Most importers and exporters usually need to negotiate shipping rates from and to a variety of final destinations, often with multiple carriers. Currently, however, rates are seemingly a moving target and so consequently shippers are also grappling with significant increases in costs, amid fierce competition for space and ongoing disruptions to scheduling and equipment availability. It’s a confusing and perplexing situation that is unprecedented in our recent past.
As an example, Tasmanian rural equipment and feed supplier Tony Williams when recently interviewed by the ABC was quoted as saying that a container from China was now US$6,000 more expensive than the highest rate he had ever seen in his 15 years as an importer. He went on to say “It’s not really a China trade issue. It’s shipping lines taking advantage of us.” On the other hand, some might say it’s simply market forces at work and that supply and demand ultimately dictate freight rates. Either way, it’s obvious that international traders cannot sit idly by and hope for the best. A proactive approach to rate management is now an essential requirement.
With BSM Global, you’ll be able to discover new ways to leverage technology and optimise your organisation’s supply chain.
Most businesses do not have the tools to manage the current environment and the indications are that managing costs in the supply chain is going to be a significant issue for the next 12 Months.
You will need a business process to capture and manage the following
- Your current and future agreements with Carriers
- Pricing requests and tender management
- Review carrier options and your procurement strategy making sure you have more than a single option for each market
- Recognise that rates are now on the rise , and decide how important cost is compared to your ability to secure equipment and space – Carriers that are locked in to rate agreements that are lower than market are likely to reject bookings or limit numbers of containers
- Look to have a balance between term and spot agreements – discuss your options with your carriers including Guaranteed options (these will have commitments some even having dead freight clauses.
- Monitor your shipping teams selection
- Create live cost accruals to monitor the impact on cost to you and your clients
If you are managing the above in excel spreadsheets and email correspondence we can help, our solutions provide the following:
- Tools and processes to capture spot and period rate agreements
- Ability to setup electronic invoicing between you and your shipping partners
- Auto price matching
- Analysis reporting for spend and options to assist your procurement decisions
- Electronic Space booking tools to create cover bookings and manage performance issues and impact on your supply chain.
If you are interested in discovering new ways your organisation’s own supply chain or have additional questions on the application of cloud-based technologies, contact us today.