In the complex world of commodities trade, working through the logistics of transport can be confusing at best, and overwhelming at worst. Making the right logistics choice is critical – as transport is one of the most significant costs and can impose a significant risk, making the correct, decision directly affects goes straight to the bottom line. In several cases it can mean the difference between profit and loss.
As a small exporter where do you start? There are two choices available – deal directly with the primary freight companies involved, or use an Intermediary Trading Company or a Freight Forwarder to facilitate the movement of your precious goods to market.
There are not many small businesses that have the capacity or resources to negotiate competitive rates for product and freight; or employ staff with the expert administrative skills, or necessary experience required to arrange Trade protections such as Customer Insurance Cover, Letters of Credit and/or freight insurance. Considering the burdens of ensuring your products are moved safely through the various parties involved, from the point of production to arrival in the final market, the administrative challenges are enormous. On top of this you have added complexities and nuances of freight fluctuations which are affected by bunker fuel costs, seasonality, competing commodities and market location, to name just a few variables, and the challenge for a producer or small trader, is significant. There are other added complicated issues, so that your goods can clear International Customs and get delivered to your customer; to name a few:
- “Market Access” – Are your products allowed to be shipped to a specific country?
- Do your goods require an Import Permit for any given Destination?
- Are you fully aware of the Document Requirements?
- Are there any specific Labelling Requirements?
The complexities of trade freight could be the difference between profit and loss.
While the likes of the big Mining Companies have significant negotiating power in freight markets, and the financial capacity to employ analysts and logistics specialists to ensure the most profitable outcome for product exports; and to track product from source to market, for most businesses this is often not feasible.
Employing the services of an Intermediary offers a competent, specialised and reliable solution. They can assist a business to ensure safe and profitable movement of the quality goods which they have invested in , from source to market. A quality Intermediary will have the necessary systems and processes in place and will take the time to understand the needs of their clients, in order to guarantee the trouble-free and timely delivery of their goods to the end buyer.
China and other Asian countries are big players in the international trade market.
An Intermediary will do more than just facilitate the movement of goods from one port to another. Depending on the needs of the customer, a First Class Supplier will take the time to understand what the specifics of a particular product. What needs to be done to maintain its quality through the supply chain (i.e. standard dry containers, chilled reefers or frozen reefers), what credit and financial protections suit the client and what needs to happen either side of the primary shipping activity, to ensure the customer’s goods reach their final destination in the condition that the client intended.