Hi Everyone… This information can save you a significant amount of money — you might want to consider getting a cup of coffee or whatever — this may take a little while.
If you understood more about how to order a mix of products that utilizes cargo space more effectively; more about cargo rates and how they work; more about how containers actually move along in their travels; and more about how (and where) to buy appropriate insurance for your order; and finally, how to handle your order once it reaches your port …
…then not only would your life (the part that is involved with ordering from someplace like Indonesia) be less stressful, but actually you would save a helluva a lot of money (you do want to keep the profit in your pocket, don’t you?)
It’s interesting — Indonesia Export only has two types of customers: 20′ and 40′ container buyers — whose orders run approximately $7,000.00-$12,000.00 and $12,000.00-$30,000.00 respectively.
At this time, about 60% of our customers order full 20′ containers and our remaining customers buy 40′ & 40′ High Cube containers. These customers already understand the great savings in freight costs and the other added advantages of using containers (though it still may be useful for you container buyers to read on)…
…however, I’m really trying to talk to new customers who may know very little about moving a shipment around the world.
The first thing you need to know is that there are 5 ways cargo can move from here to you:
1. LCL Sea Cargo (less than a container – charged per cubic meter)
2. 20′ Container (30 cubic meters)
3. 40′ Container (60 cubic meters)
4. 40′ High Cube Container (72 cubic meters)
5. Air Cargo
LCL & Full Containers
We will not ship an LCL order (less than a container load), but it would be good for you to understand why we won’t do that. (Basically the worst & most expensive way to go because shipping companies hate handling loose crates and charge a fortune for doing so).
Shipping via LCL means that your products are packed into paper cartons and then we build wooden crates around the cartons.
Your crates are then moved to our cargo company; official government documentation is completed; the shipment is then trucked to the port of Surabaya, Java (which is the closest international shipping port to Bali.)
Since your LCL shipment is just a few wooden crates and doesn’t fill a container, then it must wait at the port while the shipping company “consolidates” your order with other small orders going in the same direction. (Specifically, that means your crates sit there [inside/outside?] while the shipping company waits for enough orders to combine with yours and fill a container — usual waiting time: 2-4 weeks — then “X” number transit days on the water to you.)
First major disadvantage: as you’ll see below in the cargo rate example I’ve given you, LCL is much more expensive per cubic meter than a container.
Second major disadvantage: while in a sealed 20′ or 40′ container, you get the full use of the cubic meters inside that container — with LCL wooden crates you lose about 25% of the useable space due to the wood crate and lack of flexibility when packing large products. That means you’re actually paying 25% more just in lost space (remember that, please).
Third major disadvantage: because LCL shipments always have to be consolidated, the transit time is usually double that of a sealed container — for example, a container to the West Coast of the USA takes about 30 days, while an LCL order to the same port more likely will take 45-60 days.
Final major disadvantage: your wooden crates are manhandled in a variety of places. From our warehouse to the truck; from the truck to the cargo company; from the cargo company to the port; from the port to the ship; from the ship to your port; and from your port to your front door. (We happen to be wonderful packers and rarely have breakage, but let’s face it, that’s just not the best way to ship things — how would you move ceramics safely in wooden LCL crates?)
Before I go any further, let me put an example of cargo costs in front of you to make what I’m saying super, ultra clear.
Destination: Vancouver, B.C., Canada
LCL – $195.50 per cubic meter — so if you shipped 8 cubic meters (maybe $2,000.00 or so of product), you would pay about $1,564.00.
Worse, if your order happened to take up 11 cubic meters of space because you ordered large products (like giraffes or cats), you would pay close to $2,150.50. (100% freight costs are a pretty heavy expense given that you can do it a lot more cost-effectively.)
Watch this: the rate for a 20′ container (30 cubic meters including all the related trucking, handling, documentation & miscellaneous charges) to the Vancouver port is $3,875.81 (or about $129.00 per cubic meter). Compared to 30 cubic meters via LCL ($5,865.00), that’s a savings of about $1,990.00 — about 35% less.
Another way of looking at is: for the same price that it would cost you to send 20 cubic meters via LCL, you can send 30 cubic meters by container. (And remember, those 20 cubic meters by LCL were really only 15 cubic meters of product, while the 30 cubic meters in the container is all product!)
Let’s take it a step farther: a 40′ container (60 cubic meters) to Vancouver might cost another $1,000.00, but it would hold an additional 30 cubic meters of product. You basically get a bit over 20 cubic meters of space for free.
And then there’s a larger container, a 40′ high cube (72 cubic meters) that costs just fractionally more than a 40′ regular, but holds another 12 cubic meters. This most often gets used when we planned an order to fit into a 40′ regular, but underestimated the space necessary, so we’ll step-up up to a high cube. Extremely cost-effective.
Now, the example of savings I gave you using Vancouver, holds true for just about every other destination in the world. LCL is the most expensive way and least safe way to go while 20′ and 40′ containers are the safest and most cost-effective.
In addition to the very obvious cash savings, containers have some other significant advantages over LCL shipments:
When we pack an order for a container, we use only cardboard cartons (we do not have to pack anything in wooden crates with the exception of something extremely valuable). Thus, you get the entire use of the 30 cubic meters of space (remember, you’re picking up 25 percent more useable space compared with LCL shipments; and you also save the expense of wooden crates).
When we order a container for your order, we have already pre-planned which ship we’ll be using (and when); a truck is brought down from Surabaya, picks up the container, immediately returns to Surabaya and puts it on the ship. There is no delay.
Containers going to the United States get there in 30 days or under; Europe usually 3 weeks; Asia, even less time (yeah, there are a couple places, like Trinidad, that can take 45 days or more).
If you plan an order well (and we’re happy to help you massage an order to get the best deal for your cargo money), you can generally get $8,000.00 to $12,000.00 into a 20′ container. And, of course, double those numbers for a 40′ container.
Every now and then, a new customer wants an order sent via air cargo…
…and our immediate response is “did you know the air cargo costs will equal or be more than the value of your order?” (With the final result being that the customer switches over to LCL sea cargo, which might be as much as 75% less than if the order went by air.)
Most people believe that air cargo is charged out by the kilo; so they “guesstimate” the kilos in their mind and multiply it out by whatever the actual air cargo rate is. However, that “guesstimate” would most likely be very far from right — I’ll explain:
Airlines, in fact, do charge by the kilo, but in addition, also by volume, whichever happens to be greatest. For example, our standard shipping carton is 50 x 58 x 33 cm (20 x 23 x 13 inches). According to the way the airlines think, that carton’s volume is equal to about 15 kilos (33 pounds).
If there is less than 15 kilos of product in that carton, then you still pay for 15 kilos. If there is more than 15 kilos, you pay the greater amount.
Let’s say the air cargo rate for you is about $3.25 per kilo which means that carton costs you in cargo expense at least $48.75. Well, if it’s a carton of low-cost products such as wooden fruit or wooden flowers, or small carvings, etc., (which will definitely weigh less than 15 kilos/33 pounds) then you will have paid more for the cargo than you paid us for the product.
Another example: a cubic meter (100 x 100 x 100 cm or 39 x 39 x 39 inches) of space on an airline is almost always calculated by volume as opposed to kilos and is charged out at 185 kilos or $601.25 (using the $3.25 rate).
Maybe you bought giraffes from us; maybe 6 or 7 of them fit into that space; and maybe you paid us $50.00 for the giraffes. (Do you get it? You would have paid $600.00 to move $50.00 of product. Not good!)
In certain situations, air cargo can be utilized very cost-effectively. Small products with high retail value work fine. Maybe you’re paying $48.75 for that carton of air cargo space, but if you’ve got product in there that you can re-sell for $250.00 — Go for it!
Another situation in which Air Cargo can be extremely effective is that many of our customers take small portions of their Sea Cargo orders via air so that they can get samples quickly in front of their buyers or fill-in some inventory needs.
We handle all the cargo arrangements and take care of all necessary official documentation (certificate of origin, B/L, commercial invoice & packing list, quota visas, etc.) for most of our customers.
The reason for this is simple: most of the time we can get better cargo rates here than you can locally.
But sometimes you can get a better deal on your end, so when a new customer sends us his or her first order, we automatically check the rates on this end and also ask you to check the rates on your end. (We don’t make any money on packing or cargo related expenses — whichever rate is best for you, that’s the way we go.)
Insurance for your shipment can be purchased in Indonesia from our cargo company — for a relatively high price.
But, more importantly, collecting a claim from an Indonesian carrier or insurance company sometimes can be a life-long event and in general, not worth the hassle.
If a customer wants to insure their shipment, my advice always is go to your local casualty agent (the same company you buy car & house insurance from) and ask your agent to sell you a policy that insures your shipment “Ex-factory to your front door”. Safest and most cost-effective way to go.
One of your responsibilities to yourself is to get on the phone and talk with about five or six customs brokers (or however many necessary) and shop their pricing. You’ll see that the pricing will be all over the place. My personal experience is that you have to bargain with a customs broker the same way you would bargain with a used car salesman. Really!
Anyway, once you have a broker, it’s his or her job to handle all the paperwork that we send, clear your shipment through your customs, settle any duties necessary and so on.
Your customs broker is also a good person to recommend the most cost-effective way of moving your shipment from the port to your front door (remember, we’re charging you only for delivery to your nearest port. Our responsibility stops there and yours begins.)
As you can see, it is necessary that both you and I take great care with regard to the mix of products in your order and how we go about shipping your order.
When we receive your order, we will advise you the approximate cost of shipping it. In addition, we will always make suggestions regarding upgrading or downgrading the size of your order so that you get the most cost-effective cargo rates and methods of shipment.