accurate dimensions.

Commodity Description

Though not an initially obvious correlate, a detailed description of the commodity being shipped is crucial information. It is important for your shipping broker to have a detailed description of the commodity being shipped so that s/he can determine the best possible shipping method. Your broker needs these descriptions to determine whether or not the commodity is temperature sensitive, whether or not it can be stacked, what type of equipment may be needed for loading/unloading, whether or not the commodity is considered a dangerous or hazardous good under existing regulations, etc.

Accurate Times and Addresses

Always provide your shipping broker with accurate pick up and drop off information. It is crucial that drivers are able to find the pick up and drop off locations for your shipment. If your customer has an obscure address, consider providing some directions, landmarks, or cross streets with the consignor address.

It is also important to consider and communicate the following information:      1) what are your business hours?                                                                                                    2) what are your customer’s business hours?                                                                            3) is there a dock available for loading/unloading? (if NO, there will often be an extra charge for power tailgate service).                                                                                     4) if a dock is available, can it accommodate a tractor trailer?                                         5) is the destination a business or residential address (there may be extra charges applied for delivery to a residence).

You and your customers may be able to take cost saving advantage of picking up at a dock or a warehouse. Ask your shipping broker if this is a viable alternative for your shipment and it may translate into cost savings for you and your customer. Just be aware that there will be some nominal charge for the docking and there may be a nominal charge applied for the notification for pick up.

Communicate.

Your shipping broker is here to help you with your shipping solutions. This relationship must be based on trust. Communicate with your shipping broker to create a seamless and efficient experience free from any unexpected surprises.

–Nikolas Guemos

Please check out the Transporters web to see how you can save on your shipping costs.

Freight Insurance – Should You or Shouldn’t You?

“Let that which has been jettisoned on behalf of all, be restored by the contribution of all.” — Rhodian Maritime Insurance Law c. 700BCE

The oldest form of cargo insurance was a form of loss control practiced by Chinese merchants dating back to 3000BCE. Merchants would spread cargo among several vessels to protect the cargo from natural disaster and from the most common liability, piracy!

The earliest record of codified insurance practice was that of the ancient Babylonians and found in the Code of Hammurabi around 2100BCE. This form of “bottomry” set an advance of 20% of the value of the cargo against the loss of that cargo to various marine jeopardies. The use of bottomry continued throughout the ancient Greek and Roman worlds. The formation of guilds in the 12th century saw the beginnings of what we would consider more “modern” insurance principles. These principles were further systematized by the merchant city states of the Italian peninsula and imported to London by the 17th century. It was here that an astute coffee shop owner named Samuel Lloyd facilitated meetings of underwriters and insurers in 1688.

The principles and use of insurance against shipping perils has been a reality for thousands of years. But the question remains, given that most of today’s carriers are insured, do you as the shipper need insurance for your cargo.

The answer, of course, is ultimately a personal decision and essentially depends upon the valuation  of your shipment. The legal convention around insurance is that the shipper (the owner of the goods) is responsible for insuring the goods, but the shipper can appoint an agent (the carrier) to deal with the insurance on the shipper’s behalf.

Most carriers today carry motor truck cargo  insurance (CSIO Commercial Vehicle Supplement Insurance). This type of insurance typically (notice that I said, “typically”) covers total loss and partial loss (damage) to freight. But beware! Motor carrier insurance is as varied as the motor carriers. Coverage on these policies is diverse and coverage is not the same for all carriers. As the shipper, it is incumbent upon you to ask the pertinent questions about the carrier’s insurance coverage.

Most road carriers will insure your freight by the pound. Industry “standards” in North America range between $0.10 per pound to $2.00 per pound. As an example, if your shipment weighs 500 LB (227 KG) the maximum coverage for your shipment will be $1,000.00 @ $2.00 per pound.

If you require more coverage than the carrier’s standard coverage, most carriers will offer extra insurance coverage (at a fee per shipment) or you can buy your own insurance through the underwriter of your choice. Whichever route you decide to take as a shipper, it is probably best to seek out an “All Risks” policy. This type of policy generally includes the most comprehensive coverage (excluding war, strikes, riots and civil commotion, and other such perils usually defined in a force majeure clause).

To determine whether the insurance coverage offered by the carrier for your specific shipment is adequate, the following questions and protocols may be useful:

1) Ask to see your carrier’s cargo insurance policy;

2) Always ask your carrier what their standard coverage is for damage or loss;

3) Always declare a shipment value on your BOL (Bill of Lading);

4) If you are contemplating added insurance, shop around. If your shipment is time sensitive, added insurance may be the only way to go as most carriers will not cover losses due to late shipments or diverted shipments;

5) For exporters, Political Risk and Credit Insurance is also available  to protect against foreign political change or buyers who don’t pay.

Insurance considerations are inherently complex and whose nuances will be addressed in later posts. In the interim, as a shipper, the best way to get the most pertinent information about insurance coverage for your shipments is to make the necessary inquiries of your carrier.

–Nikolas Guemos

Please check out the Transporters web to see how you can save on your shipping costs.

Saving Time and Money by Using a Shipping Broker

If you can, you will quickly find that the greatest rate of return you will earn is on your own personal spending. Being a smart shopper is the first step to getting rich. — Mark Cuban

Whether you are a small business or large corporation, you must get your product to market (and concomitantly, to your customers) in the most efficient way possible. Without a shipping solution, your company, big or small, will founder and be lost in a sea of competitors. As a business, it is important to leverage every aspect of your operations and to streamline them.

Many companies and their operations personnel view shipping costs as just another “cost of doing business”. Considered in this off-hand way, many companies inevitably find that they are paying far too much in freight costs. There are many factors that determine the “real” cost of shipping your products to the marketplace.

Scenario 1: You may have a long-established working relationship with a single large volume freight company. You call the dispatch office, give them the details of your shipment, and relay the information to your shipping department. You haven’t spoken to your representative since the day you opened your account, and you couldn’t recall the name of your dispatcher at the carrier company because they change all the time. But your shipments seem to arrive to your customers (more or less on time) and anyway, you have other more important operational tasks. This “out of sight, out of mind” approach could be costing you money.

Scenario 2: You spend the better part of the day tracking down the best price you can find to move your goods. You don’t know anything about the carrier but after the person on the other end of the telephone finishes gulping down what sounds to be a large bite of an egg sandwich, he (or she) assures you that your product (which represents you and your reputation to your customers) will be picked up sometime between 8am and 4pm. This approach is definitely costing you money.

Scenario 3: Because you know that your time is valuable and can be put to better use in your business, you make a single phone call and accept the first (and only) rate that is offered.

Clearly, none of these scenarios is satisfactory. Freight rates change all the time. If you or your business rely on or have relied on one carrier to meet your shipping needs, you are not taking advantage of LTL (less than load) opportunities, freight lane demand, or freight lane density. In scenario 2, acting as your own freight broker is fraught with unknowns and is a wasted allocation of your talents and operations direction. And scenario 3 does not take advantage of any of the existing freight management opportunities out there. In the end, all of these approaches cost you and your business money. But hey, it’s the cost of doing business…or is it?

The cost of doing business does not have to break the bank.

By using a qualified freight broker, you can mitigate both your costs and your risk, ensuring the best possible service for your customers at the best possible price for you and your business. A freight broker has established relationships with qualified and reputable carriers. Your broker can leverage freight lane demand, freight lane density, and transportation modes. Your freight broker is best situated to determine whether rail, road, or ocean freight makes the most sense for your unique shipping requirements. You save money in time as your freight broker uses his networks to find the best mode of transportation and then applies geographic and seasonal variants to negotiate the best possible price.  Your freight broker takes all the guess-work out of the shipping equation.

Your time is the single most valuable commodity in your business. Allowing your qualified freight broker to do the leg work for you, will not only save you money but will also mitigate your operational risk.

— Nikolas Guemos

Please check out the Transporters web to see how you can save on your shipping costs.