Mission Impossible: Should you choose to accept it?

Steve Jones contacted the network’s Property Team in April, 2011, to request their assistance in a review of    the rent and rates of a client, Rosewood Pet Products Limited, based in Shropshire. The company has grown rapidly in recent years to become a leading wholesaler of pet products to retailers and independent high street stores across the UK. Based at a freehold site in the village of Broseley, the business had acquired an overspill warehouse and distribution facility approximately three miles away at Halesfield in Telford some years ago to cater for a short term expansion. That short term expansion has now grown to ongoing requirement of approximately 43,000 sq ft and was a cornerstone of the current business growth. The brief was to agree a renewal of the lease on more competitive terms, if possible, from the leases’ expiration at the end of October 2011.

Steve Jones obtained the lease documents and identified that the leases were on an “all inclusive” rental including business rates, utilities and repairs. Net of business rates, the rent equated to £96,806 per annum, or £2.25 per sq. ft – not much to work with given the Property Team’s usual contingency fee basis. Nonetheless, the Property Team agreed to undertake a consultant day review with the client which includes a number of generic stages including reviewing company documentation, inspecting sites, conducting a market assessment and creating a recommendation report.

The review established that the business undertaken at Halesfield had grown very rapidly through winning key large accounts with major retailers. This led to an expansion at the Halesfield site on a “bay by bay” basis on separate but flexible lease terms with no security of tenure. The lack of security of tenure meant that Rosewood had no automatic right to a new lease or any right of independent redress in the event that the landlord would not agree acceptable terms at renewal.

Whilst this lease flexibility suited the business in its early expansion phase, clearly having no security of tenure on a large warehousing operation presented a potential business risk in future. Furthermore, the scale of the operation was such that it may be problematic to relocate it before the lease expiry if the terms are not agreeable with the landlord.

Property consultant, Andrew Pegg, MRICS, said “This is a very good example of a dynamic and successful business doing its “core” business very well. However, because it didn’t have the benefit of on-going property advice, the rapid growth had meant that their ‘eye was not on the ball’ with regard to the implications of the present evolved lease structure. Fortunately, Steve Jones was able to spot the potential problems for the client as a result of his attendance at Property Team training sessions, and flagged it with ourselves and the client accordingly”.

Fortunately, Mark Bollands, Financial Director at Rosewood had provided a thorough initial briefing as to what the business required in terms of alternative space. This included dock loading, location of the premises and also a desire to relocate both parts of the business to a single site in the future. This enabled the Property Team to undertake a thorough and informed review of the market for alternative space to benchmark both current costing and alternative likely lease terms.

The market review identified of a number of properties which could be suitable for the Rosewood both on a straight replacement and consolidation basis. As external advisers, the team were able to provide an independent and objective view of the local market options whereas all the local agents were conflicted in form by offering space on behalf of their landlord clients.

Pegg commented “It was quite interesting to see that when it came down to negotiations on specific properties, the professional landlord made sure that he was present on site, to both meet our client and to ensure that his interests were represented, knowing his agent had other clients’ properties he was also promoting”.

Initial negotiations were carried out with potential suppliers and by the end of May 2011, the Property Team were able to report; two sites were identified which could accommodate Rosewood as a whole for less than the current cost.

Speaking of this wider opportunity, Mark Bollands, Financial Directors, Rosewood Pet Products Ltd, said “It was very interesting to see what was available in the market place at very competitive rates, the expert knowledge provided by Expense Reduction Analysts opened our eyes to both short term gains within our current location but also the future opportunities for the business”.

This review provided a basis for constructive negotiations to take place with the current landlords. Unsurprisingly, the landlords were expecting to agree a short term renewal at a higher rent being paid. However, with Expense Reduction Analysts leading the negotiations, it enabled discussions about securing the longer term requirements of the business with the flexibility to vacate to a single site in the medium term if required.

Ultimately, the business decision was to remain with the current premises but to have the flexibility to move out within the next three to five years. The outcome achieved by the end of July 2011 was renewal terms agreed on a 5 years basis with a Tenant-only option to break the lease at the end of the 3rd year. Furthermore, a revised rent was agreed of £1.90 per sq ft (£0.30 per sq ft saving or £15,068 per annum), making a useful saving of over £45,000 for the duration of the lease term up to the break option alone.

The Property Team also secured the ability for Rosewood to take further expansion space within the Halesfield unit at the new pre-agreed rate, thereby ensuring cost certainty as well as the ability to expand or contract as required. Moreover, it ensured business continuity during a critical phase and allowed the senior management team to focus on their “day job” throughout the negotiations, with the exception of 2 or 3 site visits and on-line reporting.

Pegg added, “In other circumstance, it is not uncommon for potential clients to consider that this level of spend not to be sufficient to get an expert in, or to undertake the negotiations themselves. Fortunately, in this instance the client trusted us to get on with it and as a result they were able to make a robust decision to stay on terms they were happy with as well as delivering useful cost savings.”

Commenting on the advice received, Mark Bollands, Rosewood, said “We managed to improve the offering we had with our landlord which was as a direct result of the advice we received, in short the advice saves us a considerable sum of money over the coming years.”

The business is now looking forward to its further expansion with the benefit of secure base for its core business together with new ideas on its options provided by the ERA property team.

The outcome achieved by the end of July 2011 was renewal terms agreed on a 5 years basis with a Tenant-only option to break the lease at the end of the 3rd year. Furthermore, a revised rent was agreed of £1.90 per sq ft (£0.30 per sq ft saving or £15,068 per annum), making a useful saving of over £45,000 for the duration of the lease term up to the break option alone.

Formed in 1968, The Wessex Autistic Society is a leading voluntary organisation delivering education, support and care  services for people on the autistic spectrum. The society, which is part of the National Autistic Society, operates  services in Dorset, Hampshire and Somerset, and outreach to anyone else who may need them, regardless of where they  may be.

The Wessex Autistic Society originally engaged Expense Reduction Analysts in September 2008. Kevin Medcraft describes his first impression: “I immediately recognised that they could make a huge difference to our procurement. We are a relatively small organisation, and we simply do not have the resources to analyse every contract and survey every corner of the market, to ensure that our expenditure is as keen as possible. I asked Danny Rogers to begin the relationship between our two organisations by analysing our spend on Office Stationery.”

Danny Rogers of Expense Reduction Analysts continues: “I saw straightaway that The Wessex Autistic Society were buying items from a disparate range of suppliers – this included arts and crafts materials for their school, as well as the more traditional office stationery. I was able to rationalise their purchasing by drawing up a core list of products, and I am happy to say that, since then, The Wessex Autistic Society have been extremely disciplined in keeping to that list and the level of their expenditure has benefited accordingly.”

Consolidating contracts to secure savings

In the light of this success, Kevin Medcraft asked Danny Rogers to look at Utilities and Postage/Franking as well. “The Utilities category was certainly more complex,” says Danny Rogers. “The Society had many different contracts – all with different renewal dates – which made them difficult to manage, as well as offering no economies of scale upon which to negotiate.”

The contracts took more than a year to consolidate, but, by the time of the final alignment in August 2010, the exercise produced the extremely positive result of over £100,000 worth of savings. Wessex also enjoy the additional benefit of being able to manage for themselves the two resultant contracts – one for electricity and one for gas.

Huge savings and far better service

Danny Rogers’s analysis of the Society’s spend on Postage and Franking produced a correspondingly pleasing result, as he says, “Wessex had signed a five-year contract lease on a franking machine, with fairly onerous monthly payments. On analysing their needs, I soon concluded that they would be far better off buying one outright. In fact, the break-even point arrived within a year, resulting in another significant saving.”

Kevin Medcraft sums up the value of Expense Reduction Analysts to his organisation: “The savings that Danny and his team have achieved have been amazing. But, more than this, they have made sure that the service that we receive from suppliers is not compromised. Quite the reverse in fact in the case of Stationery, for example, they recommended a new supplier, who has proved to be outstanding, so we enjoy huge savings and far better service! I have already asked Danny to extend his remit and look at our Marketing Print spend as well.”

Bob Lowndes, Chief Executive of Wessex Autistic Society, concludes: “I cannot praise Expense Reduction Analysts highly enough. They have made sure that the precious funds that we receive from the Local Authority and our fundraising activities are spent as wisely as possible to benefit people with autism in our region.”

First ‘rate’ service delivers cost savings for European Furniture Group

As the leading supplier of office workstations, desks, chairs and  wall screens, European Furniture Group’s (EFG) focus  has been on making  the working environment comfortable and efficient for a number of  organisations throughout  Europe. But EFG recently realised it needed to  address the financial comfort of a company much closer to home: itself.

Since changing its name from NKR in 1993, EFG has grown to become one of  the largest manufacturers of office  furniture in Europe, with subsidiaries in  Sweden, Norway, Denmark, Finland, Great Britain and France. In the UK,  EFG  Office Furniture supplies to both commercial projects and government  offices and has built a strong reputation for  being one of the  country’s leading manufacturers.

Reviewing existing processes

Despite EFG’s proven success, the company felt that reviewing its own day-to-  day processes and assessing it’s commercial partnerships – developed and managed at  the  company’s 3 warehouse and office buildings – could result in certain expenditure  levels being reduced.

EFG engaged the services of cost, purchase and supplier management consultants,  Expense Reduction Analysts in March 2008. Almost immediately, Expense Reduction  Analysts consultants Tony Smith and Paul Giness implemented a cost management  exercise for EFG, beginning with a comprehensive audit of the company’s business rates.

Craig Howarth, Managing Director, says: “EFG is a geographically diverse organisation, with national coverage across current premises in London, Warrington and Glasgow. We wanted to ensure that we were paying the correct business rates across all our sites, and, if we felt there were grounds for appeal, contact the Valuation Office Agency (VOA).”

Giness explains: “Most people are aware that business rates are the way in which businesses contribute towards the cost of local services like the police, fire and rescue services. What is less well-known is that there are grounds on which these rates can be challenged.

“The VOA – the agency responsible for business rates – produces ratings lists which include the rateable values of domestic and commercial properties. They are based on a five-yearly review cycle, but are calculated on the VOA’s estimate of a property’s rental value. As with all estimates, however, the end figures might be either too high or too low and can be challenged.”

Cost saving measures

EFG forwarded a copy of the local authority rate demands to Expense Reduction Analysts for review. The team began by conducting a site appraisal of EFG’s premises at St Helens, Reading and Warrington. This would prove to be a highly useful – and ultimately financially rewarding – process for EFG, with each site uncovering a different set of criterion which would ultimately deliver cost saving opportunities.

The team at Expense Reduction Analysts began their audit by measuring the ground space at EFG’s Warrington head office facility in order to ascertain the size of the property. Aware that the VOA measures all properties using Royal Institution of Chartered Surveyors-approved standards to calculate rateable value, Expense Reduction Analysts’ measurement did not correspond with the one used by the VOA.

Craig Howarth says: “Expense Reduction Analysts’ informed us that there are grounds on which business rates can be challenged, with an appeals process being available to businesses which believe their buildings have been overvalued. Despite the law governing rating challenges being complex, Expense Reduction Analysts’ worked closely with us to lodge an appeal with the VOA regarding this apparent measurement error, an appeal that ultimately delivered a £10,000 rebate.”

In addition to assessing the buildings’ accessibility, car parking facilities and ceiling height – all of which can have an impact on the rateable value of a property – Expense Reduction Analysts’ team of experts was able to generate a further £6,000 saving at EFG’s offices in Reading due to the decision taken by EFG in 2005 to merge its ground and first floor functions.

Giness explains: “Changes to the physical state of a commercial building can render its rateable value inaccurate. Prior to the merger, EFG’s charges had been based on there being two floors. While the merger had delivered EFG benefits in economies of scale, it was unaware that economies of scale – calculated on rate per metre basis – were securable on larger floor spaces.”

Neighbourhood watch

Meanwhile in St Helens it was, according to Giness, very much a case of EFG “keeping up with the Jones’s”. He says: “The rateable value of a commercial property is based on a professional assessment of the annual rent of a property if it was available to let on the open market at a fixed valuation date. In St Helens we conducted an analysis project to ascertain the rates that were being paid by neighbouring properties as these were almost identical to EFG’s. Having secured this information, we were able to lodge an appeal with the VOA and successfully negotiate a £20,000 rebate for EFG.”

Giness concludes: “In the current economic climate, it’s essential that businesses, whatever the size, check the proposed rates and seek professional advice where they feel there may be grounds to appeal. Many SMEs operate on relatively small profit margins, and making sure the business rate bill is correct could make a big difference.”

Howarth agrees: “Business rates are a necessary – but costly – overhead for occupiers of property. Understanding the key issues and knowing how to control them is fundamental to good financial management and can deliver considerable efficiencies.

Ask the experts

“The issue is complex, especially given regional variations and changes in the law. My advice would be to enlist the services of companies which truly understand the subject. By doing exactly this, we have been able to save more than £35,000 alone – a significant amount of money by anybody’s standards.”

Based on the success of the business rates audit, EFG has invited Expense Reduction Analysts’ to seek other potential opportunities by reviewing expenditure levels across a number of different cost categories, including the latest business rates revaluation in 2010, Office Stationery, Energy Supplies and Environmental Waste.

Howarth adds: “Finding similar savings may turn out to be a challenge for Expense Reduction Analysts’ as they’ve set the bar so high.”

Welcome to the Winter 2011 edition of LOGISTICS TEAMtalk, the Newsletter and Digest of the Expense Reduction Analysts’ Logistics Team. As well as our usual selection of topical comment to help keep you informed of some of the underlying factors affecting the cost of moving and storing goods for British Industry, we are pleased to announce our new website:

www.eralogisticsteam.co.uk

Within the site, you will find more comment on the sector, case studies of the Logistics Team’s successes in driving down Client costs, a complete archive of blogs and other articles by the team, and a contact and comments form.

All of the topical articles below are available to be read in full on the website, as well as our monthly market reports on the logistics sector.

Get notifications of new articles and reports by following us on Twitter @eralogistics

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Fuel Consumption is getting worse !

That is one of the most surprising key findings from the Office of National Statistics latest report into the Road Haulage sector in the UK.

The Report also shows that there has been marked growth in goods movement across all sectors, which is rather opposite to general perceptions today. Admittedly, the statistical base is now nearly one year old. Read more at www.eralogisticsteam.co.uk or click here

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Export success is leading to increased costs.

Suddenly the traditional imbalance between imports and exports is changing. This is having a significant impact on exporters costs, just as they are beginning to see volume growth. Kevin Fryer reviews the situation at www.eralogisticsteam.co.uk – click here

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Large warehousing projects have high failure risk.

Fergus Smith has been reviewing the inauspicious track record of warehouse initiatives, and offers some tips on how to reduce the risk exposure when your business has to make changes.

There have been a number of high profile warehouse implementations that have seriuosly impeded the ability of some UK businesses to function. Read more at www.eralogisticsteam.co.uk or click here

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How do carriers plan networks in recessionary times?

Kevin O’Neill explains some of the strategic process of adapting depot networks to reducing volumes and a more competitive marketplace  – read the full story at www.eralogisticsteam.co.uk or  click here

Neill Summerfield, an Expense Reduction Analyst consultant, recently helped the Royal Academy of Dance save over £1m in costs. These are his top ten tips on how other charities can reduce their own expenditure.

Tip 1: Have a thorough review – Many charities decide to cut costs but don’t carry out a thorough review first and make rash decisions that might not be the most effective cost savings in the long run

Tip 2: Make a list and prioritise – After conducting a review, list every element of expense within the charity and look at the ROI of each of the costs, this will help make clear which expenditures to cut first.

Tip 3: Listen to staff – After recognising potential cost savings speak to staff about their thoughts on reducing the expenditure. They might agree or point out a reason whythe expense is vital to the charity

Tip 4: Be Objective – Weigh up all options and look at the issue from all areas of the charity before making the decision to cut or change supplier.

Tip 5: Shop around – It’s tempting to stay with the same suppliers for years due to lack of time to ‘shop around’, but this time can equate to large cost savings. What was the best deal 5 years ago probably isn’t now, so look at what other suppliers can offer.

Tip 6: Negotiate – Suppliers across all sectors and industries want your business so barter with them. Don’t automatically take the first offer; keep going back to each telling them you’ve been offered a better price.

Tip 7: Take Control – Many charities allow staff to make purchasing decisions butmanagerial control is vital to ensure costs are kept to an absolute minimum. If this is not possible all purchases need to be visible through statements and receipts.

Tip 8: Read the small print – Charities often get stung as they haven’t fully understood the legalities behind contracts and agreements with suppliers. Always read the small print before signing any contract and seek advice if unsure.

Tip 9: Keep up-to-date – Technology is evolving as fast as ever and there are always new ways of making tasks quicker and easier.

Tip 10: Don’t lose sight of quality – In difficult economic times cutting costs might seem like the only way to survive, but never make any decisions that will impair on the quality of your services. It’s just not worth it.

So what can be done to reduce this cost during this high period and beyond?

1. Be aware when your contract renewal date is. If you do not take action to renew at the right time then the contract will automatically roll over into a new contract of up to 3 years on above standard market pricing.

2. Give adequate notice. Notice requirements can be up to 3 months before the renewal date and well before you have received your renewal offer. Failure to act within the prescribed period will mean once again that you will be forced to roll over and become locked in to another contract for the same period with your existing provider at higher costs.

3. Once your renewal offer is received, then test the market either yourself or with the help of consultants or a broker. The above actions will only result in providing you with the best market tariff for your usage. Additional action can be taken to reduce electricity consumption for large users. This usually means some capital investment, but often the payback is less than 5 years and the benefit is received for long after.

A. Voltage Optimisation Businesses waste energy without realising it. Imagine a pan cooking on a hob with the heat on full. Any heat not directly hitting the bottom of the pan is wasted. Because of the way the distribution system works, it is the same with electricity supply. Voltage optimisation equipment reduces your supply to the optimum level saving energy, money and reducing carbon footprint.

B. Voltage Stabilisation Electricity is not delivered in a smooth steady stream. It contains waves, surges, peaks and troughs which cause quality problems. Voltage stabilisation equipment stabilises supply which is much better for equipment which is generally designed to run on a steady supply.

C. Harmonic Filtration Every power supply is inherently “dirty” because of harmonics, which are disruptive waves. The “dirty” supply means that the lifespan of equipment could be reduced resulting in premature failure, increased downtime and higher maintenance costs. Use filtration technology to remove the “dirty” harmonics for a cleaner and more efficient supply.

D. Power factor Correction Power factor, an itemised charge on your electricity bill, is a measure of the efficiency of an electrical supply and how efficiently the power is consumed. The charge is targeted against companies who do not demonstrate clear energy efficiency use and who therefore have a low power factor. Power factor is reduced by motors, welding sets, fluorescent and high bay lighting which creates inefficiencies. Power factor correction technology reduces load and minimises wasted energy, improving the efficiency of the site and reducing bills.

In this holiday month the PCI Data Security Council has taken the opportunity to update guidelines for merchants using Wireless technology to collect payments and also to issue guidelines for the growing number of merchants employing Tokenization.

The Payment Card Industry – Data Security Standards (PCI-DSS) lay down minimum security requirements for all merchants and aim to reduce the level of data breaches where customer card details are stolen. Failure to comply with these standards or incidents leading to data loss can lead to substantial fines and brand damage.
The guidelines are designed to help merchants to interpret the PCI-DSS standards, so are not prescriptive and do not change the Standards. Each merchant must ensure that their individual operation complies with the PCI-DSS standards.

Please click for links to the Wireless and Tokenization guidelines or the PCI Security Standards Council website, where you will find guidance, Self-Assessment Questionnaires, lists of qualified Assessors and other valuable information.

If this affected you, the latest long-range forecast from respected forecaster James Madden may cause you concern. His key conclusion is:

“I therefore expect the 2011-2012 winter to follow a similar pattern in terms of how November and December was in 2010 for the vast majority of this winter.  It will be exceptionally cold and snowy with well below average temperatures.  I fully expect to see records broken with the highlands of Scotland being once again particularly hard hit.  It is therefore vital to start preparing now in terms of high energy bills and raising awareness amongst the most vulnerable and elderly people of society.

James Madden (UK Long Range Forecaster)

www.ExactaWeather.com   Published: 18th June 2011 (21:29) BST”

(Full forecast at http://www.exactaweather.com/uploads/mainswinter1.pdf )

Even today, heating-oils at wholesale level are trading at a premium of circa 25% above prices at the beginning of November 2010. However, once the weather turned wintry last year, final delivered prices were running at nearly double wholesale prices in some cases.

Fortunately although existing clients of Expense Reduction Analysts endured the impact of world wholesale prices, they avoided the pain of the increased costs associated with the delivered prices being charged to non-contracrt customers in the UK.

If you are a heating-oil user, perhaps now would be a good time to undertake a review with Expense Reduction Analysts to achieve some immediate cost savings whilst obtaining protection against opportunistic pricing when the weather turns as bad as Mr Madden has forecast.

Ken Rogers.

August 2011

See all Logistics Team blogs

Far East & Indian sub-cont westbound (import) rates/space/equipment

Half year losses declared by some carriers are causing concern and some ships have been withdrawn from service. Demand has increased over recent weeks and utilization has returned to more acceptable levels. It does appear as though some lines will apply Peak Season Surcharge from 1st September 2011.

Far East & Indian sub-cont eastbound rates/space/equipment (exports) – Ocean freight rates remain at an all-time low and there is a significant volume of empty containers being returned to the Far East.

UK Terminal Handling charges – generally remain at £120 except Maersk and SafMarine where THC is £131 per container and MSC where THC is £125 per container.

Heavyweight Container Surcharges – continue for westbound traffic only with each carrier having slightly different weight break points. It should be noted that this surcharge is not part of any ‘all-inclusive’ rate.

North China 20ft Equipment Premium (westbound only) – This charge continues to be applied by all lines on 20ft containers ex Dalian, Qingdao, Tianjin, Xingang, Yantai and Lianyungang at $250 per 20ft container only.

Suez Canal Surcharge – remains at $25 per TEU except Evergreen ($47 per TEU) and CSAV ($50 per TEU).

Gulf of Aden Emergency Risk Surcharge – this surcharge is now $55 per TEU.

Equipment Inspection Fee – Hapag Lloyd has introduced a surcharge of £6.00 per container as the result of packaging being dumped inside ‘empty’, returned containers. No other carrier has yet applied this surcharge.

Port Congestion – Some carriers have announced this charge from several Far Eastern ports including Qingdao, Haiphong and Chittagong. General advice is that such charges should be pais by suppliers of goods and included in FOB charges.

UK Landside Charges/Haulage/Fuel/Port Congestion – Fuel Surcharge remains at 25.5% (against a base price of £0.90 ppl) on most published indices. An infrastructure charge of £3.00 per container continues at Southampton.

Airfreight – fuel/security surcharges are expected to continue. Current rates:

Hong Kong  8.80 to 9.20 HK$ (combined) per kg.

Shanghai     9.20 CNY (combined) per kg.

Kevin Fryer 8th August 2011.

See all Logistics Team Blogs – Click Here

Far East & Indian sub-cont westbound (import) rates/space/equipment – It is pleasing to report that carriers have postponed intended rate increases for July 2011. Whilst there are some equipment shortages in China and Malaysian ports slow steaming continues to affect equipment turnaround times. Supply still exceeds demand and thus it is very difficult for carriers to push through rate increases.

Whilst 2010 saw record profits for carriers 2011 to date is witnessing significant losses such that several carriers are considering emergency measures and the removal of vessels. It is clear however that present low rates are not sustainable and it is inevitable that significant increases will have to be made in the near future.

Far East & Indian sub-cont eastbound rates/space/equipment (exports) – Exports rates remain extremely low with many containers being returned to the Far East empty and this adds to carriers losses.

UK Terminal Handling charges – generally remain at £120 except Maersk and SafMarine where THC is £131 per container and MSC where THC is £125 per container.

Heavyweight Container Surcharges – continue for westbound traffic only with each carrier having slightly different weight break points. It should be noted that this surcharge is not part of any ‘all-inclusive’ rate.

North China 20ft Equipment Premium (westbound only) – This charge continues to be applied by all lines on 20ft containers ex Dalian, Qingdao, Tianjin, Xingang, Yantai and Lianyungang at $250 per 20ft container only.

Suez Canal Surcharge – remains at $25 per TEU except Evergreen ($47 per TEU).

Gulf of Aden Emergency Risk Surcharge – this surcharge is now $55 per TEU.

Equipment Inspection Fee – Hapag Lloyd has introduced a surcharge of £6.00 per container as the result of packaging being dumped inside ‘empty’, returned containers. No other carrier has yet applied this surcharge.

UK Landside Charges/Haulage/Fuel/Port Congestion – Fuel Surcharge remains at 25.5% (against a base price of £0.90 ppl) on most published indices.

An infrastructure charge of £3.00 per container continues at Southampton.

Proposed ‘No-show’ fee – over booking and inaccurate booking and lateness in arrival of containers at port are likely to face cancellation fees of around $100 per container. It is not expected that this cancellation charge will introduced until the capacity issue is addressed.

Airfreight – fuel/security surcharges are expected to continue. Current rates:

Hong Kong  8.80 HK$ (combined) per kg.

Shanghai     9.20 CNY (combined) per kg.

Kevin Fryer 16th July 2011.

See all Logistics Team Blogs – Click Here