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More Storage Products
Transporting goods by sea remains the most common way to trade globally, but in Africa cargo spends an abnormally long time in ports before it is moved inland, presenting a serious obstacle to the successful integration of sub-Saharan economies in worldwide trade networks. The port of Durban, however, has managed to buck the trend.
A World Bank study, titled Why does cargo spend weeks in sub-Saharan African ports? Lessons from six countries1, found the average cargo waiting time to be 20 days and that more than half of the time needed to transport cargo from ports to hinterland cities in landlocked countries in sub-Saharan Africa is wasted because of the time it spent in ports.
The average cargo dwell time in Durban is four days, which is on a par with ports in East Asia and Europe.
The African Development Bank s definition of dwell time is the time cargo remains in a terminal s in-transit storage areas while awaiting shipment for export or onward transportation by road or rail for import.
Dwell time is one indicator of a port s efficiency: the higher the dwell time, the lower the efficiency. And longer dwell times have an adverse effect on economic growth.
Long transport times reduce trade
A 2012 working paper produced by the National Bureau of Economic Research, titled Time as a trade barrier2, concluded that longer transport times dramatically reduce trade and estimates that each day in transit is worth 0.6% to 2% of the value of the goods.
Long transit delays also significantly lower the probability that a country will successfully export its goods.
Africa s estimated infrastructure deficit of $48-billion a year is often singled out as the culprit for hampering trade in and around the continent, but reasons for bottlenecks are far more complex and a lot more challenging to resolve.
Shantayanan Devarajan, the World Bank s chief economist for the Africa region, says that long dwell times are in the interest of certain players in the system and that dealing with the proximate cause of the problem, such as the apparent lack of berths in African ports, is unlikely to trigger a solution.
Specifically, importers use the ports to store their goods; in Douala Cameroon, for instance, storage in the port is the cheapest option for up to 22 days, Devarajan wrote in the foreword of the World Bank study.
Customs brokers, meanwhile, have little incentive to move the goods because they can pass on the costs of delay to the importers. Worse still, when the domestic market is a monopoly, the downstream producer has an incentive to keep the cargo dwell times long as a way of deterring entry of other producers.
The evidence in the study shows that discretionary behaviours increase system inefficiencies and raise total logistics costs.
In most ports in sub-Saharan Africa, the interests of controlling agencies, port authorities, private terminal operators, logistics operators (freight forwarders) and large shippers collude at the expense of consumers, the report said.
Surveys demonstrate that low logistics skills and cash constraints explain why most importers have no incentive to reduce cargo dwell time as, in most cases, doing so would increase their input costs.
Moreover, some terminal operators generate large revenues from storage, and customs brokers do not necessarily fight to reduce dwell time because time inefficiency is charged to the importer and eventually to the consumer.
Durban port is considered a good benchmark for sub-Saharan ports. Its average four-day waiting period for import and export cargo is much closer to best practice in East Asia and Europe, which is a three- or four-day waiting period.
South Africa s commercial ports have been placed firmly in the hands of the state through Transnet. With the exception of these ports and Mombasa in Kenya, all other ports surveyed in the study are run by private container terminal operators.
Lessons from the Durban port
The demand at South African ports surpasses all countries in East and Southern Africa and has a critical role to play in the international trade landscape for the region, according to a 2011 World Bank working paper.
It said Durban port could teach sub-Saharan African ports a few lessons namely that the onus was on public sector players such as customs and the ports authorities to put pressure on the private sector of port users to comply and reduce cargo dwell times.
Prohibitive charges for storage, coupled with strict enforcement and the possibility to preclear with customs with advantages attached to it and service level agreements binding both parties are critical tools for the reduction of cargo dwell time, the paper said.
In the late 1990s, Durban port was notoriously inefficient with high levels of congestion, characterised by long berthing delays for container vessels, long train turnaround times in the port and long queues for road trucks, which resulted in dwell times of six to seven days on average.
But in 1998, the paper said, shipping lines lost their patience and introduced a vessel delay surcharge.
This was a wake-up call for Transnet Port Terminals and the National Port Authority. A committee was created involving the port stakeholders with a defined strategy and several measures, which seem to have had the most important impacts.
Major stakeholders acknowledge that the introduction of the punitive storage charge after day three is probably the most important single factor affecting dwell time at Durban port, the working paper said.
This means that, after 72 hours, containers incur heavy storage charges. The result is that storage charges in Durban are almost six times as high as other ports in the country.
But investment in infrastructure has certainly also helped the process. At the time when Durban adopted its port liberalisation policy, South Africa s trade infrastructure was ageing and had been neglected for many years, and most of the country s ports were not performing well.
From 2002, Transnet invested more than $700-million in ports over a five-year period, focusing on creating capacity and equipment. An average dwell time for cargo of four days at Durban port has been achieved and maintained since 2006.
More investment is also on the way. Just last month, Minister of Public Enterprises Malusi Gigaba unveiled Transnet s seven new state-of-the-art ship-to-shore cranes at the Durban Container Terminal as the company surges ahead in its drive to boost productivity and efficiency in arguably the southern hemisphere s biggest and busiest port.
The cranes are part of Transnet s rolling R300-billion seven-year investment programme the market demand strategy , the state-owned enterprise said.
Over the next 20 years, Transnet Port Terminals, which currently operates 45 cranes in seven ports across the country, will buy 39 new ship-to-shore cranes.
While Durban may remain top dog when it comes to the continent s ports, improvements elsewhere will undoubtedly have positive spin-offs for South Africa.
Ga l Raballand, World Bank senior economist and co-author of the cargo dwell-time study, told the Mail & Guardian that reducing dwell time could possibly increase competition in Sub-Saharan Africa.
But, he added, what matters in transport are economies of scale and, therefore, there is somehow a first- mover advantage the biggest economy is likely to attract more flows, which are going to lead to reduced transport costs, which will reinforce its position. South Africa is the gateway because it is also the largest economy.
- ^ Why does cargo spend weeks in sub-Saharan African ports? Lessons from six countries (econ.worldbank.org)
- ^ Time as a trade barrier (www.nber.org)
- ^ http://mg.co.za/article/2013-06-14-00-durban-port-leads-way-for-african-trade (mg.co.za)
17 year old car owner/driver needs a proper car insurance policy
With the number of young car drivers growing every day, there is a need for a specific car insurance policy, which caters to 17-year-old drivers, having their own cars.
While we have the figures showing that the younger drivers being inexperienced are involved in more car and other accidents, than the older drivers. However, it cannot be said for the whole lot of young drivers, particularly the 17-year-old car drivers. At the same time, there is a greater need to educate the young car drivers including 17-year-old drivers to search for a comprehensive and proper car insurance policy that suits them best.
Certain insurance brokers may offer an insurance policy that has every stuff in it and ultimately it may not prove useful to the 17-year-old car driver, as there may be nanny benefits offered with the car insurance policy, which are not at required by the young driver.
The law should be very stringent with regard to the car insurance policy, particularly for the 17-year-old car drivers having their own cars. The law has to ensure that a 17-year-old car driver has a proper and well-documented car insurance policy, before he takes on the wheels and goes off to the road for a drive. Certain countries have fixed penalties for not having a proper car insurance policy by the 17-year-old car driver. In Great Britain the penalty for not having proper car insurance is a six point fine. This means in real terms that a 17-year-old car driver has to appear for a retest as their license gets revoked due to this offense.
Young car drivers, especially 17-year-old drivers and till the age of 25 years, are deemed as high-risk drivers. This means that the chances of more accidents are higher with this age group of drivers. Hence, most of the insurance companies add up their costs to quote a higher price for a 17-year-old car driver to have the car properly insured.
However, there are many instances where we can find that the insurance brokers and companies have a genuine case to put up the prices, as 17-year-old car insurance will have to meet the excess claims from the 17-year-old drivers due to their inefficient handling of the vehicle and its maintenance..But at the same time there are certain car insurance companies who provide 17-year-old car insurance at cheaper and reasonable prices, as they are specialists in the field of providing car insurance policies to the young drivers only, like a 17-year-old driver.
One needs to do a online search for such companies and here is the link to one website that can help
. /17-year-old-driver-auto-insurance.htmDuring the course of learning car driving, a 17-year-old car driver is taught to drive slowly and that too a older vehicle, so that the driving skills get perfect and the 17 year car insurance policy is also cheaper to get. Another web site address given here can be of much help in this direction.
In Netherlands, we can find many Dutch companies that can give a proper autoVerzekering and the companies like the following Dutch website can prove very useful
Despite the tough overall conditions that continue to plague north European economies, road freight volumes appear to be holding up.
The recent monthly Danske Bank freight forwarding index recorded a May level of 63, substantially up from April s level of 50 (a number that represents a stable level of volumes). However, road freight operators also remained relatively pessimistic about the forthcoming months, according to report author Erik Bergoo.
Expectations for road came in at 47 for July (57 in June) and indicate decreasing volume development over the next two months, he said.
The uncertainty over future business levels was reflected in the preliminary results of one of the UK s largest haulage companies, Wincanton, which were released today. Over the past year the company has refocused its business, withdrawing from its European operations and exiting the food distribution business and instead concentrating on the remaining UK and Ireland operations.
It recorded a 10% decline in revenues, which dropped from 1.2bn the year before to 1.08bn, partly as result of the withdrawal from Europe and food, but also partly as a result of two particular customers deciding to in-source supply chain operations.
Nonetheless, pre-tax profit was up, from 28.8m in 2012 to 32.1m this year, with underlying margins up from 3.6% to 4.3%, which were principally the result of cost savings, while it bolstered its revenues through a series of contract wins, and sought to offer existing clients a broader range of services.
We have made progress with offering broader supply chain solutions in the year, in particular with the extensive technological developments inherent in the convenience store distribution centre solutions. By increasing the value added in our solutions we have both increased the return from such projects and also the depth of our relationships with our customers, said chief executive Eric Born.
Its major difficulty is that in concentrating on the UK and Ireland it has hardly placed itself in a market that has significant growth potential. That said, after a challenging few years in which it has recorded losses and seen its markets hit by recession, it remains firmly in recovery mode.
Wincanton is making steady progress in its recovery programme and, whilst average debt levels (c 201m) remain too high in our view, the group is now generating a positive cash inflow and debt levels are falling. Underlying trading looks reasonably encouraging in a tough industry and group operating profit margins rose from 3.6% to 4.3% in the year, analysts at Investec wrote in a note following the publication of the results.
Mr Born added that he did not expect to see any general economic recovery in its markets over the next 12 months. We do not expect the economic environment in the UK and Ireland to offer any relief and as such we will focus on winning market share and capture customer opportunities through the development of supply chain solutions and the cross-selling of products and services.
In addition to growing the business and broadening our offering, we will continue to drive out further costs by improving the efficiency of our operating model across our three main asset pools of people, property and fleet.
A Dow Jones analyst told The Loadstar: Unemployment is slow because most people have kept their jobs, which is unusual for an economic downturn in this country, but on average they re actually earning what they were earning perhaps 10 years ago. Stobart offers a template for an alternative strategy, diversification into other business areas, but with the exception of its biomass operations, that doesn t seem to have paid off yet.
In terms of logistics, however, both companies are broadly transforming themselves from hauliers into integrated logistics service providers.
Wincanton splits its business into two sectors: contract logistics services, which covers its logistics customers in the construction, FMCG, retail grocery, retail general merchandise, tankers and fuel sectors, amongst others. Overall revenue for the division was down 10% to 923m, and every sector showed declining revenues bar construction, which was buoyed by new bulk cement powder transport operations for Lafarge from its network of six national plants nationwide.
It also won a new contract with Rolls Royce for the storage of defence-related power units, while other start-ups included two new distribution centres for Morrisons and Sainsbury s convenience store expansion.
Its other sector is the smaller, specialist services division, which comprises container haulage, document storage and vehicle maintenance and repair services, and which reported an 8.5% decline in revenue, mainly dragged down by the weakness in the container transport market.
The container transport market continues to be weak in the UK with limited overall volume growth. Factors such as increasing shipping line charges for UK delivery diverted volumes to European ports and transport operators, the company said.
For anyone who is a world provider of items then you definitely have to know the importance of logistic providers. Logistic services vendors or freight forwarders present variety of transportation providers for their customers. They help to maneuver the items and extras together with food items, attire, engineering machines, and lots of other items. They offer an opportunity for your makers to grow their business far across the nations. They will simply satisfy the intricate distribution wants on the makers. These logistic services vendors operate in the determined manner and use really regular procedures to ensure your business plans are achieved by the due date. busana muslim1
Logistic services vendors operate seamlessly with transportation services vendors, provide chain & logistics professionals, customizing the solution to the wants of their worldwide customers. They operate in association with their air, ocean, brokerage, warehousing as well as consolidation providers. Their wide ranging consolidation and distribution providers present worldwide logistics vendors and makers a complete control on their provide chain management. They provide logistics and distribution providers to the customers at the worldwide location where business wants on the customers are best achieved, by the due date and within their budgetary constraints.
Logistic services vendors can handle and manage all factors of sea freight, air freight, land transport and shipments with flawless integration of inbound receipts, warehousing, distribution, storage of cargo & end-to-end as well as port to port services with excellent transit times. They provide port-to-port and door to door freight providers transit times consistent throughout the year and to any location on the manufacturer s choice. Their local experts operate with the makers to book capacity and track their shipment anywhere anytime to ensure goods arrive when needed.
The flexible providers and their international network locations render an inspiring prospect for your makers, suppliers, transportation agencies, and warehousing companies to minimize cost of operation and distribution. Their efficient door to door transport providers refers to the quick movement of goods from the door on the seller / shipper to the door on the buyer. This type of transportation services may include various modes of transportation together with air, sea or road. Each mode of transport is specialized and wants a professional excellence and thorough understating on the warehousing and distribution providers.The logistic services busana muslim trendy 2vendors present absolute professionalism, loyalty, and consistency with the essential providers like:
1. Air Express Support, high priority (24 hours)2. Value added services to any destination3. Economical & timely distribution4. Door to Door & Airport to Airport services with excellent transit times5. Full Container Load (FCL) & Partial Container Load (LCL) cargo services6. Worldwide delivery
Logistics and freight forwarder companies provide the ideal balance of time, space, frequency and cost. They offer the most efficient and cost effective solutions for your worldwide customer s freight wants while meeting time critical schedules to meet their requirements. busana muslim terbaru3
Using a freight forwarder to handle your import or export shipment might not be as costly as you think.
Firstly, freight forwarders have good contacts with various hauliers and shipping lines. Freight forwarders understand their industry, and their suppliers. Shopping around for the best price is standard practice here at Mercator Cargo, we obtain the best price for our customers. Using a freight forwarder can have this advantage, if you consider a potential shipment, where would you start? Would you ring around lots of suppliers to get the best price? Would you know which supplier offers which route or service? Mercator Cargo knows, and that s why we are able to shop around for the most competitive price for you.
Would you know to ask suppliers if prices they gave you included this service, or that service? A freight forwarder can help you in this aspect, the price given will be the price paid. If you know your costs upfront, you can then work on your profit margins; how much do you need to sell this for to make a decent profit taking into account your shipping costs?
Finally, utilising a freight forwarder can prevent mistakes, thus saving money. For example, if a document is not in the right place at the right time, your shipment may have to be held on quay, or in storage, which can be costly. Putting your freight into trusting hands can alleviate this possibility of further costs incurred due to delays.
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- ^ email@example.com. (www.mercatorcargo.co.uk)
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- ^ freight forwarding imports (www.mercatorcargo.co.uk)
- ^ freight forwarding services (www.mercatorcargo.co.uk)
- ^ freight forwarding uk (www.mercatorcargo.co.uk)
06 Jun, 2013
SACRAMENTO, Calif., June 6, 2013 /PRNewswire/ Volvo Trucks today became the first North American manufacturer to announce plans to utilize a new, clean-burning alternative fuel to power its heavy-duty trucks. Dimethyl ether (DME) is a non-toxic, non-carcinogenic fuel that can be made from a variety of domestic, sustainable feedstocks and is currently used1 ;as a propellant in many household and cosmetic products. The announcement was made at the California State Capitol.
Volvo invested in the DME3 technology for the North American market because of the numerous benefits DME offers as an alternative to diesel fuel. DME mirrors the exceptional performance qualities and energy efficiency of diesel while also delivering a number of excellent environmental properties including the fact that it produces no soot. The company plans to commercialize DME-powered vehicles in 2015.
DME can be made from a variety of organic sources4, including biogas from food and animal waste, wastewater treatment facilities and landfills. When produced from biomass or biogas, DME can reduce CO2 by up to 95 percent compared to diesel.
DME can also be produced from North America s abundant supply of natural gas, and therefore has the potential to significantly reduce energy dependency. ; Converting natural gas to DME is an innovative way to address many of the distribution, storage and fueling challenges otherwise presented by natural gas as a heavy truck fuel.
We are proud to be a leader in providing alternative transportation solutions to the market, said Goran Nyberg, president of Volvo Trucks North American Sales and Marketing. It is clear that DME technology shows great potential for North America and allows Volvo to further its commitment to both our customers and the environment.
The DME announcement is the latest example of Volvo s ongoing commitment to environmental responsibility and developing alternative fuel drivelines. In 1972, Volvo first established a formal position on the environment, and in 1985, Volvo made environmental care a core value.
In 2007, Volvo showcased in Brussels seven commercial vehicles powered by seven different CO2-neutral fuels, one of which was DME. The company demonstrated these vehicles in U.S. operation in 2008, in conjunction with the Washington International Renewable Energy Conference (WIREC).
Nyberg was joined at the California State Capitol by Cliff Rechtschaffen, senior energy and environmental advisor to California Gov. Jerry Brown, and by executives from Oberon Fuels, which has developed skid-mounted, small-scale production units that can convert various feedstocks into DME.
It s exciting to have a global leader like Volvo Trucks partnering with California companies to develop innovative technology in the Golden State, said Kish Rajan, director of the Governor s Office of Business and Economic Development (GO-Biz). ; The State of California continues to attract the most dynamic companies in the world and GO-Biz looks forward to helping Volvo and Oberon maximize the benefits of DME as a commercial transportation fuel.
Volvo s DME technology will be available in a Volvo D13 engine, the top-selling heavy-duty engine in the world. The DME-powered vehicles will join a line-up that already includes Volvo VNM and VNL models that can be specified to run on compressed or liquefied natural gas. ; The company will also introduce its own proprietary LNG compression-ignition engine North America s first fully integrated natural gas solution in Volvo VNL models next year.
With the addition of DME-powered vehicles to our alternative fuel lineup, Volvo will offer the industry s most comprehensive approach to the developing North American alternative fuel market, Nyberg said.
Volvo Trucks North America s operations and products are guided by the company s three core values: Quality, Safety and Environmental Care. The Volvo VN, VHD and VAH trucks are assembled in the United States at the New River Valley Plant in Dublin, Virginia, while Volvo engines for North America are assembled in Hagerstown, Maryland. Both plants are certified to ISO14001 environmental and ISO9001 quality standards.
The Volvo Group is one of the world s leading manufacturers of trucks, buses, construction equipment and marine and industrial engines. The Group also provides complete solutions for financing and service. The Volvo Group, which employs about 115,000 people, has production facilities in 19 countries and sells its products in more than 190 markets. In 2012, the Volvo Group s sales amounted to $45 billion. The Volvo Group is a publicly-held company headquartered in Gothenburg, Sweden. Volvo shares are listed on OMX Nordic Exchange Stockholm and are traded OTC in the U.S. For more information, please visit www.volvogroup.com6 or www.volvogroup.mobi7 if you are using your mobile phone.
SOURCE Volvo Trucks North America
- ^ currently used (www.youtube.com)
- ^ http://photos.prnewswire.com/prnh/20130606/NY27578 (photos.prnewswire.com)
- ^ DME (www.youtube.com)
- ^ variety of organic sources (www.youtube.com)
- ^ www.volvotrucks.com/DME (www.volvotrucks.com)
- ^ www.volvogroup.com (www.volvogroup.com)
- ^ www.volvogroup.mobi (www.volvogroup.mobi)
- ^ firstname.lastname@example.org (latinbusinesstoday.com)
- ^ www.volvotrucks.us.com (www.volvotrucks.us.com)
By its very nature, transacting business overseas poses an extra dimension of logistical and financial challenge in other words, risk which is best tackled with the help of specialist insurance products designed to bridge the culture gap . Always ensure that your business is covered against the dangers of distance, language and fluctuating exchange rates: it simply doesn t pay to take a chance. Paul Godfrey explains the options
Whether your business is an import/ export specialist, or has a sprinkling of overseas clients, there is a good deal that insurance can do to make life easier. For example, it can -
Hedge against fluctuating exchange rates
Protect you against late payments and unpaid debts
Safeguard goods in transit or held in overseas depots
Protect you against third party litigation if deliveries are late
Going the distance: cargo, freight and goods in transit insurance
One of the potential hazards of doing business overseas is that if you re involved in managing any kind of delivery, the longer journey time means that there s more risk of theft or damage due to natural disaster or other unpredictable accidents. Traditionally, these risks are handled by freight or cargo insurance often as part of a marine or aviation insurance policy. Freight insurance gives the extra coverage against the unpredictable and the unpreventable damages that might occur when freight moves from point A to point B. If you import/export goods, the insurance cost of a freight or cargo policy is usually calculated by the total commercial value of the goods.
Note that if you are physically selling the goods, rather than simply transporting them, the sales contract may require that you provide insurance to protect the buyer s interest or its bank s interest. So it goes without saying that noncompliance with the contract can result in legal problems if the goods in transit are lost or damaged. Moreover, even if you are not legally obligated to provide insurance, you may want to purchase insurance to protect your business if it has a financial interest in the goods.
Cargo and freight policies will typically cover:
Loss of damage to cargo during transit
Transport expenses and overhead charges
Expected profit from sale of goods at place of destination
Financial losses attributed to delay in start-up (for project cargo insurance) caused by loss or nondelivery of insured cargo
Recently, more sophisticated versions of freight and cargo cover have become available. One example is goods in transit (GIT) cover, which is specifically designed to protect you if you carry goods for someone else. This will cover claims relating to loss or damage to those goods while in your care. Having access to a well written, comprehensive GIT policy will often be a standard requirement if your business is pitching for new freight contracts.
Goods in transit insurance covers inventory or other merchandise shipped by the seller, but not yet received and accepted by the purchaser. It is intended to protect buyers and sellers who are exposed to financial loss if this property is lost, damaged, or destroyed while off premises and in transit. Typically a goods-in-transit policy will insure:
Your legal liability as a carrier for the physical loss or damage to goods that you re responsible for
Your legal liability for loss or damage to containers that aren t yours
Financial liability arising from damage, delay, accidental mis-delivery
Open cover policies
A further development of the traditional freight and cargo formula is an Open Cover policy. This is designed to provide complete, end-to-end protection. For example, it will cover shipments by any conveyance, ie, by sea, by air, by truck, by rail. Coverage will also typically be worldwide. (It s important to note, however, that shipments to, from or within countries under UN and/or US sanctions are usually excluded).
A great advantage of this type of policy is that it can provide cover for the whole period of transportation from warehouse to warehouse , including overloading, trans-shipments and intermediate storage.
This means that you will be indemnified against any danger of loss or theft in warehousing facilities, and against delays incurred by any element in the delivery chain. Policies of this kind can also be customised (at extra cost) to meet your exact, bespoke requirements for example, you may be using an express-transfer provider to switch goods from sea to land in a singlebond port, or need extra protection against potential damage to fragile or heat-sensitive goods.
Choosing the value of the cover
Deciding on the amount of insurance is an important first step. Generally, the policy limit should reflect the maximum value being shipped in any one conveyance. When choosing the amount, keep the following in mind:
Cargo policies typically value goods at the invoice cost, plus freight charges, plus an advance of between 10 and 20 percent to cover expenses incurred during shipping that are unknown at the time of shipping.
If you are an exporter, your profit is generally already included in the invoice cost. An importer may want to select an advance valuation that includes a profit margin, and may also want to include coverage for duty and taxes. Some importers and exporters may want to insure their goods based on sale price.
The duty of care clause
Just about every style of freight or goods-in-transit policy will include a duty of care section that lays out a list of reasons why an insurer might reject your claim. Typically these will require that your company:
Employs only competent drivers and agents (you may have to complete a risk checklist to verify this).
Takes all reasonable measures to secure the load.
Keeps the load under surveillance 24/7.
Keeps the fleet maintained properly (again, this may need verification).
Has ISM Endorsement for shipments on Ro-Ro passenger ferries.
Protection against currency risk
One of the most important uses of insurance in international trade is to create a buffer against the loss of profits if you re adversely affected by a changing exchange rate.
Every business involved in international trade faces the risks of fluctuation in the exchange rate eroding profits and operating margins. This can have severe consequences if it isn t managed properly. For example, exchange rates may move by up to 10 per cent within any single year, which can significantly affect a firm s cash flows, meaning a 10 per cent decline in the value of a receivable or a 10 per cent rise in the value of a payable. This can mean that export profits are negated entirely or import costs could rise substantially.6
There are generally three main types of foreign exchange risk. These are
Each of the above can be mitigated and managed through correctly-placed insurance, but it s important to understand exactly how your business may be impacted by these different types of event.
A business has transaction exposure whenever it has contractual cash flows (receivables and payables) whose values are subject to unexpected, unpredictable changes in exchange rates, due to a contract being denominated in a foreign currency. At some point, the company must exchange foreign currency for domestic currency and risks facing volatile, disadvantageous changes in the exchange rate. Businesses will inevitably become exposed as a direct result of activities such as importing and exporting or borrowing and investing.
Economic exposure (sometimes called operating exposure) is when a business market value is influenced by unexpected exchange rate fluctuations. Adjustments of this kind can severely affect the firm s competitiveness, its present and future cash flow, and ultimately its value. For example, there may be a shift in exchange rates in one of the business key operating markets, which dramatically influences (either for good or bad) the demand for a particular product in that country. If your business produces or exports that product, it s subject to all the economic exposure that a rise or fall in demand can leverage.
Translation exposure is when the business financial reporting is affected by exchange rate movements. Inevitably, your business will prepare consolidated financial statements for reporting purposes, and the consolidation process means translating foreign assets and liabilities from foreign to domestic currency. While translation exposure may not affect an SME s cash flows, it could have a significant impact on a firm s reported earnings and therefore its stock price if its publicly listed.]
Managing the risks: traditional strategies and the role of insurance
There are basically two different ways of protecting against currency exchange risk:
Insurance. A range of insurance products is available to mitigate the potential damage of currency fluctuation on cash flow and profitability. Policy claims have, for example, traditionally been triggered when exchange fluctuation reaches a particular agreed point. The only downside with using an insurance tool is that of cost, since it is in effect buying protection from a scenario that might be handled though other financial instruments.
Foreign exchange hedging strategies. Transaction exposure is often managed either with the use of foreign exchange derivatives such as
1. Forward contracts
2. Futures contracts
3. Options and swaps
4. Currency invoicing
5. Leading and lagging of receipts and payments
6. Exposure netting
The drawback of any of these approaches, however, is that they require a high level of financial sophistication and a level of participation in the global money markets that may be quite beyond the usual experience of even the larger SME. So again, a bespoke insurance solution (tied to a particular level of exposure or exchange variation) can be a worthwhile and practical option.
- Doing business in overseas markets1
- Is your business protected?2
- Business slow to align analytic metrics with enterprise business drivers3
- Preparing for the inevitable: Life assurance for business4
- IMD Business Forum outlines a new regional business agenda5
- ^ Doing business in overseas markets (www.smeadvisor.com)
- ^ Is your business protected? (www.smeadvisor.com)
- ^ Business slow to align analytic metrics with enterprise business drivers (www.smeadvisor.com)
- ^ Preparing for the inevitable: Life assurance for business (www.smeadvisor.com)
- ^ IMD Business Forum outlines a new regional business agenda (www.smeadvisor.com)
Townley Group International (TGI) provides logistics and freight forwarding services to the defence industry.
Our experience of operating within difficult and remote areas, such as Saudi Arabia, Iraq, Fiji and Algeria, has led to us becoming a pioneering defence logistics agency, specialising in international war zone logistics.
With receiving stations in all major cities throughout Australia, as well as regional sites and overseas locations, we are able to accommodate clients all over the world.
Logistics and freight forwarding services for the defence industry
TGI’s services within the freight industry range from general customs clearance right the way through to chartering ocean vessels.
We provide a professional and extensive service for delivery of your cargo through a single point of contact in our customer service team. Our services include:
- War zone logistics
- Project / out of gauge (OOG) cargo
- Freight forwarding by air
- Freight forwarding by sea
International war zone logistics services
TGI specialises in providing international war zone logistics to clients working in Iraq and other major areas of conflict. We have experience of working on projects in these environments, which require in-depth planning and a great deal of attention to detail. We are also able to react to changes that may occur during a project, to ensure its successful completion.
Our service operates in line with your required timing and standards, including the coordination of services from ex-works to delivery, along with security.
Project logistics and OOG cargo for the defence industry
In addition to general cargo logistics, we offer project logistics and OOG cargo services. We can accommodate an array of major heavy-weight shipments, and provide a full range of logistics services for large-scale, heavy-lift projects, including thorough planning, project management and delivery.
We pride ourselves on delivering and completing our services on time and to our customers’ exact specifications. Our dedicated teams are experts in handling road, road and specialised air charter cargo movements, from origin to site in difficult and remote areas.
Air freight forwarding services
In most cases, air is the fastest and most convenient method of transportation. TGI provides solutions depending on the urgency of your shipment via our strong links with many of the world’s premium aircraft operators.
We can arrange for the transportation of all cargo, whether it’s a small, time-critical spare needed for a military vehicle, or heavy equipment needed in a war zone. We also organise the necessary air freight documentation and tracking processes, to ensure you have complete piece of mind.
Freight forwarding services by sea
Our freight forwarding services by sea are dependable and timely, thanks to our reliable port-to-port and door-to-door transit times that allow our clients to make decisions based on a combination of cost, speed and service.
In addition, our comprehensive list of strategic carrier partners across the globe enables us to provide space allocations and competitive pricing. Once your cargo is on its way, we provide updates in real-time, which allows you to optimise your supply chain.
Asset tracking and condition monitoring system for defence cargo
Together with Wavetrend, TGI has produced the freight forwarding industry’s first real-time asset tracking and condition monitoring system, called GlobalEyes .
Consisting of an asset monitoring unit (AMU) and a network communications centre called the Information Management Bureau, GlobalEyes allows stakeholders in the logistics process to access real-time knowledge of the ‘where, when and condition’ of cargo and containers, 24/7.
The system’s AMU is equipped with a sensor suite that communicates with the web-accessible IMB via mobile, satellite, or through another unit via wireless LAN. Incorporating the patented integrated RFID solution, GlobalEyes uniquely combines GSM, GPS-based tracking with RFID monitoring and security.
As the system uses publicly available global communications networks, no additional infrastructure is required.
Customs and quarantine clearance and storage solutions
TGI offers comprehensive customs and quarantine clearance for import and export cargo, anywhere in the world. Following the recent re-location of our business to Yatala, Qld, we now offer storage solutions on a short, medium or long-term basis.