The finer details of shipping

WA’s exporters are being urged to extract cost savings and efficiencies in their business by being more astute in their choice of shipping service.

Savvy exporters can use their choice of shipping service to enhance cash flow, save on inventory costs, maximise just-in-time manufacturing principles, and save on warehousing costs.

Sea freight Council of WA executive officer Michael O’Callaghan said many exporters ignored the finer details of shipping options and pursued the avenue of simply seeking the cheapest quote.

While some of the larger exporters employed in-house shipping managers and logistics experts, the small to-medium sized exporters were unaware of the competitive advantages to be gained by investing more energy on researching shipping services.

“Don’t just pick up the telephone and ring six shipping lines and take the cheapest quote,” Mr O’Callaghan said.

“Sit down and think about the outcome that best suits your overall needs.

“An exporter really needs to prioritise their needs before choosing a service. For example, for some low value agricultural commodities it may be better to seek a slower service that offers a low freight rate and also enables the ship to be used as a floating warehouse.”

Mr O’Callaghan said some shippers’ first priority was to get goods to market as fast as possible so that documents could be presented for payment.

Faster transit times to many destinations could be achieved by using a shuttle service between Fremantle and Singapore and then tapping into this port’s huge array of transhipment services to other parts of the globe.

In citing an example of this, Mr O’Callaghan said shippers who had lost direct services through ANSCON’s withdrawal from Fremantle more than three years ago were now gaining time savings of up to eight days by using transhipment or relay services.

When direct services to Kaohsiung were withdrawn from Fremantle, Mr O’Callaghan explored whether to transport cargo over land to ship directly from Melbourne or continue to ship out of Fremantle with transhipment via Singapore.

He found the use of relay services through Singapore offered higher frequency – weekly instead of fortnightly rotation – and contributed to reduced inventory costs.

In many cases, transit times to North-East Asian ports were reduced between six to eight days from using the relay service.

“Surprisingly enough a lot of exporters thought transhipment was a dirty word, but we’ve been able to show people that there are many opportunities to obtain faster delivery by using through relay services,” Mr O’Callaghan said.

A similar exercise to determine benefits of using transhipment through Singapore for European destinations, as opposed to a direct route from Fremantle and then around Africa, produced time savings of two days.

“Two days may not be a lot, but for some exporters this may mean the difference between presenting document on a Friday for Northern Hemisphere banks or having to wait till the following week,” Mr O’Callaghan said.

“Of course there are also cases when it is better for an exporter to have his goods arrive a bit later, and in that case it is more advantageous to obtain a slower service, a lower freight rate and use the ship as a warehouse.”