If you’re an importer in Australia looking to take advantage of the benefits the construction industry has to offer, you’ll need to know everything on importing construction materials.
This is because, despite the presence of local opportunities, most construction materials in Australia are imported from overseas. The Australian Construction Industry Forum (ACIF) estimates that around 60% of Australia’s yearly $6 billion spent on construction materials are imported from China.
So if you’re looking to import into Australia and take advantage of the many opportunities in the construction sector, you’ll need to know exactly what is involved when shipping your construction materials into Australia. Customs is heavily regulated, and you’ll need to know how to be prepared, the duties to be paid, the shipping costs that apply and more. We consider all of this below.
Overview of Australia’s construction industry
The construction sector in Australia is integral to the nation’s economy, generating more than $360 billion in revenue and accounting for nearly 9 percent of our Gross Domestic Product. The industry is expected to grow by 2.4% every year over the next five years. While the majority of companies are sole traders, some of the major players include brands like John Holland, CPB Contractors, Lendlease and Nexus.
Despite the harsh impacts of the COVID-19 pandemic, opportunities for the construction sector remain high in Australia. The federal government announced a USD 1 billion funding package for small-scale construction projects in mid-2020, with major projects in focus such as a rail project from Melbourne to Brisbane and an undersea electricity cable between Tasmania and Victoria.
There are also numerous opportunities that will arise from the 2032 Brisbane Olympics, expected to create over 91,000 full-time jobs and deliver $8.1 billion to Queensland’s economy.
How to import construction materials into Australia
Importing construction materials into Australia is a lengthy process, involving many different parties and moving parts. Attention to detail is critical during this process, and any slight mishap can potentially lead to delays, increased costs and missed deadlines.
Find the right supplier
The first step is to find reliable suppliers you can trust. This process can be as thorough as you need it to be. It may involve you analysing dozens of proposals and tenders before finding the most cost-effective solution.
Consider a range of factors before choosing the right supplier. You’ll want to gain as much information as possible such as:
- The turnaround time
- Whether there is a minimum order quantity
- Their payment terms
- Sample prices
You will also need to make an assessment as to whether your suppliers are stable, reliable, affordable and are willing to negotiate on any key terms. You’ll ideally want to get quotes from multiple suppliers before making the final decision.
Make sure your construction materials are compliant
It is absolutely critical that your business follows the strict rules and regulations imposed by the Australian Government when importing your construction materials. At the end of the day, you – the importer – are responsible for ensuring the products comply with consumer laws and with any product certification requirements.
Many companies in China are simply unaware of the strict regulations here in Australia, or any other Western country. This makes importing challenging for you, but not impossible.
The National Construction Code (NCC) is Australia’s main set of technical provisions for buildings. It is the Code which sets the minimum level for the safety, accessibility and sustainability of certain buildings. The provisions of the Code apply to the construction and design of new buildings being built, and also the plumbing and drainage systems in existing and brand new buildings.
The NCC is created and maintained by the Australian Building Codes Board (ABCB).
You should ensure that the materials you import comply with the Code, so you don’t run into legal problems down the line.
Negotiate your incoterms
When you’ve pinpointed a supplier and you think it is a good match, the next step is negotiating a deal with them. At this stage, it is very important to consider what Incoterm will regulate your transaction.
Incoterms stand for the ‘international commercial terms’. They are the globally recognised standard commercial terms developed by the International Chamber of Commerce which allocate costs, risks and insurance between a buyer and seller when shipping internationally.
There are many different types of incoterms, some of which favour the buyer more so than the seller (and vice versa). For example, the Ex-Works (EXW) term is best for a seller because the buyer takes on almost all the costs involved in a shipment once they’ve collected the goods. Delivered Duty Paid (DDP), on the other hand, is more friendly to the buyer because the seller takes on all costs and risks for the whole shipment. The buyer is simply responsible for unloading the goods when they have arrived.
Factor in the shipping timeframes
When planning your shipment, timing is everything. You’ll want to know the dates your goods are expected to depart from their port of origin, and when they are to arrive at their destination in Australia.
Shipping timeframes will always depend on the origin and destination port. The most important point to clarify, however, is if your cargo is going to travel via a transhipment point (basically, if the cargo is going to stop somewhere along the way).
If so, you should allow additional time for congestion, especially in Singapore and Port Klang which are heavily congested most of the year around.
Take close look at your deadlines
Many construction projects have tight deadlines, some even have penalty clauses in contracts for not delivering a construction build on time. One 2020 report found that the international average value of a construction delay dispute has escalated to US $30.7 million.
Think carefully about this prior to committing to dates, especially if you are importing your construction materials via ocean freight.
Factor in delays to your timeline
We recommend scheduling your shipment well in advance given the delays that can occur with your shipment.
Since the COVID-19 outbreak, sailing schedules have been particularly volatile due to a vast range of factors, causing extensive delays in supply chains across the world.
The cause behind these delays could be any number of factors, including:
- Strained carrier capacity (and the difficulty to secure a container amidst a global container shortage)
- Port congestion in transhipment ports
- Industrial action at ports
- Shipping accidents such as containers falling overboard
You can always use airfreight as a backup (which is much faster, albeit generally more expensive).
Determine how your cargo will be shipped
You should determine whether your cargo will be shipped via air or sea, and consider the advantages and disadvantages of each.
If you decide to ship by sea, you’ll need to how will your cargo be shipped. Some of these options are as follows:
- Full container shipping – This is where your cargo will be in its own cargo. You will want to ensure your cargo is packed securely for easy removal from containers on arrival. Consider palletising cargo or crate packing.
- Loose container load – This is where your cargo will be consolidated with other cargo (i.e. you will share a container with other shippers). This is good for small volume cargo (under 10 CBM) but you will need to allow additional time on arrival to access your cargo from the port.
- Using Open Top Containers – This is a particularly popular for construction materials. It alllows equipment on construction sites to crane cargo directly out of the container.
- Using out of gauge open top containers – To remain cost efficient, the best way to ship cargo in open tops is to keep the cargo “in Gauge” (or within the frame of the container). When stock protrudes past this point, you will be charged additional costs.
- Using breakbulk – If your cargo is particularly irregular, you can ship the cargo loose as breakbulk cargo usually paying per revenue tonne of space on the vessel. This type of shipment requires special handling and will need pricing per job – expect this to exceed charges versus a standard container.
Shipping by air is an alternative option. It is typically faster, and not subject to similar delays such as port congestion (unlike ocean freight).
However, if you decide to ship by air, you’ll inevitably face the challenge of construction materials being bulky heavy and awkward. This will greatly impact the price. Services have also been limited since the COVID-19 outbreak.
Consider consolidating your cargo
This is relevant to determining how your cargo should be shipped. Buyer’s consolidation simply means combining a group of smaller shipments into one larger consignment. It typically involves combining two or more LCL (Less than Container Load) shipments into one FCL (Full Container Load) shipment. Consolidation is the opposite of ‘segregation’.
There are a range of benefits to consolidation such as:
- Reduced consolidation charges and fees – because you’re only shipping one consignment (and not multiple), you only pay one set of fees. This includes a single delivery and collection fee, freight documentation fees and export handling fees.
- One delivery and collection – there are major logistical advantages when consolidating your cargo. You only have one delivery to the destination port, and one consignment to collect (rather than a dozen smaller shipments).
- Track all cargo on one voyage – when tracking your shipment as it moves throughout the supply chain, you only have to focus your cargo on the one voyage. If you didn’t consolidate your cargo, you’d have to watch your shipments arrive onboard several vessels, which can be unnecessarily confusing and stressful.
Calculate the landed cost of your materials
The term landed cost means the price of the product you are purchasing from the manufacturer, as well as the cost of taking it to your warehouse. When coming up with a figure, you have to add together the cost of the products themselves as well as the shipping, customs, overhead and risk. Altogether, this will produce the landing cost.
The formula in most circumstances to calculate landing cost will be:
FOB/EXW + Custom Fees + To-Door Freight
The FOB/EXW will need to be paid to the supplier, To-Door Freight should be paid to the freight forwarder and your customs fees obviously to customs (which can be done through a customs broker).
Organise marine insurance
Construction materials can be expensive, and there is a lot that can go wrong when shipping them from overseas. Marine insurance should be purchased prior to shipping your goods, given the massive amount of risk your materials face during a standard shipment (whether by sea or air).
Your cargo may be damaged or lost due to any range of factors:
- Poor packaging or handling
- Fire or natural disasters
- Vessel running aground or colliding with another vessel
- Containers collapsing and/or falling overboard
- Political unrest
- Industrial action
Ensure your supplier provides you with a packing list with your purchase. This will be required should you need to identify and claim any damages or loss for insurance purposes.
Our team here at International Cargo Express offers thorough marine insurance options to ensure your cargo is covered if the worst happens.
Pay applicable duties and fees
The amount of duty you have to pay when importing construction materials can vary greatly. It may be very expensive, or it may be completely free if a free trade agreement is in place. This should always be checked prior to shipping.
However, below we have listed some standard rates that may be useful:
- Import duty – 5% of the FOB (Free on Board) Value
- Goods and Services Tax (GST) – 10% of the CIF (Cost, Insurance and Freight) plus Duty value
- Customs Import Declaration Processing Fee
- Seafreight shipments with a value of $10,000 or less – the import processing charge is A$99.00 per shipment
- Seafreight shipments with a value of $10,000 or more – the import processing charge is A$201.00 per shipment
- Airfreight shipments with a value of $10,000 or less – the import processing charge is A$88.00 per shipment
- Airfreight shipments with a value of $10,000 or more; the import processing charge: $190.00 per shipment
It is important to check if your materials are subject to anti-dumping duties. These are essentially taxes on imports that are ‘dumped’ into Australia and threaten the competitiveness of local businesses. The policy behind anti-dumping duties is that they are to save local Australian jobs.
However, you should be aware that anti-dumping duties act like tariffs – and lead to a higher cost of goods for users based locally.
It is also useful to reduce your import taxes on construction materials when importing from China. The value of these taxes is dependent on a number of factors like:
- The location you’re importing the goods from (this will determine the tariff code and applicable duty rate)
- How your transaction is structured
- Whether the goods are being re-exported
- What you’ll do with the goods after importing the goods
Organise transport from port to warehouse
Once your goods arrive at an Australian port, work needs to get done to ensure it is transported safely to your premises such as your warehouse.
If your product is going to a construction site, make sure that the staff on site are in a position to accept the materials. Consider if there is the capacity for them to unpack the container onsite, or if it needs to be unpacked at your warehouse and then subsequently transported to a construction site.
If your cargo is long or out of gauge, special transport with escort vehicles for Australian roads may need to be arranged.
If you are taking a container directly to site, remember that you only have a certain amount of free time to keep the container in your possession. This is usually 7 days. You will need to get your cargo unpacked and the container returned back to the wharf within this timeframe in order to avoid being charged detention fees.
Engage a professional freight forwarder to help import your construction materials
Importing construction materials into Australia is a complex process. A lot can go wrong, such as goods being damaged or insufficient documentation being provided to customs authorities.
What may appear to be a small problem can have large consequences. This is something you want to minimise as much as possible – especially if you’re working on an expensive construction project subject to tight deadlines.
We recommend working with a freight forwarder such as International Cargo Express, who can guide you through the process of importing your construction materials all the way from A to Z. From ensuring every document is correct and paying the right duties to making sure your transport arrangements flow smoothly, the team at ICE can assist at every stage.
Please reach out to a freight forwarding specialist at one of our offices across Australia today, and let’s discuss your next import of construction materials.