When conducting overseas sales, one of the most challenging aspects we often encounter is international shipping costs. This step is also where customers are most likely to lose trust in us.
Goods Destined for Kazakhstan
During the quote stage of cooperating with clients, we evaluate the overall procurement costs for them and confirm the shipping details with the freight forwarding company. Since our greenhouse products are customized and not standardized, our packaging needs to be adjusted according to the size of the greenhouse framework. Therefore, before production is completed, we can only estimate about 85% of the accurate volume and weight, and then ask the international shipping company for a quote.
At this stage, the shipping estimate we provide to clients is usually 20% higher than the quote from the freight forwarding company. You might be very upset about this. Why is that? Please be patient and let me explain through a real-life case.
Real Case Scenario:
When this project started, the shipping quote we received was about 20,000 RMB (all-inclusive: valid for 35 days, covering factory to customer-designated port, and loading onto the customer's arranged truck). We added a 20% buffer to this quote for the client's investment evaluation.
By mid-August, when it was time to ship (within the quote's validity period), the forwarder's updated quote exceeded the original by 50%. The reason was restrictions in a certain region, causing fewer ships and increased freight costs. At this point, we had our first round of communication with the client. They understood the impact of international regulations on global trade and agreed to this cost increase.
When the greenhouse products left our Chengdu factory and reached the port, the ship couldn't arrive on time. This resulted in additional unloading, storage, and reloading costs amounting to 8000 RMB, which the freight company hadn't mentioned as a potential risk. Lacking enough experience to assess and manage these risks, we had a hard time explaining these costs to the client, who was understandably very angry.
Frankly, we found it hard to accept as well, but it was the reality. We decided to cover these additional costs ourselves because we saw it as a learning experience, helping us better protect the interests of both our clients and our company in the future by evaluating and controlling risks from the client's perspective.
In future business negotiations, we will communicate openly with clients and maintain trust. On this basis, we will strictly select cooperating international logistics companies and try to list all potential problems to avoid them.
At the same time, we promise our clients that we will outline possible shipping cost scenarios and provide a detailed breakdown of the costs included. If the actual cost significantly exceeds the estimated cost, our company is willing to cover 30% of the excess to show our commitment to sharing the responsibility with our clients.
Of course, if the actual shipping cost is lower than the estimated cost, we will promptly refund the difference or deduct it from the next purchase.
This is just one of many real-life cases. There are many other hidden costs. We also don't understand why there are so many "unforeseen" expenses in international logistics during specific transport processes. Why can't freight forwarding companies do a better job of assessing and standardizing these costs? This is something we need to ponder, and we hope to discuss the pain points in international logistics with everyone to jointly reduce or avoid these issues.
Important Points to Note:
1.Confirmation of Quote Details: When quoting, try to confirm all fees with the freight forwarding company in the form of a detailed list, not just the quote amount. Some freight companies may offer very low prices to secure orders. We all understand the principle of "you get what you pay for," so don't just look at the total price when comparing. Clarify what is included and attach relevant cost details as a contract appendix.
2.Specify Exclusions: Clearly specify exclusions in the contract, such as costs caused by "natural disasters, wars, and other non-human factors." Clearly list whether documentation will be provided for these. These terms should be clearly written as mutual binding terms in the contract.
3.Maintain Contractual Spirit: We need to respect the contractual spirit towards ourselves, our family, employees, customers, and suppliers.
4.Client Trust: A Crucial Element in International Shipping
Building and maintaining client trust is critical, especially when dealing with the uncertainties of international shipping costs. Here’s how we manage this aspect:
Transparent Communication
One of the key strategies to maintain client trust is through transparent communication. We ensure that our clients are fully informed about all aspects of the shipping process. This includes:
● Detailed Cost Breakdown: We provide a comprehensive breakdown of all costs involved in the shipping process. This transparency helps clients understand where their money is going and why certain costs may be higher than expected.
● Regular Updates: Keeping clients updated on the status of their shipment is essential. This includes notifying them of any potential delays, changes in shipping schedules, or additional costs that may arise.
● Clear Documentation: All agreements, quotes, and changes are documented and shared with the client. This helps avoid misunderstandings and provides a clear reference for both parties.
Learning from Experience
Each shipping experience provides valuable lessons that help us improve our processes and better serve our clients. For example, the unexpected costs we encountered during the shipment to Kazakhstan taught us to:
● Evaluate Freight Forwarders More Rigorously: We now conduct more thorough evaluations of potential freight forwarders to ensure they have a solid track record and can provide accurate quotes.
● Prepare for Contingencies: We have developed contingency plans for various scenarios, such as delays or additional storage costs. This preparation helps us manage unexpected situations more effectively and minimize their impact on our clients.
Client Education
Educating clients about the complexities of international shipping can help manage their expectations and build trust. We provide clients with information on:
● Potential Risks and Costs: Understanding the potential risks and additional costs involved in international shipping helps clients make informed decisions.
● Best Practices for Shipping: Sharing best practices, such as proper packaging and documentation, can help clients avoid common pitfalls and reduce shipping costs.
● The Importance of Flexibility: Encouraging clients to be flexible with their shipping schedules and methods can help them save money and avoid delays.
Hidden Costs in International Shipping
Besides shipping costs, there are many other hidden costs to consider. For example:
● Port Fees: Including loading and unloading fees, storage fees, and miscellaneous port fees, which can vary significantly between different ports.
● Insurance Costs: Insurance costs in international shipping can significantly increase the total cost, especially for high-value goods.
● Documentation Fees: Including customs fees, clearance fees, and other document processing fees, which are usually unavoidable.
● Taxes and Duties: Different countries impose various taxes and duties on imported goods, which can significantly impact the total cost.
Case Studies and Real-Life Examples
Sharing real-life case studies and examples can help clients understand the challenges and potential solutions in international shipping. For instance, our experience with the shipment to Kazakhstan highlights the importance of:
● Building Buffer Costs: Including a buffer in shipping estimates to account for potential increases in costs.
● Effective Communication: The importance of keeping clients informed about changes and additional costs.
● Proactive Problem Solving: Taking responsibility for unexpected costs and finding solutions to prevent them in the future.
Understanding and estimating these hidden costs is crucial for accurately calculating the total cost of international shipping.
Facing Challenges with Clients
When handling international shipping costs, we always stand alongside our clients, facing challenges together. We understand their concerns during the shipping process and do our best to provide support and solutions.
We also encourage clients to consider the operational aspects after the construction of agricultural projects. CFGET suggests that clients visit more agricultural parks to understand the specific maintenance and operational challenges, helping them avoid potential pitfalls in their investments.
What We Hope to Achieve
In our future business, we will continue to adhere to transparent communication, client education, and facing challenges together. We are committed to continuously improving our processes and services, ensuring that clients feel confident and supported throughout the entire international shipping process. We will also continue to optimize our greenhouse products to ensure clients receive the best solutions for their agricultural projects worldwide.
By building trust and long-term partnerships with clients, we believe we can jointly overcome the various challenges in international shipping and achieve mutual benefits.
Our company is dedicated to providing the best possible service, ensuring that our clients feel confident and informed throughout the shipping process. This commitment helps us build long-term relationships based on trust and mutual respect. CFGET will continue to optimize our greenhouse products to meet the evolving needs of our clients and ensure our competitiveness in the international market.
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Post time: Aug-09-2024
