Air Freight Forwarding

This particular client was shipping 5cbm of goods from Mumbai to Melbourne. The shipping documents had already been passed along after the client had been notified of requests for a quote for CIF with local delivery to Melbourne. 

On looking over the documents, we noticed two things; the goods had already arrived and were, in fact, accruing storage at the LCL freight forwarding depot, and that a treatment certificate was required for the commodity. 

The client did not have the treatment certificate and had to go back to the shipper to request one. The shipper then notified the client that it had been couriered and should arrive soon. A tracking number was requested, and documents were in fact, en-route.

We obtained a copy of the document to find out it had been incorrectly filled out and was not accepted by DAFF. The shipper was not able to make any changes as the original had already been sent, and DAFF would not allow customs clearance without proof of treatment. 

Because the goods had been shipped from India, they could be cleared on a copy of the certificate only. However, it was the fact that the original had been sent already and could not be changed that was the issue.

This client required the goods to be cleared urgently and subsequently could not wait on sending the certificate back, especially when each day cost him AU$600 in storage costs. 

The local charges from the handling agent were AU$987 more than they should have been, AU$1200 in additional storage at the local depot had already accrued and, the re-treatment cost the client AU$2756, which he tried to bill back to the shipper, unsuccessfully. 

In this circumstance, CIF should not have been the preferred term of trade used to move LCL freight from places like India and China. This is because by moving under this term, any control along the supply chain is essentially wiped out and puts all responsibility on the supplier. 

The cost of the local charges and the cost of late or lost documents are very expensive. At Stockwells, unfortunately we see this time and time again. Many importers fall into the mistake of assuming CIF is the easiest way to ship, but in fact, it has far more reaching ramifications in the long run when things go wrong. Once the goods arrive in Australia, they are the importer’s problem, including all the costs associated with the aforementioned errors. 

When you ship free on board (FOB), you are putting the responsibility of some of these things on the Australian freight forwarder. The freight forwarder then has the opportunity to liaise with the shipper and work out whether fumigation is required, etc. 

The documents are also handled between the freight forwarder and the shipper, so we are able to assist with overseeing the documents for Australian standards. Unfortunately, under FOB we still do not handle the fumigation, but we can offer advice on commodities where it is required. 

All in all, CIF is suitable under some circumstances (especially where it is not a prerequisite to control the shipping times, costs and or if there were allowable consolidations), however for LCL freight forwarding out of China and India, it does not work in favour of the importer. 

If this particular client had approached Stockwell to advise them on LCL freight forwarding, they would have saved a lot of time and money.