Shipping can be a real minefield full of regulations and terms that seem to mean nothing, even when a Freight Forwarder explains a term it can still make no sense. One of the most common questions is “What’s BAF?”, to which the Freight Forwarder replies, “Oh that stands for Bunker Adjustment Factor” which doesn’t really help you out.
Below we’ll try to unravel of the mystery but as always, if in doubt give us a call, we’re always happy to answer your shipping questions.
Where do I start?
First you’ll need to know the full dimensions and weight of the goods you are looking to ship. Whether it’s a 60' yacht or a couple of boxes of plastic balls from China, we can’t work out pricing without these vital details. In the case of heavy machinery and boats it allows us to determine if it can be containerised and if not what the available options are.
In most cases freight is based on the overall volume, so an incorrect estimation, even if it’s off by a mere 10cm, can be the difference between fitting in a container or not, which has a dramatic impact on cost.
What are Incoterms, and do they apply to me?
Incoterms are standard trade definitions commonly used in international sales contracts, whether you need them or not can largely be grouped into two categories.
- Shipping goods you already own: Incoterms are irrelevant in this instance because you are both the shipper and receiver, you’re not selling to anyone so you don’t need to worry about the terms at all.
- Selling or Purchasing goods: Yes, you need to understand on what terms the goods have been sold to you or on what terms you want to sell your goods.
Common terms are FOB, FAS, EX Works and C&F.
- FOB means the price invoiced or quoted by the seller includes all charges up to placing the goods on board a ship at the port of departure specified by the buyer.
- FAS means the price invoiced or quoted by the seller includes all charges only up to the ship at the port of departure (but doesn’t include loading the goods onboard).
- Ex Works means the price invoiced or quoted by the seller includes all applicable charges from them right to your door.
- C&F means the price invoiced or quoted by the seller doesn’t include insurance charges, but includes all expenses up to a named port of destination.
Taurus Logistics can handle any of these scenarios so get in touch with us today!
How do I know if the quotation includes everything I need?
This is a good question because not all quotes are equal, you have to be very careful that you ask lots of questions to be sure with common misconceptions being that the quote will include all port charges and customs clearance on arrival, It’s rare for quotes to include all this information.
As an example…
You’re in Australia and you’re looking to purchase a yacht from the USA. You receive two quotes, one from a USA based Freight Forwarder and one from an Australian Freight Forwarder.
The Australian Freight Forwarder has included all the charges in the US, on the water, and all the charges on arrival in Australia. the USA Freight Forwarder however has not included the arrival charges, so while the quote seems significantly cheaper and easier on paper, when the goods arrive in Australia you will have to pay arrival charges which can be very high.
Because you weren’t quoted all charges this leaves an opportunity for the USA forwarder to make a real killing at your expense and this is often how they make their margins. Once they have your money they have little concern for what happens after that, or what it costs you when it arrives.
At Taurus Logistics we care about your goods and the experience you have with us, which is why we include all applicable costs on our quotes, and where we can’t quote for something specifically we let you know clearly on the quote.
