Understanding Additional Costs
Perhaps you are new to shipping or maybe you have worked in the industry a while. Either way, at some point you will have likely experienced a sense of fear when your final invoice arrives and charges you haven’t accounted for appear. Understanding the hidden costs of shipping and key factors that influence your final bill, will help you manage your budgeting effectively.
At ICE, we have created our hidden costs of shipping guide to help you plan for unexpected charges in shipping.
Need a quick reference? Download our Hidden Cost Breakdown or read on for your ultimate guide below.
Duties and GST
The most crucial charges that must be factored into your shipping are duties and GST. These are government taxes that will be passed on to you to cover the cost of importing or exporting your product. As a general rule taxes for importers in Australia are charged as follows:
- Duty 5 % of the FOB Value
- GST 10% of the CIF plus Duty value
- Processing AUD 85.00 up to AUD 200.00 based on the FOB value
Australia has some excellent free trade agreements in place with other countries that can reduce or even completely remove any duties chargeable. You will normally need to provide a Certificate of Origin with your shipment prior to arrival to benefit from these. Read our guide on The Value of a Certificate of Origin to find out more about duty charges.
Once your goods arrive, the wharf or airport will only hold your shipment on site for free for around 3 days. If your goods need to be held longer than this you could run into storage charges. Storage at the wharf or airport is extremely expensive and should be avoided where possible. Some of the reasons your goods could go into storage are:
- You have not provided commercial documents in a timely manner for your goods to be cleared
- The documents you have provided are incomplete or incorrect
- You are missing import permits
- You have not paid your duty and/or GST invoice and your goods cannot be released
Where possible your forwarder may move your goods “underbond” to a bonded location. This will reduce storage charges whilst any issues get resolved.
By being prepared and providing commercial documents in advance of a shipment arrival, you reduce your risk of paying storage.
Australia has strict biosecurity regulations and will at times request random inspections of goods. Unfortunately as an importer you are liable to pay any costs associated with inspection activity. If your goods have been selected at random and your consignment complies with all biosecurity requirements you will not usually be charged. If your goods are directed for treatment you will need to accept any associated costs.
You can read more about inspection regulations on The Department of Agriculture and Water Resources Website.
If you are importing Full Container Loads (FCLs) you have a fixed amount of free time to keep the container following its arrival. Free time is usually 7 days, however you can apply for more time in advance. The 7 days allows your forwarder to collect the goods and deliver them to site, for you to unload the cargo and for the container to be returned to the wharf.
Charges after the 7 days free time can vary by shipping line. As a general rule you can expect charges of $150-300 per container per day.
Transport for container and LCL shipments will normally be subject to a certain amount of free time. This means the transport company has allowed for waiting time at the wharf and at the unloading point. The purpose of this is to enable an efficient operation. If a driver has to wait over the allotted free time for loading/offloading, he is losing time and cannot complete other jobs.
Unfortunately, you can be liable for waiting time payments if the transport company is kept waiting. By communicating with your forwarder regarding arrival times and ensuring your staff are prepared, you can avoid costs associated with waiting time. With FCLs, you also have the option to choose a drop and return service if it will take you more than an hour to unload your goods.
Going to a rural destination in Australia? If you are delivering a container to a rural location your goods will need to go via a rural tailgate inspection.
A rural tailgate inspection involves directing containers to an approved arrangement site. At the site all external surfaces of the container are inspected before opening the doors and checking for biosecurity risks including signs of:
- plant material
- non-compliant packaging
You should allow up to a day for this extra activity and should expect additional charges. You can check in advance if your location is classified as rural here.
One Last Tip
Your forwarder will guide you through all foreseeable charges at the time of booking. The information in this guide should allow you to factor in added costs that you may encounter, but also allow you to best prepare so you may avoid additional charges.
Should you have any questions your ICE team member is here to help. You can contact the ICE team on 1300 CARGO1.