If you are in an antiques, furniture, or any other import related business, then the packing and shipping of your goods will be a crucial logistical detail which should not easily be overlooked.
Since many buyers are unable to maintain a permanent office in China, and surely not individual buyers purchasing for their homes, they logically often turn to third-party packing agents to fill this void. Yet, packing and crating can determine if your item arrives without a scratch or rather in several pieces. Ocean Shipping might be a short direct hop across seas or turn out to be a long delayed drawn out journey through canals and via detours. A
And even short term warehousing might mean either brief storage or long term loss of your product in someone else’s warehouse.
As most of us cannot be in China full time, it is still critical to have someone physically on-site who will inspect your shipment before it leaves. This is to ensure that a) the correct items have been picked up from your vendors, b) packed and loaded properly and that c) no items are left behind.
Logically often turn to packing agents to fill this void. Packing agents, freight forwarders and consolidators (theoretically) offer the following to their customers:
- Furniture Packing
- Antique Inspection
- Temporary warehousing
- Freight forwarding
- Co-packing & consolidation
- Container Booking
- Container Loading
- Inland Transportation
- Custom Clearance & Inspection
- Import documentation & paperwork
- Shipping Insurance
High Volume / Low margin
In all fairness, many of these companies complain about the slim margins on each packing job. Therefore most packing agents in China must work on a high volume/low margin business model with occasional extra profits earned via supplier referral fees and commissions as well as from embassies and private individualsÂ whom are charged a premium over fees charged to normal furniture/decor importers. Their core customer base will typically consist of smaller shops, retailers and wholesales without a permanent trading company with a valid export license set up in China. Many packing companies, particularly the larger ones may have been spin offs of military operations from the 80ies and 90ies when the Chinese central government encourage the military to set up business to supplement their budgets. When the Chinese military became a bit too successful in making money, in the late 90ies the government ordered them to reverse track and detach themselves and many of these entities became private business still operating today.
Smaller companies may export a few hundred containers a year, with the larger ones exporting upwards of a thousand or even more in a single year. This, along with much of their client base consisting of smaller independent direct furniture importers, means that regardless of the number of orders you are able to place, its highly unlikely your business will be doing enough volume to be seen as “an important customer.”
Despite claims to the contrary, many larger factories will also outsource their exporting to these businesses, even if the actual packing itself occurs at the factory using their own staff. International moving companies such as Asian Tigers or Sino Santa Fe have also been known to outsource a portion of their packing work to these companies, as do embassies sending staff home at the end of their contracts. Fees will typically be based on the container size and include customs inspection, relic inspection, packing, loading and anything else which is needed to get your order out. Be aware of additional charges for heavy items and wooden crating.
Forget Forklifts! Six workers are easier to operate…
My first visit to a packing facility quickly dispelled any visions I might previously have had of climate controlled facilities, sophisticated inventory controls or even forklifts for that matter and facilities are rudimentary a best. Sophisticated DHL like computer systems are non-existent here. Concrete covered brick walls, tin roofing and lots of dust are more accurate impressions.
Pickups are typically with a blue domestic flat bed where items will be piled up onto the the truck, with woolen blankets in between the pieces to minimize damage. Pay attention to this as those nicks, dents and scratches in your order will initially start here. From there items make their way to the warehouse to be again, piled two to three meters high in different sections of the warehouse, often divided with corrugated cardboard in between to separate different customers orders from getting mixed up.
Which of course, is how your missing rice pot, lamp or other item got lost. Sometimes this works in your favor as you may be the recipient of that missing rice pot, lamp or other item.
For furniture items typically they will use three layers of packing: 1) Bubble wrap for shock resistance 2) Foam wrap or foam sheets and 3) Cardboard.
Small items will be packed inside inner spaces of cabinets and other un-used areas. When it comes to loading, six workers loading a packed cabinet by hand into a container is not uncommon to see though in all fairness, optimized container loading is an area where these companies succeed. Much like fitting together a 3d Tetris puzzle, pieces are fitted into spaces so as to prevent shifting in transit and to make use of wasted space. Small items can be co-packed within cabinets and ACF has overseen orders with more then ten thousand items large and small.
Most warehouses will also have an attached “for sale area” where furniture, lamps, stone statues or other items are up for offer, theoretically for last minute purchases or to fill an extra cubic meter or so of space. Take note of this area – despite what you are told, this is normally lost product from prior orders (hopefully not yours), items which never made it onto the paperwork or product left by customers in lieu of unpaid fees (again if there is an unpaid bill it normally involves a dispute). A separate troubling trend is some packing companies in the antique furniture industry have set up their own websites to do direct furniture sales to overseas individuals, thus in effect both collecting money from your business and simultaneously potentially selling to your same customer base.
What you see may not be what you get
A main issue is customers understanding of these providers scope of business and their capabilities with the most common misconception is that these companies will take responsibility for getting your products picked up, packed and shipped out in good condition. Many importers believe that sourcing suppliers and selecting product is where their job ends until the container arrives on the other end, with the critical portions in between left to the packing agent.
Despite any such claims made their core abilities lie mainly in providing trucks for pickups, labor for packing/loading, back-office staff for rudimentary documentation and trading support and Chinese stye “guanxi” relationships with China customs.Â Essentially these companies really do little other then loan the customer their export license along with a bit of hard, manual labor. This may be one reason why packing agents number in the 4 digits in Beijing alone, as warehousing in China is rudimentary (and not costly), manual labor is cheap and cardboard packing is not a sophisticated task. What these companies do not provided is true vendor management, inventory control, independent oversight and responsible care and handling of your shipment – which in the eyes of the overseas customers is primarily what they believe they are hiring them for.
What could possibly go wrong?
While this could be a long, long list, we will only mention some of the most common items here:
- Packing paper can stick to furniture items, it the lacquer is not fully dried before pickup and packing so make sure sufficient time occurs before transporting custom made items.
- Items may be mislabeled by workers during packing and then mislabeled again in the associated shipping documentation. With no inventory control in these warehouses, this is a common problem. Items can easily be lost in the warehouse or never picked up.
- Poorly loaded items may shift in transit and subsequently arrive damaged.
- Strong odors may be the result of chemicals used in fumigation (this is not the fault of the packing company though).
Some common misconceptions
If a problem occurs, such as an item is lost in the warehouse or in transit or damaged due to poor packing they will not accept responsibility for it and you will be most likely not credited back for it or if so, be prepared to dig in and prepare for a fight.Â With low margins,Â little motivation to improve standards and tens of thousands of items to track and too may customers, packing agents see these sort of losses as simply the customers cost of doing business. Many are experts in shifting the blame to suppliers, container shipping customers or any other individual in order to avoid taking responsibility.
Small handling damage is difficult to prevent. With rustic reproductions of Chinese antiques this is less of a problem as a small wear and tear may be easily tolerated and sometimes even add to the “authenticity” of the piece. However with contemporary furniture, lacquered furniture and new reproductions a small scratch may be enough to ruin the piece or at least result in costly repairs by a carpenter in the destination country. If preventing small dents or scratches are a primary concern then consider have the product fully packed in full at the factory or origin before it is sent to the consolidation warehouse. Though this may result in extra time and additional fees it can be an effective way to prevent scratches. For high gloss, thickly lacquered furniture this is a must.
Chinese companies have gotten savvy with western marketing language but using your packing agent as a tour guide and or to meet new Chinese suppliers will not always occur with your business needs and best interest at heart. Should you purchase product from that vendor, its common practice for many packing agents to expect to be compensated by the factory for the introduction, typically anywhere from 10 to 20 percent of the purchase price. Overseas buyers further facilitate this by having their packing agent facilitate payments to individual suppliers, thus inadvertently making the commission collection process even easier. Unfortunately negotiating a deal with your agent for this commission to be paid to them separately by you will not help as they will simply collect the commission twice. Make no mistake, suppliers introduced to you by the agent are introduced to you for a reason, not as a favor or to “help you as their customer.”
Storing your product in between shipments is not provided as an additional value added service. There is a Chinese proverb which (paraphrased) is, “cast a stone to catch a fish” and this is no more relevant then here. Most suppliers have the space at low/no cost already and they are keenly aware that with your product stored in their warehouse, they gain additional leverage over you should a problem arise. With product in their hands you are also less likely to switch packing agents. Send left goods back to their origin rather then leave them in the hands of the packing agent where they are more likely to be lost, damaged or forgotten about.
Picking the best of the mediocre.
Regardless of their size, stated abilities or prices most of these companies offer the same level of service. A larger one may seem on the surface to be more professional but will also have enough customers to ignore your needs or address problems when they occur. Smaller ones may pay more attention to your needs but will still generate the same issues of lost/damaged product, slow response times or other problems. Some suggestions:
- Work with fewer suppliers. This gives your agent less product to mix up. Though this will narrow your product mix and potential selections, it will give the export agent less product to mix up, loose or damage which will translate into savings.
- Inspect each shipment yourself in person. Though this is often unpractical for most buyers as it requires an extremely high learning curve and extensive travel time and cost you will at least know exactly what is going on.
- Work with an outside party: If inspecting your shipments in person is not an option, then work with a third party agent such as ACF China. The critical point here will be selecting someone who is unbiased and not attached to particular suppliers or export agents. Providing you can select a reliable person or company they may be able to add valuable industry advice, independent oversight and extensive cost savings in the long run. ACF China provides extensive programs like this for importers and buyers of all sizes.
- Employ your own staff in China for this purpose: though be aware this may bring new unrelated issues into the picture. Staffing in China and HR is an art form of its own with high staff turnover and recruitment adding to complexities. After you have invested time training them, more often then not, these staff may entertain moving onward and setting up their own business potentially even servicing your own competitors.
- Source your own suppliers or work with a third party agent: Preferably this should be someone who can reliably and unbiasedly help you assess potential suppliers.
- Get smart. Chinese culture stresses harmony and Chinese hospitality can be charming (and may be one of the most pleasant things about doing business in China. Nevertheless, remember your supplier is not your friend and most likely has goals that differ significantly from your own.