Oversupply in transpacific ocean freight capacity has driven down the cost of shipping freight. The question to ask is, “How much of that savings is passed on to the end user?” Companies that use 3PL to import 1,000 containers per year or less can enjoy many benefits, but if the bid/ask margin is greater than a few hundred dollars, the end user would certainly benefit from knowing that, if they could.
In February 2011, the VOCCs and NVOCCs began special rate increases on incoming base ocean rates from Asia on April 1.
This announced increase is in addition to any GRI (general rate increase) implemented for May 2011, which is the operation’s annual GRI time frame. According to the rules of the Federal Maritime Commission, any carrier must give its customer thirty days notice before increasing base ocean rates or bunker charges (BAF). As for bunkers, there is a normal change on April 1 (every quarter) and since bunkers were $450.00 per ton in January 2011 and are now over $650.00 per ton and are not likely to go down in the immediate future.
For many businesses, the total costs, including hauling, fuel surcharge, etc. can cost up to $3,000 for a 40ft HC. An important review would be to review LCL shipments by date and place of shipment. A review of LCL shipments often reveals how much logistics coordination has been used between LCL shipments. There may be times when multiple LCL shipments are shipped from a single carrier that can be consolidated into a single FCL with better planning. Once this is done, the analysis should examine each component of the cost impact: Container, BAF, Peak Surcharge, Hauling, Fuel Surcharge, Dock Pass, Clean Truck, Import Processing Fee, AMF, ISF, Custom Charge , customs entry) Since some providers bundle some of these charges together, some research may be required to establish a true benchmark.
If you decide to use an independent freight analyst, you should ask your analyst six questions:
1. How would you establish your baseline to verify the existence and amount of savings that can be implemented?
2. How much administrative support from our company would you need?
3. Would these potential savings require any operational or service provider changes?
4. If container supply goes up and rates go down, how would we know what savings to attribute to analysis vs. What savings to attribute to results that are certain to happen regardless of the analysis?
5. How often should ocean freight rates be reviewed?
6. How do we reduce expenses without unnecessarily alienating our relationships with foreign suppliers as well as related carriers and vendors?