Understanding Ex-works

Ex-works places minimum responsibility on the seller, who merely has to make the goods available, suitably packaged usually at the seller’s factory or depot.

Why using Ex-works when exporting overseas not always best? 

As the exporter has limited responsibility when arranging the freight using Ex-works, many prefer to use this term and avoid the perceived headache of arranging the freight and instead pass the buck onto their customers. 

However, we at Pinnacle do not always believe that this is the correct approach, and would encourage shippers to be flexible when supplying to their overseas customers and consider using other shipment terms such as CIF/CPT/DAP or even DDP, therefore taking control of the freight. 

When you are spending time and resource in manufacturing your product, why would you then leave your goods reaching your customer to chance? 

So when negotiating terms with your overseas customers, consider negotiating other terms such as FCA/CIF/CPT/DAP or even DDP, rather than just offering EXW.

What are the benefits of considering other shipment terms and keeping control of the freight? 

Being HMRC Compliant

It is a myth that if using EXW terms, the exporter is not responsible for Export Customs Clearance, you are.

As the exporter, HMRC expects you to ensure any licences are obtained and goods are declared correctly, regardless of which party is paying for Customs Clearance. 

Simply switching to FCA terms and taking responsibility for the export customs entry would ensure you control this element. Pinnacle help all of our customers manage this process efficiently and in full compliance with HMRC rules. 

Improving Service and visibility in the supply chain 

Service is crucial. By offering your customer a more comprehensive solution, you can simplify the process for your customer who can take a more hands-off approach.

This can potentially help you secure more business and orders from them. Pinnacle can help manage your shipment for you and monitor your shipments’ progress through every milestone, keeping you and your customer fully updated. 

Consequently, this ensures that your customer gets the best level of service and are adequately prepared to take receipt of the shipment. When you supply Ex-works you are often left with no idea where your shipment is, and you can receive unwanted surprises along the way such as requesting further paperwork for customs clearance, which can result in more stress for both you and your customer, and make them more likely to order from elsewhere in the future. 

Reducing the Risks, 

By controlling the freight you know that the service on which your shipment is booked is adequate to meet the needs of your shipment. You can make sure that the service meets any transit time demands and deadlines, travels on a secure, reliable route and is not handled excessively.

Pinnacle has flexibility across multiple services, ensuring the best options in both transit and price are being offered to you and your customer. 

You also minimise the risk of the unexpected happening, and therefore issues arising between you and your overseas customer.

Finally, Pinnacle can also ensure that your shipment is adequately packed for the method of shipping you are using to export your goods to your customer. This will ensure that your precious shipment arrives to your customer in exactly the same condition as it was collected from your facility. 

We offer a full and extensive export packing service, reducing the chances of damage being sustained during the shipment’s transit. Also, in the event of any damage being sustained, it will not invalidate your insurance as suitably packed for transport.

Profitability and control of the costs 

Unsurprisingly, by offering more than just the incoterm Ex-works to your overseas customer, you have more opportunities to increase your business and potential future orders, as some buyers will prefer the freight is arranged by the supplier/shipper. 

Offering multiple Incoterms based on your customers’ demands, result in you being more flexible and therefore having the potential of securing more business. Some buyers may not consider your product if you cannot arrange the freight, and therefore look to alternative options.

With more freight control, not only can you give your customer a better service, whilst increasing the potential to secure more business, you can also maximise the profitability and revenue of your company. Arranging the freight gives your company another revenue stream, and you have the opportunity to make profit on the freight itself. 

Getting back control of your shipment 

To put it bluntly,  under Ex-works, as the seller you have no control over multiple aspects of your shipment, such as when and who will be collecting it. You also surrender the knowledge of whether it is secure, how it will be transported and where your shipment is and when your customer receives it. 

Therefore, next time you are supplying your overseas customers or negotiating terms, consider using terms such as DAP/DDP rather than just Ex-works. Whichever shipping term you negotiate, be sure to set out the parameters clearly to your customer, to avoid any confusion with them. 
If you need any quotations or advice on shipping and use of Incoterms,  please feel free to contact Pinnacle at enquiry@pif.co.uk or call 0845 6216 111.

The post Why it’s not always the best solution to ship Ex-works when exporting overseas appeared first on Pinnacle Freight.

Actually, it could be an important factor to consider when selecting your best placed (literally) logistics partner. Your warehousing partner might be a single logistics provider or may also be your logistics partner/warehousing/freight forwarder (multiple logistics partner),  in which case they’re likely providing an end to end service for you, including your imports/exports and national distribution.

It is true that via modern technology, an experienced team and an established network, a freight forwarder can operate effectively from almost anywhere – sometimes, literally out of a bedroom- watch out for those!  

All successful businesses and any business that wants a sustainable future will focus on reducing costs by improving efficiencies and being as effective as possible. For businesses that rely on the movement of physical products, their logistics costs can often be considerable and therefore cost management in this area is crucial. Every area of a logistics partner’s or freight forwarder’s service should be scrutinised before making your decision. It might be key for your business to ensure that location is one of those areas. 

“Efficiency is doing things right; effectiveness is doing the right things.” Peter Drucker

Whether you’re using a single or multiple logistics provider, there are some factors regarding their location that should be considered. In this article, we’ll look at 6 of those factors in order to help you make the right call with this important pillar of your business.

1. Warehousing

If you’re using third-party warehousing and fulfilment services via your logistics partner, then you’d be well advised to consider their location for the following reasons: 

• How near are they to your facility? 
• How easy is it to arrange a visit to view your products? If it’s a full day trip to the other end of the country, with all the costs of time spent and miles travelled to cover – is it really in the best location for your needs? 
• National distribution costs (more detail in below sections). For example, if your warehousing fulfilment partner is located in the Midlands, then you’ll have a central location to distribute from, evening out your costs and the delivery service offer to your customers. 

2. eCommerce B2C fulfilment & distribution

Whether you’re selling across e-commerce platforms such as Amazon, eBay, Wayfair or your own website, you’ll want to consider the location of your warehousing fulfilment partner due to parcel carrier distribution. If your warehousing fulfilment partner is at one end of the country or too far east or west, you may not be able to offer the full range of delivery services that your customer needs (especially B2C) and your pricing may be inadvertently affected.

3. Location to airports and sea ports

As an importer and/or exporter, you will need to consider where your goods enter or exit the country in relation to their origin or destination location in order to effectively manage your transport costs. 

For example when it comes to sea freight,  your cargo (LCL less than container load or FCL full container load) will need to be collected or delivered from your appointed warehouse then transported to or from the relevant sea port. Apart from The Port of Liverpool, the UK’s major sea ports are located in the south of the country from Southampton across to London Gateway and Felixstowe, so your location in relation to them can greatly affect the cost of haulage and add crucial time to its journey. 

Equally, your air cargo will be best placed conveniently near to an international airport with access to major airlines in order to control your transport costs. 

4. Transport costs for national distribution

For B2B full loads or part loads to your UK customers or from your UK suppliers, you will be wise to consider the location of your warehousing / distribution centre. Again, if you’re stock is located in a fringe location, you may become restricted in terms of service and pricing.  

5. Export packing

If you’re a manufacturer and your freight forwarder provides in-house export packing services then it makes perfect sense to be located nearby. Collection of cargo from your facility and subsequent transit to port or airport for export transportation will be made cost effective and time efficient. 

6. So what could be some of the best locations for freight forwarders in the UK?

Well, if you consider the key points raised earlier around avoiding time and cost pitfalls then you’ll want to make sure that your freight forwarder/ logistics / warehouse fulfilment partner is in a location that works for your business. 

As mentioned earlier, the major UK sea ports are located mainly in the south of the country (aside from Liverpool). You’ll find a wealth of single and multiple logistics providers near to major UK sea ports and for obvious reasons. Handling import and export cargo near to its international origin or destination makes perfect sense in principle; and if your business is located in and around any of these areas, it can be very beneficial. 

However if you’re an importer, the flip side to this arrangement comes in when it comes to cost of national distribution / haulage from sea ports to your distribution centre and from your distribution centre to your nationally based customers by restricting your time and cost efficiencies. Taking a more central location like the Midlands can help balance your service and costing options, in turn helping you to manage your costs and keep your customers happy.

You’ll also want to consider locations near major airports. The busiest airports in the UK are Heathrow, Gatwick and Manchester. If your single and multiple logistics provider is based in the south, you’ll have obvious access to Heathrow and Gatwick or for the Manchester Airport for the North West, effectively managing your time and cost efficiencies.

Lesser known is the fact that East Midlands Airport is the UK’s busiest pure cargo airport and second only to Heathrow, handling over 320,000 tonnes of flown cargo every year. 

In our opinion and for many reasons, the Midlands is the best-placed location for a logistics partner. The Midlands today is incredibly well connected, sitting at the heart of the country’s transport network. With relatively equidistant locality to all parts of the UK via major motorways and main road networks, the Midlands is the obvious location that makes the most sense from a road freight perspective, positively managing your time and cost efficiencies. With East Midlands Airport being the UK’s busiest pure cargo airport, you’re well placed to access the best air freight services and rate options available for your international cargo. 

As a freight forwarder in Leicestershire in the Midlands, Pinnacle are well placed to manage your sea freight and air freight imports, exports, export packing and warehousing fulfilment and road freight distribution for your B2B and B2C customers. 

Contact Pinnacle today and speak to one of our Leicestershire based team of global logistics experts for information, pricing and advice for your unique requirements. 

UK +44 (0)845 6216 111 / enquiry@pif.co.uk 

The post 6 Reasons Why the Location of your Logistics Partner is Important appeared first on Pinnacle Freight.