Philippine Fashion

Just got home from another busy Philippine Fashion Week, I find this year's event level up to new breakthroughs in the Philippine Fashion and designs.  Old and new designers emerged with more and more creative works than ever before.

Compared to New York, Paris and Milan Fashion weeks, definitely theres a long way to go but with consistency and innovation, I am certain the Filipino designers can be at par with international creative fashion.

As a retail merchandising manager myself, I place top quality in the works of my vendors and here in this event, I can see many potential future suppliers that can make big names and bucks in the store racks.  Though in my many years, I rarely see these fashion designers take the opportunity to enter the mainstream retail since most of them being creative as they are wants to preserve their independence and would want to focus mainly on their couture works.

Even if the big bucks remain in having their works become part of the mainstream retail for the mass consumers, they tend to cocoon and thrive in mainly targeting custom-made clientele.  For me one would be their limited understanding of how big the potential of their works becoming part of a bigger platform rather than producing one dress at a time.  Secondly, most of these young and old designers have very limited resources to expand their works to enter mainstream retailers, they must be backed by financial backers inorder for them to take the bigger stage of massively producing for the bigger consumers of retailers.

Lastly, I supposed there have been perception that when these fashion designers mass produced for major retailers, they have to take the loss of non-saleability of their clothesline if their merchandise perform dismally in a given fashion season.  For me this can be a two-edge sword.  For one, merchandise are saleable if truly they can come up with designs that hits through the core of what the consumer needs, secondly, its not right to say, retailers have this heartless way of returning unsold goods after a period of time since these can be negotiated with other means to compensate a win-win for both retailers and fashion designers.

I wish to one day see the works of these very hard-working and creative designers be in most retail racks and that there will be a collaborative work in enhancing each of their potentials of improving the retail landscape. 

Merchandising & Stock Replenishment

Merchandising and stocking are essential tasks in virtually any retail business. Effective merchandising techniques prevent a haphazard arrangement of goods that can hinder sales, while efficient stocking procedures ensure the merchandise is always available for customer purchase. While the merchandising and stocking functions are closely related, there are also some key differences between the two.

Merchandising Identification

Merchandising is a retail marketing process entailing the visual displaying of goods as well as product selection. Merchandising involves determining the proper product mix for the store, the shelf position of each item and creating and building attractive displays and signage. Merchandising also includes the creation of special promotions and pricing. When done effectively, merchandising serves as a type of "silent salesperson," as it draws customers to merchandise and displays, often leading to purchases.

Stocking Identification

Stocking is the process of filling the store's shelves and displays with merchandise for sale, commonly referred to as "stock." Stocking can also refer to the process of replenishing and storing goods in the store's backroom or warehouse. Store employees known as stock clerks are responsible for keeping the shelves full in their particular departments and reordering merchandise when supplies run low. In larger retail establishments, stock replenishment occurs with the aid of an automated inventory management system.

Relationship

Store management's merchandising policies and practices largely determine the stocking needs of a retail establishment. For example, in a clothing store, if management decides to run a sale on a new line of summer fashions along with creating a special display, store personnel will likely need to order extra merchandise and ensure the display remains fully stocked during the promotional period. If grocery store management decides to carry a new product, stockers need to place the item in the appropriate shelf location.

Job Duties

From an employment perspective, stocking duties are more physical in nature while the merchandising role requires more analytical and creative abilities. Stockers spend much of their time transporting and lifting merchandise while in the process of filling shelves and building displays. The merchandising role requires the analysis of sales data and trends, such as when determining what items to carry or to put on sale. Creative ability is helpful for thinking of innovative and profitable ways to display products.

Reviving a new love

English: Camera Nikon D5000 and KIT Photographic Lens. Français : Un appareil photo Nikon D5000 et son objectif d'origine. (Photo credit: Wikipedia)

Yes, I love and will always love this..

But don't get overly excited, I'm not talking about the platonic kind of love.  What I meant is I have this new fondness for taking photographs once again, that I recently bought a new Nikon D5000 SLR.

Oh yes, taking those shots makes me want to capture every glimpse of every morning sunrise and the setting of the sun.  To immortalize a scene in the form of visuals.  A cataclysmic way of doing something momentous in such an agonizingly boring life of mine.

Unfortunately, the last time I held a camera was back when I was in High School, when I used to be the photography editor for the school newspaper and gets to participate and win in the regional and national press conferences, Looking back then and now, the evolution of capturing through the camera lens has truly made a dramatic breakthrough all these years and the recent announcement that Kodak films will soon be out of sync with the fast changing times has caught my awareness once more.

Needless to say, I am trying to enroll for a crash course in basic digital photography and natural photo editing and wish me the best of luck as I learn something new with this new desire in understanding the basics of digital image capture.

Soon will share those shots and may those captured moments tell a whole new story of my life and the surroundings I'm traversing each day.

Merchandising Operation

As a merchandising company, you can divide your activities into separate operations and determine how efficiently each one carries out its work. Your company buys products, places them into storage and sells them again for a profit. Each of the merchandising functions required for this process operates as a separate unit. These merchandising operations represent the steps required for the company to carry out the merchandising business and coordinate its functions.

Purchase

Purchasing your merchandise involves identifying suppliers who can meet your price and quality targets, ordering the appropriate quantity, arranging for shipment to your warehouse, receiving and inspecting the merchandise and placing it into inventory. This part of your operations generates the largest part of your costs, making cost control of purchased merchandise a key factor in the profitability of your merchandising company.

Inventory

A merchandising business has to manage inventory to make sure the merchandise stays in good condition and to track goods so they are available when they are to be sold. Inventory can be perpetual, which is a control method that tracks merchandise purchased and sold in a continuous fashion, or it can operate cyclically, with inventory taken periodically and costs calculated and assigned at the end of each period. In either case, inventory operation requires the merchandiser to decide how much inventory to carry, where to store it and how to optimize use of available space.

Sales

The sales operation of your merchandising company determines the sales strategy and the product mix. The sales department considers the expected demand, the actions of competitors, the promotional strategy, the image to be presented and the features sales personnel can use to sell the products. When the sales department operates effectively, the company has inventory corresponding to the projected sales and achieves those sales, generating the expected profit.

Presentation

While the sales department develops the overall sales strategy, a merchandising company often has a separate operation in charge of the retail presentation of the products. For fashion retailers, for example, the in-store arrangement of manikins, clothing, promotional material and displays is important. This part of the merchandising operation executes the sales strategy in a creative way to attract customers and encourage them to purchase the offered merchandise.

Administration

The three parts of a merchandising business that determine profitability are the purchasing function, which generates the costs of goods; the sales function, which produces revenue; and administration, which is the overhead. Since your profit is revenue minus cost of sales and overhead, profitability increases when you increase sales but keep overhead increases low. Controlling overhead costs while implementing a sales strategy to increase revenue is an effective method of raising profitability for merchandising companies.

Merchandising and Business Management

Business management and merchandising are very different business processes. Business management involves leadership of a company or department, which includes employee supervision, strategic planning, organization and decision-making. Merchandising involves all of the steps in the process of acquiring products from a supplier and delivering them to your customer.

Business Management Basics

Business management provides vision and direction to an organization. Managers have higher-level responsibility for business success than other front-line employees. Managers must typically have the ability to communicate strategy and decisions and feedback on employee performance. Managers also hire and train employees and have oversight of employee morale in the workplace. Some managers also have responsibilities for monitoring and accounting for performance of the employees who work for them.

Merchandising Basics

To effectively persuade customers to buy your products in a store, you have to merchandise them. This means setting them up to attract attention and displaying them attractively in the store. Merchandise directors and specialists usually oversee the merchandising process, which has significant influence in the success of retailers in turning over inventory. Merchandise requires good strategy, as most stores carry many products and must decide where to place all products to optimize overall sales performance.

Merchandiser

Merchandise directors, specialists or just merchandisers are the employees typically responsible for merchandise management. Merchandisers usually coordinate with company design teams to develop plan-o-grams that lay out the products in an aesthetically pleasing way. Merchandisers usually need good communication and negotiation skills to provide leadership on visual design and floor planning processes. Merchandisers also need creativity and innovation to proactively design effective floor plans and to respond to poor performing merchandise.

Managers to Merchandisers

Merchandise directors often participate in company management teams with leaders of other functional departments. They may coordinate with vice presidents or executives in the company's buying department to coordinate the entire process of buying products, merchandising it, selling it and replenishing it. Company buying managers need to be on the same page with merchandisers to have a well-planned and coordinated product merchandising effort that results in strong sales performance.

Marketing and Category Management

When I was offered to lead a team of a newly formed department called Category Management in a beauty and health retailer in 2010, I was given a briefing by the Vice President for Human Resources as to the scope of the job, as it is their first time to have these division in their corporate structure, they would want to initially merge it with their marketing department.

It took me more than two weeks to finally came up with the written and approved job scope of their category division, nonetheless, it is still a merchandising related job however there were several additional scope in the job that pertains to marketing and branding.

So here, I am sharing what that responsibility means and how it has developed me further in my retail dynamic skills and experience which I find very valuable.

Category Management

is a collaborative continuous process between manufacturers and retailers to manage a shopper need state which we refer to as a ‘category’. The purpose of this process is to optimize shopper satisfaction and fulfill the role chosen by the retailer for that category within the overall portfolio of categories in the retail format. The end state of the category management process is that combination of assortment, price, shelf presentation and promotion which optimizes the category role over time.

Category management is data intensive and analytical in character. Category management is about understanding data. By contrast, shopper marketing is more about understanding emotions or motivations.

Most importantly the category serves as the platform from which shopper marketing  initiatives can be collaboratively launched because the retailer and the manufacturers ideally are aligned around a common solution to a need state of the shopper. Large complex consumer need states such as a ‘family dining‘ solution or a ‘birthday party‘ solution often involve a multi-category solution which necessitates the collaboration of multiple manufacturers and the retailer.

Marketing

is an effort to change attitudes and thereby change behaviors. Marketing has many requirements. It must create awareness, stimulate desire and ultimately differentiate the product by giving consumers a reason to purchase in preference to competition. Marketing is a continuous and all-encompassing activity. It is not a single campaign or initiative such as event marketing, a social media program or an in store shopper marketing event. These are components of the larger multi-faceted activity known as marketing.

Marketers have many tools to attain their objectives. These include research protocols and various promotional and communication options ranging from print to TV to all the newer social and digital media.  Marketing begins by understanding consumer attitudes towards a particular need and then proceeds to product design and strategy development. Great marketing is built upon an insight, a profound understanding of some critical aspect of the consumer need. Marketing consummates at two moments of truth, the first at the shelf when the product is purchased and the second when the product is consumed.

The ultimate end of marketing is creating equity in the consumer’s mind such that consumers identify that product as uniquely theirs, a trusted contributor to a more satisfying life, one that meets a perceived need in a superior manner.

Shopper Marketing

For the CPG manufacturer, shopper marketing is an occasion based component of the larger marketing armamentarium.  It is preceded by the shopper’s perception of a need state and possibly by previous experience with other products in the category which satisfy the need. Shopper marketing is  preceded by and influenced by all the advertising and information collected from months perhaps years of advertising exposure and in many cases actual usage experience.  The objective of shopper marketing is the enhancement of the brand’s equity at the point of sale. Such that a purchase occurs.

 The initiative called ‘shopper marketing’ begins as the consumer perceives a need and starts down the path to purchase perhaps by taking the mundane first step of preparing the shopping list. Shopper marketing may include a range of information gathering and communication interactions including seeking and receiving promotional incentives or exploring websites for product recommendation or product availability. 

The key point is that shopper marketing is an episodic  time bound activity, occasion specific and immediately linked to a transaction consummated at retail at the end of the path to purchase.  

The larger and more comprehensive ecosystem of marketing surrounds and influences the more immediate transactional activity known as shopper marketing.  What differentiates shopper marketing is its inextricable link to the retail point of purchase. Therefore truly effective shopper marketing requires some level of collaboration with the retailer who, after all, controls the point of sale. Let’s put it this way: the single most effective and efficient ‘shopper marketing’ tool is a display at retail. Can any manufacturer get display without the retailer’s collaboration? This basic fact requires the manufacturer to align with retailers who understandably have their own objectives regarding the shoppers and the need states involved in any given shopper marketing initiative.

For the retailer, shopper marketing is a more important component of the overall marketing activity because the   ‘product‘ the retailer is selling is the shopper experience. That experience has as its objective satisfying the need states which the drive the shopper to the store or digital shopping location. Many important aspects of that shopping experience are not time bound. For example, store appearance, in store service level, pricing and promotional policies etc. are permanent, continuous components of and contributors to the shopping experience and the overall marketing platform of the retailer.

But many important aspects of the retailer’s overall marketing platform are occasion specific or target shopper specific.  

These overlap with and often align with the manufacturer’s ‘shopper marketing’ initiatives. These are initiatives aimed at a specific shopper need state that add excitement and urgency to the shopping experience. In these cases, shopper marketing for the retailer centers on categories which themselves are satisfiers of shopper’s needs. The brands within the category are competing to satisfy the basic shopper need. The retailer is agnostic to the brand except in so far as one brand somehow does a superior job in meeting the shopper need.  For the retailer, shopper marketing is about categories and needs not brands and their initiatives.

The retailer has the same weaponry as the manufacturer with which to influence the shopper but has two unique weapons unavailable to the manufacturer.  Through its proprietary loyalty card data, the retailer knows every aspect of the shopper’s buying behavior in the store. Even more importantly, the retailer controls one critical moment of truth, the  point of purchase itself, the shelf, the alter of  the shopper experience. Without the retailer’s collaboration, the manufacturer is virtually powerless at the shelf. 

Therefore the manufacturer’s capability to succeed at shopper marketing requires aligning with the need states or categories chosen by the retailer to attract and satisfy the shopper.

Preparing Purchase Order

How does purchase order work?

Once after approval of your sample by overseas buyer, the next step is on negotiation price of sale. You can quote your price of goods with all terms and conditions of sale. Once after approving each other on price of goods, terms of payment, terms of delivery and all other conditions on the sale, you send a ‘Pro forma Invoice’ to overseas buyer. Pro forma Invoice is nothing but a commitment of sale by seller to buyer with the terms and conditions of sale. Please note, the pro forma invoice is only a binding agreement but not a commercial Invoice. Based on pro forma invoice, buyer prepares ‘sale contract’ with complete terms and conditions of contract. Then the said contract is sent to you duly signed by your buyer. Once after receiving the contract of sale you sign and return back a copy to your buyer as a proof of acceptance of sale contract by you. Once after receiving the contract of sale by buyer, he places the order or arrange with his bank to open a Letter of Credit which ever agreed by both agreed.

Purchase order content?

Purchase order is prepared on the basis of mutual agreement between buyer and seller. Some of the contents of purchase order are product specification, price, terms of delivery, terms of payment, mode of transport, validity of shipment etc. Since the seller has to supply his goods on the basis of purchase order, all terms and conditions to supply goods are mentioned in a purchase order.

Who signs purchase order?

Since purchase order is prepared by buyer, obviously buyer signs a purchase order or if there be other principal signatories. However in most cases, buyer sends purchase order to seller and requests him to sign and sends back to buyer as a proof of acceptance of such purchase order.

Can a purchase order be amended by buyer?

Purchase order can be amended before effecting shipment, but with mutual understanding between buyer and seller. If any amendments on purchase order, a revised purchase order has to be sent to seller with such amendments.

Should an export purchase order have buyer’s bank details?

An export purchase order need not have buyer’s bank details. However, bank details of overseas buyer are ideal to mention in an export purchase order. Bank details of buyer help supplier at different levels of export process. If credit period is involved, buyer may approach an export credit guarantee agencies for insurance cover against such buyers on credit worthiness. In such cases, seller may require buyer’s bank details to apply with such credit guarantee insurance agencies for approval of buyer’s credit worthiness. The buyer’s bank details are to be mentioned in a bill of exchange to send to buyer for acceptance.

For the purpose of sending shipping documents to buyer through his bank, the details of bankers of buyer are mandatory.

CASA ROCES

Food has always been one of my passion and to look for such a place to dine is never a problem, but at times, I have cravings for good food with ambiance thats relaxing.  So I tagged along 3 of my friends to dine in this secluded place near Malacanan, Manila.  Amazingly the food is so good and the place really makes one feel walking through the history of Philippine political scene.

The food is mouth-watering and the people managing this dining place have well-trained staffs, I think its being managed by the Cravings Group(bravo! great service).

At the end of the meal, I find this dessert uniquely special that I ordered another serving. lol

This is one place I will always find the best food to relieve me of my stress, surely I will keep coming back for more.  Try to visit this place, its at 1153 JP Laurel Corner Aguado St. San Miguel, Manila.

Stock Market

There is a recent urge for me to take a look at the stock market trends lately and my friends stocks PCOR has drastically climb up to the 19 level last January 5 and now trading the 16.80 mark... she bought it during the stocks IPO and hasn't sold since, I adviced her to sell and buy the stocks when it reach 15.

SMC is one stock I also noticed to have a huge potential for growth and its affiliates are all darling stocks. But one noticeable stock that hasn't diminish since the start of the new year and has consistently been fluctuating in the upward trend is the Cyber Bay stocks, and I'm pretty sure alot of individual investors who has joined the early bandwagon to buy this stock has have hefty gains in the past few days of this year.

Going back to SMC, their recent announcement for their newly formed company San Miguel Energy that will have its international bond offering in preparation for their shift from its current Food and beverage conglomerate into a full-pledged Power-generation/Energy/Communication conglomerate transition speaks pretty well of the company, not to mention that their handling of Petron is already one great indication the stock has been undervalued in a pretty long time since it went public.  Good management is the key to its upsurge in price and not to mention the recent investment made by SMC in the North Harbor for Petron's future depot.

This company is also in the stage awaiting for the congressional approval of the recommision of the long mothballed BNPP.  If the rumor is true that SMC's daughter in law in congress has trully garnered enough support from fellow congressmen and women then surely BNPP will be bidded by SMC as an added portfolio to their behemoth conglomerate.  Oh did I also mention, they recently bought 40% of Eastern Telecom?!

This is one hell of a stock to watch out for.

New Year

Its been quite awhile since I last posted here, and seems like the new year brought so much blessings and new task at hand for me to journey on.  I got so fascinated with the recent upsurge in the stock market and the new optimism of investor with the recent change in our government administration and I hope the new administration, the new zest of local and international investors, the optimism of our traders, businessmen and those getting the interest to  join the bandwagon of this new hope and challenges will ultimately make our country great once more.

Purchase Order vs Pro-forma Invoice

Starting out in merchandising made me immerse myself into a whole new set of business words and documents and the most common thing I am doing every single day of my job is to release Purchase Orders to various merchandise suppliers.

On the other hand there is relative confusion to those who are new in the business the difference of Purchase Order from a Pro-forma Invoice

First let me me explain  when is a pro-forma invoice issued.

Once after agreeing the terms of contract of sale, the buyer has to issue a purchase order or Letter of Credit. Just before this process, the seller has to send a ‘pro-forma invoice’ to buyer, mentioning complete details of agreement of sale. Normally, purchase order or Letter of credit is opened on the basis of this pro-forma invoice sent by the seller. 

So, we can treat pro-forma invoice as a document of commitment to sell the goods to the buyer as per the terms and conditions agreed between both in person, over telephone, by fax, email or any other mode of communication. In other words, we can treat the pro-forma invoice as a ‘confirmed purchase order’ from the seller, although the official purchase order has to be issued by the buyer. The pro-forma invoice is issued before sales takes place. 

Once after receiving pro-forma invoice from the supplier, the buyer sends a purchase order or opens a letter of credit to the supplier.

Here we come to the point of knowing what a Purchase order really is.

Once the seller sends the details of the product(even a sample of an actual merchandise) and after satisfaction of quality, price and terms and conditions the seller sends a pro forma invoice to buyer. Based on such pro forma invoice, buyer release a Purchase order to seller as confirmation of purchase of his goods. Purchase order contains the details of product, quantity, price, payment terms, delivery terms and other terms and conditions of purchase contract as mutually agreed between buyer and seller. Normally purchase order is prepared by buyer on the basis of pro forma invoice sent by seller to buyer. Once after acceptance of purchase order by seller, the purchase contract exists. 

Thus delivery of goods by the seller shall be expected on the date indicated in the Purchase Order, sometimes there are instances where suppliers cannot fully fulfill the quantities indicated in the purchase order that there are still negotiations that can be made verbally.  Most often especially for big companies, delivery of less than 50% of the indicated quantity means rejection of the delivery.  In some instance, a new Purchase Order has to be issued indicating the adjusted quantity that the seller can deliver.

LED Lighting Revolution

We all aim to have a doable market power efficiency that translates into energy saving and cost saving for everyone who is a consumer.  With the rising cost of fuel energy that powers utility companies, every consumer wants to harness products use that will make their monthly electric bill a manageable expense to say the least. The market has always been on the lookout for the best product that delivers highly tangible usage, low wattage and most energy saving functions.  

Fortunately, in recent years, LEDs have become the most popular energy efficiency measure on the market, the rate of adoption has not been easy.  It doesn’t matter whether the existing lighting is incandescent, fluorescent, metal halide or sodium. When improving lighting energy performance LED sources have become the number one efficiency recommendation.  LED lighting has been high on the wider energy efficiency agenda for several years, but right now no other technology change offers the same level of power reduction, whilst maintaining or improving on operational performance.

LED lighting has fast become one of the top sustainability measures taken by businesses and the public sector. Heavily-incentivized renewables may be attracting the attention from policy makers, investors and those keen to make a ‘green’ statement. But in terms of carbon abatement the deployment of LED solutions provides some of the best ratios available when it comes the amount invested per tonne of carbon reduced.

The step-change in more recent years has been the deployment of LED technology to illuminate wide areas and from mounting heights previously thought to be beyond the range of the technology.  Today all sectors, from logistics companies with large warehouses and external spaces to light, through to small offices and retailers, can take advantage of the LED revolution.  The commercial case for investment is strengthening as performance improves, product costs decrease and the relentless rise of energy costs continues.

The best commercial cases are present where operating hours are highest.  Where continuous operation is required payback periods are often close to one year.  However even in office applications where annual hours of operation are 3,000 or more the return on investment can be less than five years - especially where effective controls are deployed.

Lack of awareness is a major factor why aren’t we seeing ubiquitous uptake of this game-changing technology? The inertia around replacing systems which may be providing an adequate function is another - many businesses have the attitude that ‘if it ain’t broke don’t fix it.’  But we find that a key barrier to action is the difficulty end users often with limited technical expertise face when seeking a supplier or partner to provide a solution.

The standard of product provided is important here: not all LEDs are equal in terms of lamp life or lamp quality.  Warranty periods matter as well – but fundamentally you do not want to deal with product failure.

LED performance and reliability has made it indisputably the leading energy efficiency technology on the market. With energy costs constantly rising, alongside the pressure to reduce carbon emissions, we expect the adoption of the technology to continue at a rapid pace. But while many organizations have woken up to the potential with LEDs, a greater awareness of the opportunity, along with improved focus on quality and confidence will help to drive up the rate of implementation and continue driving down carbon emissions.

Calculating chargeable weight under airfreight in import-export

There are several ways to ship your products to your customers abroad and here I want to share how airfreight charges are being computed, so you will know more or less how much you'd be paying for the cargo you will be shipping through airfreight.

How to calculate chargeable weight under airfreight in exports and imports.

Freight charge under air shipment is calculated on the basis of weight of cargo. Commonly a question arises here, whether actual weight or chargeable weight?

In an air shipment, airfreight charge is calculated on the basis of actual weight or chargeable weight, which ever is higher. Then what is Chargeable weight? How to find chargeable weight?

Chargeable weight is an equilibrium point where in actual weight and volume of cargo balance.

Why chargeable weight in airfreight?

Let me explain the importance of chargeable weight in airfreight. Why do air carrier balance weight and volume of cargo?

Let me explain the importance of chargeable weight in simple terms. If a shipper exports cotton, the actual weight of cotton is very low but occupies a good amount of space as a volume. In this case, if airfreight is charges on the basis of actual weight of cargo, the said shipper needs to pay a very nominal airfreight compared to a shipper who exports iron plates. Am I right? Here is the importance of chargeable weight by considering volume of cargo and actual weight of cargo at an equilibrium point.

Calculation of chargeable weight in airfreight.

In order to find chargeable weight of cargo you need to have measurement of package of goods.If the cargo measurement are in centimeters, the total volume of cm3 to be divided with 6000. In other words, if the volume is in cubic meter (CBM), the said volume in M3 to be divided with 0.006. Air carriers charge airfreight on the basis of chargeable weight or actual gross weight which ever is higher.

Let me explain to calculate chargeable weight in simple language to make understand easily. I am going to explain with 3 examples, the method of calculation of airfreight for export shipments.

You have three shipments to be exported separately. Measurement of cargo length, width and height

Shipment 1:

Gross weight =750kgs

Measurement of cargo = 102cm X 98cm X 106cm = 1 box
80cm X 65cm X 103cm = 3 boxes

Total volume = 1059576 +(535600X3) = 2666376 cubic centimeter

Total chargeable weight = 2666376 / 6000 = 444.396kgs

Here in shipment No: 1, the gross weight is 750kgs and chargeable weight is 444.396kgs. Hence, actual gross weight of 750kgs (which is greater) is charged airfreight.

Shipment 2:

Gross weight = 850kgs

Measurement of cargo = 120cm X 160cm X 115cm = 2 boxes
75cm X 130cm X 125cm = 2 boxes

Total volume = 4416000 + 2437500 =6853500 cubic centimeter

Total chargeable weight = 6853500 / 6000 = 1142.25kgs

Here in shipment No:2, the gross weight is 850kgs and chargeable weight is 1142.25kgs. Hence, airfreight is charged on the basis of chargeable weight of 1142.25kgs.

Shipment 3:

Gross weight : 950kgs.

Measurement of cargo = 1 meter X 1.05 meter X 0.85 meter = 2 boxes
0.7 meter X 1.50 meter X 0.60 meter= 3 boxes

Total volume = (0.8925 X 2) + ( 0.63 X 3)
1.785 + 1.89 = 3.675 cubic meter

Total chargeable weight = 3.675 / .006 = 612.50kgs

Here in shipment #3, the gross weight is 950kgs and chargeable weight is 612.50kgs. Hence, airfreight is charged on the basis of actual gross weight of 950kgs which is greater than chargeable weight. Also note, the measurement in shipment 3 is in meter and volume calculation also may be noted.

Importation Basic Computation

I started working for a major retailer in 1997 but it was in 2001 when I first got to deal with importation for another major retailer.  What I primarily have to import are toys, glassware, footwear, apparel, household linens, hardware stuffs.

When I began doing importation, I have totally no idea how to do calculations whatsoever, even for margins but learning on the job was really a real eye-opener, how big profit is being made by retailers especially those who do import goods for sale locally.

Let me share here one of those calculation that may prove useful for new entrepreneurs who wants to venture into overseas importation of goods.  I hope this will be useful for you readers.

Let us first learn the different importation terms:

Less Container Load or better known as LCL shipping is a good way to ship large orders and items that are large or heavy.  LCL shipping is based primarily on the amount of volume with a minimum shipment of one cubic meter.

Calculating volume of cargo is a common subject for all exporters and other shipping related companies. If cargo is Full Container Load (FCL), the freight charge is for full container load basis. But if the cargo is a Less Container Load (LCL), normally a freight forwarder charges freight on the basis of volume of cargo. A freight forwarder charges freight on the basis of CBM.

The method of calculation of volume of cargo under sea LCL shipment

CBM means Cubic Meter. However, the total weight of cargo should not exceed 1 ton. That means, if the cargo weight is above 1000kgs, the volume of cargo is treated on the basis of weight. In short, freight forwarders charges LCL rate on the basis of ‘per CBM’ or per weight of 1000kgs (1 ton) which ever is higher. CBM – cubic meter is calculated by multiplying length, width and height of packages of goods. For example, if the length, height and width of a cargo is 2.3 meters, 1.4meters and 2 meters respectively, the volume of cargo is 2.3 X 1.4 X 2.00 = 6.44 CBM. If you have the measurement in inches or centimeters, first you need to convert in meters and then calculate CBM which will be easier for you. If freight forwarder quote a rate of USD 10.00 per CBM, the rate will be 6.44 CBM X USD 10.00 per CBM = USD 64.40.

If the weight of the said package is 7 tons (7000kgs), the freight on LCL is calculated on the basis of weight. That is, 7 tons X USD 10.00 = USD 70.00. So, weight of 1 ton (1000kgs) is treated as 1cbm. In other words, the LCL freight is calculated on the volume of 1 CBM or weight of 1 ton (1000kgs) which ever is higher. 

Please note that the shape of the crate does not have to be 1 meter by 1 meter, it can be any size it is only the volume that is calculated.

We calculate LCL shipments by taking the item or items that you would like to purchase and calculate their given volumes.  To do this we first take the length, width and depth of each piece and add from 2-10 centimeters to each dimension.  We add the 2-10 cm to the size to allow for packing and framing.  Once we get the total volume of the pieces you are ordering we divide the total volume by 1,000,000.

We get the 1,000,000 figure from the length 100 cm multiplied by width 100 cm multiplied by depth 100 cm.  Take note that there are 100 cm in one meter, thus there are 1,000,000 cm in a cubic meter.

For example:

Item #Box1

Quantity 1

Size 75 x 50 x 90 cm

Let us assume that this item is fragile so it will need very good packing and framing.  To ensure that we are able to pack this very well, we will add 10 cm on to each side of the object.  The new shipping size of this box is now 85 x 60 x 90 cm.

85 x 60 = 5,100

5,100 x 90 = 459,000

459,000 / 1,000,000 = 0.46 or 46%

From this example we know that this box will occupy 46% or about half of a cubic meter.  Since there is a minimum shipping volume of one cubic meter for LCL shipping, there is an extra 54% of a cubic meter that can be used. 

Example 2:

Item #BOX 2 Quantity 2 Size 10 x 40 x 60

Item #BOX 3 Quantity 40 Size 50 x 30 x 20

Item #BOX 4 Quantity 1 Size 75 x 50 x 90 cm

Let us assume these items are all fragile so it will need very good packing and framing,  To ensure that we are able to pack this very well and we will add 10 cm on to each side of the object.  We now have the following shipping sizes.

Item #BOX 5 Quantity 2 Size 20 x 50 x 70	Item #BOX 6 Quantity 40 Size 60 x 40 x 30	Item #BOX 7 Quantity 1 Size 85 x 60 x 100 cm
20 x 50 = 1,000 1,000 x 70 = 70,000 70,000 x 2 =140,000  (2 is the quantity)	60 x 40 = 2,400 2,400 x 30 = 72,000 72,000 x 40 =2,880,000	85 x 60 = 5,100 5,100 x 100 = 510,000 510,000 x 1 =510,000
Now we add the volumes together to get a total shipping volume:140,000 + 2,880,000 + 510,000 140,000 + 2,880,000 + 510,000 = 3,530,000 (this is the total cm) 3,530,000 divided by 1,000,000 (the number of cm cubed in a cubic meter) = 3.53 cubic meters.

If you do not understand these examples don’t worry when ordering all you need to do is give us the items that you would like and the quantities we will do all this for you.

At the beginning of this answer we mention that volume is the primary factor in calculating LCL shipment there are a few other things that affect the way LCL shipping cost are calculated.

1. all order need to be insured, insurance for LCL shipments is calculated at a rate of 3% of the cost of the goods.

2. Document and Export Fees are added to the shipping cost per order not per cubic meter

3. The maximum weight of a cubic meters goods can not exceed 350 Kilograms, if this is the case with your order we need will need to calculate shipping rates by weight not volume.

Good luck to all entrepreneurs who are eyeing to enter the importation business and may you find this educational.