Understanding your logistics options

Logistics for exporting is more than a simple equation balancing out the cost and timing options of whether you use road, rail, air or sea. With stringent and specific market requirements, it’s all about getting the details right.

From ensuring you have the correct export documentation with the Harmonised System codes, through to meeting the local market’s product labelling and traceability requirements. The costs can be high if you get it wrong.

Arm yourself with the right knowledge and reduce the risk of your product being delayed, refused entry, lost in transit, suffering product spoilage, and other issues that can result in additional costs to you. As you grow your business and target new international markets, you can handle logistics yourself, but sometimes it pays huge dividends to get professional help.

“Hire somebody that knows about freight and logistics. It is a critical component of an organisation, and I think it’s one of the first ones that every business overlooks. And it’s absolutely a key driver to success is having a seamless freight and logistics operation.” Steve Boyd, Deadly Ponies

Understanding logistics

This guide introduces you to the key considerations to improve your export logistic practices and identify the help you may need. You’ll find information on:

  • How to use Harmonised System (HS) Codes
  • What a Freight Forwarder can do for you
  • Common problems you can overcome with a little attention to detail

Download our free guide on this page for more information.

Watch this four-minute video of Jai Basrur, NZTE Beachhead Advisor and Steve Boyd from Deadly Ponies on the increasing importance of getting freight and logistics right as the size of your business grows.

If you would like to learn more about developing the right approach to exporting for your business, register now for the next Export Essentials workshop. We’ll give you practical tools and techniques to take your business global.

Jai Basrur: Logistics, to me, is a means of connecting; connecting a supplier with a customer. The important thing is that in the logistics chain property passes and gets converted. This seems a basic discipline but the reality is that each market has got specific requirements that are regulatory and compliance requirements, and that is specified as a “code” under which imports are undertaken. 

Steve Boyd: Deadly Ponies is a luxury accessories brand and we’re shipping New Zealand product all over the world. We’ve faced all kinds of challenges in logistics. For our online store obviously we want to present a really beautiful package. Is the size of it ideal for the size of handbag but then is that just over the size of a price break for the couriers? And then, on large scale, financially sending in or bringing in product or bringing in finishings that are late and we have to airship versus sea freight; I mean the cost implications of that are massive against a unit cost of a product.

Jai Basrur: The most common costs related to logisitics are time-related costs, and the second is delinquency costs because you may not actually get your money on time, so again it’s a derivative of time costs. The third is any kind of spoilage costs that you might have because of time delays particularly for perishable products. And the fourth is logistics-related costs, like there could be costs of demurrage at wharfage, [Unintelligible 0:01:48.6] which are passed onto you.

Steve Boyd: We used to never package anything in plastic because we were really against using so much plastic; we’ve got quite ethical ways of doing things. But we learned the hard way. We realised that you can’t do that, you have to seal it, it cannot get any water damage; it’s got to be beautifully wrapped. And all of those things that you think you can get away with as a small business, as things grow you know the implications are just so much larger.

Jai Basrur: We’ve seen situations where shipments have been turned back because some of the documentation was not in order. And it seemed quite trivial in context, particularly if you’ve got an $80,000 shipment or a $100,000 shipment, but the reality is the banks will not honour these documents because ultimately they pay against the documents. They’ll not honour the documents until they’ve complied with all the specifications that they have.

Steve Boyd: Hire somebody that knows about freight and logistics. It is a critical component of an organisation and I think it’s one of the first ones that every business overlooks. And it’s absolutely a key driver to success is having a seamless freight and logistics operation.

Exporter guide

Get your head around Incoterms® with this logistics tool
  • How do I clear my products for export?
    New Zealand Customs has detailed information about export clearance requirements on its website.
  • How do I protect my business against a buyer defaulting on a payment?
    The Export Credit Office can help you protect your business from cancelled contracts or payment defaults that are due to commercial or political events beyond your control. 
     
  • I want to find out about regulations and tariffs for export
    Regulations and tariffs should be one of the first things you find out before exporting. They often determine whether a market will be easy or hard for you to export to, or whether you should try to do business there at all.

    Understanding regulations in your export destination is a must-do. For an introduction to what you need to think about, see our guide on understanding international compliance requirements. This includes tips on how to research regulations, as well as insights on local regulations, standards, health and safety, and dealing with local bureaucracy.

    It’s a good idea to take a look at the rest of the international compliance process while you’re doing your work on regulations – see more information in our guide to understanding international compliance requirements.

    If you’re planning to export food or food-related products, you should also check out the food exporting page on the Ministry for Primary Industries (MPI) website. MPI maintains a list of Overseas Market Access Requirements (OMARs) for New Zealand food products in different export markets – search and identify OMARs for your product online

    Tariffs can make your products more expensive and less attractive to overseas buyers, so you need to know the charges your products will attract before you commit to a new market.

    You can get a big head start in finding tariff information by using the Ministry of Foreign Affairs and Trade (MFAT) tariff finder or the World Trade Organisation’s tariff download facility. You can search the databases by product name, but they work best when you know the approximate Harmonised System (HS) code for your product. HS codes are used by customs authorities around the world to identify products and apply tariffs. The longer the code is, the more precisely it describes your product. The first six digits of an HS code are usually the same worldwide – after that, there can be up to eight further digits, which often vary from country to country.

    The  (NTAU) can help you to find out the first six digits of your HS codes – call +64 4 473 6099 or email mntau@customs.govt.nz

    To get a longer and more precise HS code for a particular market, look up and contact the local customs authority online, or talk to a customs broker or freight forwarder who has done business in that market.

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