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.

Exporter - - CONTENTS -

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. daniel@dsl.co.nz

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