INCOMING: AN UPDATE FOR IMPORTERS
Daniel Silva, secretary of the Importers Institute, comments on the latest news headlines and stories impacting on New Zealand’s import, and export, companies.
Daniel Silva comments on the latest news headlines and stories impacting on import and export companies.
Dollar up, dollar down
The New Zealand dollar rose to giddy heights, where a dollar was almost worth a dollar. It has since slid back sharply – but bounced. At the time of writing, it is unclear whether the bounce is for real or of the dead cat variety.
What is real is that the fall in the value of the dollar could not have come at a worse time for consumers. Spring is the time when importers pay for (and price) their Christmas merchandise. The next Christmas will certainly be more demanding on the wallet than the previous one.
Our Prime Minister is a former currency trading guru, so when he pronounces, we listen. He recently said he considers a USD rate of 0.65 to be the ‘Goldilocks value’ of our currency. Maybe he is right, but we are no slouches either when it comes to predicting future exchange rates. We predict that, at any point in the future, the New Zealand dollar will either be higher, lower or the same. This prediction has a 100 percent success track record, so you may also want to listen to us.
A fall in the value of the New Zealand dollar is welcomed by some exporters as it reduces their costs and helps them to compete in certain overseas markets, mainly those for low tech engineering in Australia. Other exporters find that the cost of their inputs rises. Primary producers are more affected by international commodity prices than the exchange rate.
For the rest of us, a fall in the dollar amounts quite simply to a pay cut.
A weighty matter, a measured approach
New Zealand importers are continuing to be stung by hugely inflated destination charges on shipments where the freight is supposedly prepaid by their Chinese suppliers. In reality, the freight is heavily discounted by the forwarders (frequently to zero) to gain the business. They make their profits by charging importers for ‘fees’ with official sounding names, like “port service charges”, “security fee”, “forestry fee” and the like. This is so profitable that some Chinese forwarders set up branches in New Zealand, to avoid the need to share the loot with a local agent. The Commerce Commission was alerted to this scam, but declined to take action on the grounds that it was too difficult to investigate.
Another common way for forwarders to inflate freight costs is to simply overstate the weight and/ or measurement of the cargo. Freight charges are normally rated per kilo or per cubic metre. Importers are well advised to carry out the occasional
audit and to seek refunds where the weight or measurement is overstated on freight invoices. In those cases, they can report the issue to a Trading Standards Officer of the Ministry of Consumer Affairs. This is likely to be much more effective than reporting to the Commerce Commission.
The Courts may impose fines of up to $10,000 for serious breaches. These penalties are likely to deter forwarders from their usual fob-off of declining liability, by saying that they are only acting as agents for their overseas principals.
Amazing ideas that don’t work.
Amazon put up a clip on YouTube showing merchandise bought from their website being delivered by a small unmanned helicopter. It lands flawlessly on a manicured suburban lawn, within 30 minutes of the happy customer clicking on the ‘buy’ button.
Fiction? This may well happen when we start commuting to work in those personal helicopters used by the Jetsons. Until then, the amazing Amazon drone delivery system may just remain in the realms of marketing (over)hype.
Another such great idea is RFID – the radio-frequency tagging of products. It has a lot of promise, but we fear that it may always do. The idea is that all products will have a transmitting chip inserted in them and tracking their movements around a warehouse, the city or the world will just be a matter of having enough radio frequency readers ready to listen. The problem is that, until the last can of baked bins and bunch of Chilean grapes have RIFD chips inserted, no supermarket can dispense with their scanners, and neither can we at DSL Logistics. The technology will find niches in closed systems, but its main weakness is that it is of no use whatsoever in the real world, unless it somehow first manages to conquer the entire world.
Smelly web returns
The BNZ developed an Online Retail Sales Index in conjunction with Marketview (specialists in analysing transactional data) and publish those reports on their website. It’s useful work. Online sales have more than doubled over the past four years and now amount to about ten percent of comparable retail sales. But the rate of growth has started to slow down. The high-water mark of the rise in online sales happened in 2011.
“We’re a billion dollar export market for international online retailers,” said Steven Bridle of Marketview. “It’s worthy of attention; hence the increasing number of sites offering free or low-cost shipping and no-questionsasked returns.”
Predictably, local retailers selling online have followed this trend.
Some retailers may be going too far, though. At DSL Logistics, we employ a person whose main asset for her job of managing online returns is her nose. She sniffs every dress returned, allegedly on the grounds that it didn’t fit properly, for signs that it fitted very well indeed and was worn to a party – therefore the not-so-faint odours of sweat, perfume and spilled alcopops. The purpose of the exercise is to decide whether the dress goes back into stock or straight into the rubbish bin. Either way, the web buyer gets a full refund, no-questions-asked.
Auckland’s new tug Hauraki arriving at Waitemata Harbour in August.
Daniel Silva is the Secretary of the Importers Institute and Managing Director of DSL Logistics, an import services company and 3PL provider based in Auckland. email@example.com