Finding Safe Harbor in the World Ports Jaguar Freight Services by liaoqinmei


									SUPPLY chain                                        by simon kaye

Finding Safe Harbor
in the World’s Ports
Combining an effective freight forwarder with efficient shipping
terms is increasingly key to effectively importing, exporting and
conducting business globally.

        s manufacturers of cosmetics expand          inseparable from quality port operations:        from a reliable freight forwarder is often
        their global sourcing, the role of port      properly selected freight forwarders and         the only way to overcome such roadblocks.
        facilities is central. Most ports today      properly selected shipping terms.                Developing personal relationships are
compete globally with one another, and                                                                essential to understanding foreign business
reflect tremendous gains in productivity                                                              culture, and to cementing agreements
in ocean transport achieved over the past
                                                     The Freight Forwarder’s Role                     between partners, who may or may not speak
several decades. Importers of cosmetic               Cosmetics producers should use freight           the same language. By taking advantage of
ingredients, raw materials and finished              forwarders as the vanguard of new                established freight-forwarding agents in the
products—like all importers—seek improved            technological advance and cutting-edge           region, a company can increase its ability to
port efficiency, lower cargo handling costs          supply chain methodology. Their services can     get results and track its goods effectively.
and port services that are integrated parts of       be customized for use by both the smallest
the global distribution network. Many ports          and largest businesses and corporations.
are responding with specialized tracking and
                                                                                                      The Role of Shipping Terms
                                                     Freight forwarders can often find creative
handling capabilities that add value to cargo        solutions where traditional supply chain         Using an established freight forwarder,
throughput.                                          handlers see obstacles. When it comes to         working through efficient port facilities,
   Consider, as an example, the ports of East        challenges such as refrigeration, throughput,    generates another benefit when shipping
Asia, through which much shipping passes.            theft, customs and other regulations,            terms are properly structured. Before the
In China, the port of Shanghai ranks first           and product tracking, freight forwarders         wide use of online technology, trading terms
globally in cargo throughput, and its facilities,    consistently solve problems in a non-            were limited generally to cost/insurance/
which have been expanded substantially in            traditional way that adds value.                 freight (CIF) charges. In CIF terms, the
recent years, have direct routes to more than           A professional logistics company represents   shipper chooses the freight company and
20 other global ports. At Ningbo, another            the interests of the full range of cargo and     includes all insurance and freight charges in
vital Chinese port location, the government          supply chain nodes. In addition to having a      the shipping price. This makes verification of
is investing billions of dollars in more than        vested interest in the ups and downs of an       the charges for freight and insurance difficult,
40 port transportation facility projects. Other      entire region, freight forwarders have another   particularly as companies increase their
competing port locations are investing,              ace in the hole: the government agencies         number of overseas suppliers and overall
too. In Malaysia, the major facilities at Port       responsible for customs clearance and other      freight volume. The greater the number
Klang, Penang Port and Port of Tanjung               regulatory issues are much more sympathetic      of CIF shipments, the more problems can
Polepes have advanced facilities—including           to the goals and aims of such a broadly-         occur with obtaining accurate shipment
electronic data interchange (EDI) systems            backed organization. Foreign supply chain        information.
and ample handling capacity. In Singapore,           networks should not be constructed without          Importers may think that having their
port and cargo handling facilities are modern        relying on seasoned guides who know how to       supplier arrange and pay for the main
and include advanced EDI systems, and the            improve throughput, navigate problems and        carriage is more convenient, but they
port authority has continually invested in           deal with the governments and ports.             generally wind up paying more when the
expanding the port-handling capacity to cope            In foreign countries where sourcing cannot    supplier chooses the freight company.
with future demand.                                  be assured of the due process of law, such       Sometimes the supplier does not have the
   For the global cosmetic industry, then, the       as China, it is vital to collect data and keep   vested interest or the leverage to get the best
quality of the physical elements in a world          track of all freight in a way that creates a     freight price. Other suppliers may build a
class port can virtually be considered a given.      provable and thorough paper trail. Crime,        higher rate into shipping terms to cover
Far more important in terms of achieving             loss, bureaucracy and corruption must all        insurance costs, currency fluctuations or
sourcing efficiency are two strategic elements       be taken into account. Electronic tracking       delays from bad weather. The result of these                                                                                                                  Supply Chain   81
SUPPLY chain

and related factors mean that shippers may       shipments operate do not deal with the           has local knowledge and will represent its
build substantial additional freight charges     transfer of ownership, when transfer of title    clients’ interests under FOB shipping terms
into its rates, which are often not itemized     in goods takes place or other terms necessary    is the essential ingredient to successful
for the importer. The United Nations,            for a complete contract of sale. The issue of    importing through ports anywhere in
through its Centre for the Trade Facilitation    the transfer of title remains subject to what    the world. It facilitates the movement
and Electronic Business, has identified more     has been agreed upon between the parties         of products around the globe—quickly,
than 200 additional freight charges that may     in the relevant sale contract and applicable     cleanly and without loss. Understanding
legitimately be added to the importer’s costs.   law. In the contract terms, cosmetics            the unique challenges of local sourcing
   In contrast, shipping Free On Board           manufacturers, particularly ones with high       markets, using modern tracking methods
(FOB) offers more competitive freight            volume importing clout, can arrange to take      and shipping terms to ensure accurate and
rates and enhanced shipment control. FOB         title to the goods shipped only after arrival    efficient product flow, and having a direct
integrates perfectly with electronic tracking    in port—offering significant accounting          local presence through a freight forwarder
because increased supply chain visibility and    advantages relating to how inventory is          of choice gives companies a far better chance
control are critical FOB benefits—created        reported. The sales contract can provide for     of creating a supply chain with a minimal
because the importer, not the supplier,          supplier invoicing upon confirmed arrival        amount of inefficiency and maximum
selects the logistics company. By taking         at destination port, and tracking will be        amount of flexibility—no matter how far-
title to the goods as they go onboard at the     made available to the supplier on-line and       flung are the ports that it uses. n GCI
overseas port of shipment, the importing         via e-mail notification. An online tracking
company is better able to obtain accurate        system is a huge advantage in making such
and timely shipment information by               cost-efficient arrangements work.
working with the freight forwarder that it                                                                     SIMON KAYE is founder and CEO of
chooses. In this way, the importer is assured                                                                  Jaguar Freight Services, with operations and
                                                                                                               fully integrated door-to-door freight solution
the freight partner is working for it, not the   The Essential Ingredient                                      networks in Europe, North America, South
local supplier.                                                                                                America, Australasia, Asia, the Middle East
   Moreover, the INCOTERMS (INternational        For cosmetic companies that source globally,                  and Africa. E-mail:;
Commercial TERMS) under which FOB                selecting a first class freight forwarder that      ; 1-516-239-1900

                                                                 for Personal Care

                                                                   This informative collection of articles covers a variety
                                                                   of topics to create a solid foundation of knowledge
                                                                   about fragrances for the personal care industry.

                                                                   Topics include:


82    Supply Chain                                                                                                                   GCI September 2008

To top