Everything else is in place to make your export venture a success, now you just have get the goods to the market. Joe Parkes talks to exporters who are overcoming that perennial problem by taking a more direct route
A quiet revolution is going on in Australia’s borderless export industry and it is showing signs of turning our exporters into devotees of door-to-door fulfilment practices.
Even multinationals are opting to route everything from major manufactured components and ingredients through door-to-door logistics, and SMEs find it ideal for small shipments and single item sales.
They all want effortless, trouble-free, door-to-door commerce that relieves them of formalities such as customs and quarantine clearance and all the other niggling elements of the supply chain process. They’d rather pick up the phone and book their freight door-to-door.
Dianne Tipping, director of the Australian Institute of Export, says she sees the whole future of exporting heading in the direction of door-to-door commerce.
For business people like Bruce Sambell—who runs Queensland-based Ausyfish, involved in the incredibly delicate and time sensitive business of exporting millions of live native fish larvae to Asia—the future has already arrived. He believes exporters can make life a lot easier for themselves by following a single basic rule. “Find a forwarding agent who specialises in your particular line of products and get them to do the work,” he says. “There’s no use haggling over price—the big international forwarding agents know what they’re doing and will give you the best deal. It took me a long time to realise this, but now I wouldn’t work any other way.”
Tipping quotes another case involving a Sydney-based exporter of women’s garments who won a substantial online market in Britain and Europe but was faced with a pricing problem. Because there was no satisfactory and simple way of folding charges like terminal fees, customs costs and deliveries, into a single price for the whole of Europe, she set out to find a solution applicable to a variety of countries.
She also found Australia-based exporters couldn’t claim back British and European VAT charges from their home base because they were not established entities in those markets. “This exporter sat down with several courier companies and negotiated a pricing strategy to cover door-to-door deliveries to Europe and Britain based on a weight scale, taking into account all fees incurred between Sydney and Europe including duties,” she explains. “Pretty much the same fees apply in all these destinations so the costs are rounded out accordingly, and the exporter clearly notes on her website that all prices exclude taxes where they apply. It’s up to the buyers to cover these costs.”
Cost v Service
Phillip Taylor, chief operating officer of the national freight forwarding specialists, Northline, agrees that while cost is always a factor when organising door-to-door export transport, the cost of getting products to market is no longer as significant as it once was.
He urges exporters instead to look closely at the capabilities of freight facilitators, almost all of whom specialise in different markets and niche business sectors. “Service is becoming far more significant,” Taylor declares. “New customers coming to Northline are usually not looking for massive savings, they’re looking to improve the level of service they get. And it’s true that good service can actually reduce costs. Improving delivery times reduces the risks exporters face and saves them money by lowering the cost of their working capital.”
Tipping abides by a philosophy that decrees “the more often you export, the better your rates will be”.
“I’ve found that when freight facilitation operators know they’ve won your business they become much more responsive to your need for attractive rates,” she says. “And it’s not true that only large forwarders can provide you with top service because a lot of smaller ones can do just as well and sometimes even better.
“The best advice is to select someone you feel you can work with easily. Small operator or big, it’s up to the individual exporter to decide how well it fits in with your needs.”
Jason Wilson, export airfreight manager at DHL Global Forwarding, thinks SMEs in particular should be able to negotiate better deals on freight. They can do this, he says, by gaining a better understanding of their customers and using the expertise of their freight carriers and facilitators to make them not only competitive but advantaged.
“For instance, exporters can adjust their supply chains to cover certain freight days and optimum space utilisation while delivering products to freight suppliers themselves, performing their own customs clearance formalities, keeping their processes automated and looking to consolidate shipments or reduce shipping days in order to build more volume. Some of our smaller customers have tailored their packaging to fit a specific loading arrangement that gives them advantages over traditional air freight systems. It’s what they mean by thinking outside the box.”
Wilson argues that there’s a bit more to being a successful exporter than just that. “People have to understand their own supply chain and the product they’re offering,” he says. “They should also understand the markets they are shipping to and the risks involved in transporting their products to those destinations.”
Using fulfilment centres to sort, pack, and distribute products either before leaving Australia or once goods have arrived at their destination can be expensive, says Phillip Taylor, but adds that it depends on the nature of the product.
“We do a number of end-to-end solutions for clients where we pick up the goods at the factory gate, move them into our distribution centre in Melbourne, organise the packaging, send out the invoices, and organise delivery to the customers,” he says. “In fact, we do the whole back-end, leaving our clients to get on with sales and marketing.”
Tipping sees fulfilment centres as being mainly useful in markets such as the United States. “I don’t see them being used by large manufacturers,” she says. “Their main value is for exporters like smaller winegrowers or food suppliers who have maybe 40 buyers in America and can use a fulfilment centre to move their products out to buyers on demand and in fairly small quantities. Large exporters are generally set up to handle their own deliveries.”
And for some specialist exporters—like Ausyfish—fulfilment centres are not an option. The company shipments can sometimes contain more than one million larvae and a minimum shipment is round 300,000. Large plastic bags containing 10 litres of water and several hundred fish larvae are placed in high density white styrene boxes especially designed for moving seafood. The bags are topped up with pure oxygen and can maintain the larvae for up to four days. It’s an effective system, but it is susceptible to attack from overweening bureaucracy.
“For instance, when an aircraft lands in Los Angeles, Californian regulations apply to all freight on board and they are so restrictive it has proved impossible to send our product through that port,” he explains. “We tried shipping through other ports but some flights were routed through Korea and we had shipments offloaded onto the Seoul tarmac for eight hours in a blizzard. The larvae had no chance.”
Some smaller exporters rely on modest or even single sales, especially in the booming world of internet commerce, and it’s here that organisations such as Australia Post and courier services come into their own.
Mohammad Khan, Australia Post’s international business development manager in Sydney, says everything from Aussie swimwear, pet food, books to toys is now fl
ying to the four corners of the earth via Express Courier International and Express Post International.
Not only are the services simple and relatively inexpensive, they take advantage of a significant benefit enjoyed by mail services—a duty-free threshold. Some markets, like Singapore, have a fairly high threshold that allows exporters to send goods valued at up to S$400 to their clients without being slugged for import duty. In Japan the threshold is about $200, in Korea $150, and in the United States it’s around $300.
Khan says hundreds of Australian SME exporters are now active, internet-based marketers, and door-to-door delivery through the post is a huge advantage. “Within individual country-based cost limits, exporters don’t have to pay any customs clearance charges. So our air express services have become areas where Australia Post really shines,” he says. “For smaller consignments—20 to 30 kilos—postal express is ideal for many SMEs.
“Express Post International and Express Courier International deliveries take two to four days. Both services have tracking systems and the premium services offer full track and trace from the time the article is lodged until it is delivered.”
Sydney-based company Identity Direct, which provides personalised children’s stories from the Disney organisation to customers round the world, uses Australia Post exclusively.
Now Australia Post has joined Austrade and South Korea’s postal service, Korea Post, to create an online shopping mall—dubbed Ozmall—exclusively for Australian products–everything from sheepskins and honey to decorative boomerangs.
“Ozmall is perfect for SMEs,” says Khan. “They don’t have to spend so much money on market research or country visits but they still have access to an established market where they can actually learn on the job about overseas marketing. Korea is a very mature market in terms of internet shopping. Its broadband is the fastest in the world and online payments are very secure.”
Last year, Austrade tested the market for Ozmall between October and December and recorded about 2,000 orders—mostly for ugg boots in the lead-up to the cold Korean winter. Suppliers pay a modest percentage on sales and Australia Post handles all the packaging, documentation, and door-to-door delivery. All major credit cards are accepted.
Once an order is received by Ozmall it is transferred to the appropriate Australian supplier who then has two hours to supply a consignment number by email to the buyer, allowing him to track delivery on the mall website. Delivery usually takes two to three days.