Welcome to this week’s episode of the Brand Builder Show where we got the chance to speak with Ryan Clark, co-founder of Westbound Logistics.
- How a $80m brand optimises its logistics operation
- Why prices have increased so much in the last 2 years and when we might expect them to come down
- Why you should think twice before ever using your supplier to ship DDP
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Ben Donovan 0:00
Welcome to the Brand Builder Show! Another episode for you today, this is going to be a great episode. I probably say that every time but this is going to be a really great episode fascinating for me, because we are talking to Ryan Clark from Westbound Logistics. And he has founded this logistics company and have, you know, really built up over a number of years and has fantastic insight into the world of global logistics and the world of supply chain global logistics over the last couple of years has been a pretty crazy one. And so being able to talk to him and ask him about how the whole process works, I think will be really insightful for you. If you’re a new seller, new to this industry, it will give you a lot of understanding about the end-to-end process of getting your products from your supplier to your Amazon warehouse or third party logistics warehouse and also just around the whole aspect of prices. Everyone knows that the world of shipping has gone up in price and you know, to be able to talk about that what the market looks like moving forward. For me it was I think, really healthy conversation. So I’m sure you’ll enjoy it too. So without further ado, let’s jump into this conversation with Ryan Clark from Westbound. Awesome. Well, great to have Ryan on the show today with us. Ryan is one of the co-owners, co-founders of westbound global logistics. Ryan, great to have you on the show today.
Ryan Clark 1:17
Thanks for having me.
Ben Donovan 1:18
So exciting time in the world of shipping and well exciting is probably the wrong word. But it’s a wild time in the world of shipping sites, it’d be great to get you on and talk about just the the craziness of what’s going on and what the future holds, and how sellers can try and optimize their shipping process. So we’ll dive into that in a minute. Before we do that, just tell us a little bit about yourself for those people that don’t know you the probably the two Amazon sellers in the world that haven’t seen you in their Amazon FBA groups on Facebook. Tell us a bit about yourself.
Ryan Clark 1:49
Yeah, so kind intro there. I’m one of the owners of westbound logistic services. We started in the UK, privately owned business in 2009. We, hence the name Westbound, we do specialize in goods moving from the east to the west. We run our own services by sea freight LCL, which is less than container loads every week, from every main port in China, to the UK and USA. In 2016, we opened up our very own British owned offices in China as well, which is quite rare and unique for a British company to do that, most people shy away from it. But we did that took a step and never looked back from there as well.
Yeah, so we were heavily involved in that market of importing products for numerous amount of businesses in different sectors as well. So high street, normal retail, wholesale, wholesale businesses, but predominantly in we’ve seen a big rise in E commerce, in general. But especially Amazon sellers as well because it’s so accessible and exciting to some as you know, Ben, for people to get into. So yeah, I first got involved in this area probably four years ago, maybe roughly around there.
Just almost by accident scouring different pages that I found interesting on Facebook and actually seen some poor advice from from a lot of people: some sellers passing on information that they thought was correct and and some other people call themselves freight forwarders. I’m obviously have a bit of an entrepreneur, background myself. Hence the reason why anyone would want to set out on their own and I like seeing other people do well and make good success for themselves. So it was one of those moments where I just couldn’t sit back and watch people possibly take a wrong turn and logistics, in my opinion is one of the fundamental things to get right to get it wrong. You can not be profitable and you’ll fall.
Ben Donovan 4:08
Definitely, yeah, no, for sure. And I’d love to dig into that sort of your approach to it just for a little bit. Because I think is really interesting. Just by the way for the record, anybody listening, we can hear a jackhammer, somebody decided to dig up the road outside my house just as we started recording. So hopefully it doesn’t come through too much. But apologies if it does. Anyway, so yeah, talk to us a bit about Westbound because it’s actually how I found you is on Facebook a few years ago, because when I started selling on Amazon, I just started using a Chinese forwarder just, you know, that was all I knew. And it was like the easiest option seems like a lot of people were doing it. And then I found you guys and the way you operate was, you know, to me so much more professional, the communication, the breakdown of how everything works. Like you guys helped me learn about shipping and logistics as a seller, whereas before just they you know a Chinese photo, just say it’s gonna be x amount of 1000s and it’s done. Whereas you guys kind of guide us through the process, and I find that super helpful. You talked about having offices in China, like, what is it about all of that and the way you operate? This may be different freight forwarders a lot of people are using.
Ryan Clark 5:13
Well, I think it’s a good question, because sometimes I’ve answered this, I’ve tried to answer that question online in text. And, and I’m always a bit of concern that comes across the wrong way. Because I don’t want to, I don’t want to knock the Chinese and you know, ring fence the whole of China and say, you know, don’t use those they’re rubbish, but as a nation of very, very good at what they do. But the reason why somebody like us, not just us, but somebody like us to operate their own service at the destination, whether it’s the UK you’re importing to, or the US, mainland Europe, we’re actually going to be there isn’t our company, that one single Chinese forwarder that operates their own service.
And the reason why that is, is because the market is probably FOB. It’s all about the Incoterms. So if you imagine, most people in the UK are agreeing FOB terms with the supplier. That means the decision maker for that freight is in the UK. So then you’ve got salespeople going around on the road in China, and you’ve got salespeople for a forwarder in the UK, the decision makers are here. So then a freight forwarder here is going to be able to build up enough customer base, get them on board to support their company. And then therefore get enough cargo week in, week out, which takes years to take two years to build up so many. It’s basically like having a cardboard box that you want to send from one destination to another, and you need enough envelopes to fill it. Otherwise they’re not going to pay you. Yeah, exactly the same container and pallets and boxes. So unless you’ve got that amount of people committed to you, from every single port, you’re never going to run that service. So what the Chinese do is subcontract it to somebody like us.
But the trouble is, it’s not going to come straight to us. It’s going to go to another Chinese company out there, that’s gonna say, “Yeah, we operate weekly out of Shanghai to Felixstowe. This is our rate. Come use us.” They’ll take that booking, say from you’ve been for example, your cargo would get booked from your supplier to a Chinese forwarder, that Chinese foreign or possibly to another one, and then eventually we’ll find somebody like our China office or back in the day before 2016, a partner that we work with. And then they would represent us the actual end operator of that service and it will get booked. So when you compare the services, what you probably would have found previously just ask a simple question, “Has it left yet?” And I don’t know how long did that take you for to get an answer. Overnight. 48 hours in things like that, where we can tap into our system go yes, left. And all you want, you won’t need to ask because when you get a notice of arrival from us, or confirmation of booking, we’ve got our own bespoke built system where it’s got a link to tracking and you can actually click it and see, you know, a Google Map pop up with a little blue Westbound ship, and you can actually see exactly where it is by GPS.
So that just falls in line with where we’re going now, you know, ecommerce businesses like yourself, yeah, you’re probably working through the night like everybody else. And when people are starting out that aren’t full time yet, and you want answers quickly, and you want out of hours? So we tried to help that, that that’s really the difference between the two is not that they’re they’re bad about their job? Or it’s just that they can’t give you the same service if they’re not actually in control of it.
Ben Donovan 8:48
Yeah, for sure. And you mentioned that you have your own LCL service. So does that mean that you work with someone that moves a container each week and you have a portion of that container? Or how does that just for I just find it fascinating how or you know, the end to end process works?
Ryan Clark 9:04
Yeah, it’s not that it’s not that exciting. But I suppose when you don’t know. So if you had enough cargo to load a full container, you book a full container that’s referred to in the industry as an FCL. So full container load. The LCL, is we’re actually doing exactly the same as booking FCL in the background. So we would commit to that, whether we fill it or not. That’s our gamble, that’s our risk and kind of stepping back to the previous conversation that we started with. You can only do that if you’re really confident that you you have enough customers every week we can we get a report. So we do that we book at least two to three containers every week. 40 foot high cubes, Shanghai, Ningbao, Chen Xin, Qingdao, other main ports.
So they’re in position we will send our truck to go and get the empty containers in the port, bring it to our warehouse and all throughout the week, where we’re loading up LCL until it gets to a certain point, right where we’re on 58, 62 cubic meters, that’s one down, the next lots come in. On load day, we literally load those containers up, we manifest it all. It all go through customs, export, declarations, doors, a sharp seal goes on that seal goes on our bill of lading. And that’s it. That is our LCL consolidation. So it’s, it’s that container as a whole is completely down to Westbound. We’ve booked it. We are in control of it. We are the last persons to close those doors. And we’re the next person to open them as soon as they arrive in the field. Yeah, that’s, again, describing what your own service look like as a freight forwarder. More chance to find one of those in the UK than China.
Ben Donovan 10:54
Yeah, yeah, for sure, for sure. And then from like an FOB’s perspective, so if anybody’s listening who’s kind of new to the whole process, FOB your supplier would you know be responsible for getting on the boat? At what point do you guys communicate, exchange takeover? How does that work?
Ryan Clark 11:10
Yeah, that’s another really good point, actually, Incoterms are so confusing to people when starting out and what it actually means. I’ve got to the easiest way to describe it is, 99.9% of the time, if you booked a shipment with us, and it was X works, we will pick it up. We’re going to pick it up straight from the start. But if you book FOB, 99.9%, we’re still going to pick it up, we’re still gonna pick it up from your factory and being controlling it of that shipment from day one, the difference of what the Incoterms mean is who’s paying for that each section.
So let’s run through an example. You’ve booked five pallets with us FOB Shanghai, our office out there would get the booking form from us in the UK, with load in the system, and it would just come through automatically the other side, they get the details. Especially if it’s not the first job they know your supply by now, they know who to call. They’ll call your colleague, John in Shanghai and say, “We’ve got another shipment for Ben, it’s five pallets when they’re ready.” They discuss it all locally, they saw all that they do all the correspondence for you. Checking on whether it’s tallies up with your ready data when you think it’s ready.
We will arrange to pick that up. But because it’s FOB, your supplies got the choice to say actually, no, I don’t want to pay you for for getting it to you. I’ve actually got my own truck. I’m gonna bring it here. And that’s the difference. So as FOB, the supplier has the option to do that element themselves. If they choose to use us, then they’re going to pay us for that, not you. Yeah, so that’s what that’s what Incoterms are is is describing who pays for what part of the shipping and where?
Ben Donovan 13:00
Yeah, yeah, that’s good. That’s good. And it’s similar process, same process, whether it’s going to the UK, America, mainland Europe.
Ryan Clark 13:06
Yeah. Yeah, exactly. Yeah. And a lot of people make the mistake as well as where that is so confusing at the start, is they come on to a freight forwarder or shipping company and say, “Can I have a DDP quote?” That they think that terminology is actually impossible to do? Because a freight forwarder doesn’t make the terms you do with your supplier. So there’s no such thing as asking a forwarder at destination for a DDP quote, because that means you’re buying the goods delivered duty paid for therefore I’m not needed, because you’ve just bought the goods. If you’re true Incoterms or DDP, that means you don’t need to be talking to us because you’ve already paid a certain amount within your commercial invoice value for those will bracket so whatever you’re bringing in, that’s been inflated by 50 cents each to cover the shipping and the duty and so the surprise they go, but you’re not in control. Yeah. But I think what what people mean is what they probably mean is buying FOB. So I’d like a shipping price to include everything to do that. Yeah, people.
Ben Donovan 14:16
But let’s talk about other because people do especially new sellers, they can fall into that trap of DDP. And what that looks like people think especially, you know, VAT duties, all that kind of stuff. It’s so murky, clear out for us, you know, someone orders some products from China DDP. And it’s, you know, includes VAT, apparently, all that kind of stuff. What’s the situation there?
Ryan Clark 14:40
Is something that we advise against for a very good reason. And there might be people watching that, of course you would. You’re a freight forwarder. So you want the business? Yeah, there is that. But if I retired tomorrow, I probably still jump on Facebook and tell people send us arrivals. Then I’ll give you I’ll give you I’ll give you a name just do not book DDP. And that is because let’s go to the wall bracket scenario, you’re buying a container, or five pallets of wall brackets or glass jars. Instead of $1 each, you’re going to pay $1.50 each, as an example. That extra 50 cents is your supplier taking the extra margin to pay their chosen freight forwarder. And they’re going to instruct them what to declare to the local customs in the UK.
They’re not going to 99% they’re not going to do that. They’re gonna instead of you, you know, that’s $5,000 worth of jars, they’re gonna declare as 1000, and they’re not gonna pay the correct duty. And you think, well, that’s their problem. It’s not my problem is, is a real messed up situation. But you’re the importer, and the purchaser of those goods and customs, then you’re responsible. And no matter what anyone says, “You can’t, that can’t be what it is, right?” We’ve seen it, and I’m gonna warn against it. And it’s the same in US, in every country. So customs can come back to you up to six years later, and uncover nightmare scenarios like that and say, you have been in control of this shipment, you as the importer, even though it was DDP, and you didn’t make sure in follow up that that has been the correct amount declared to us, therefore you owe us the difference. And there’s a fine as well.
So we have a real blue chip customer that shipped to the UK and the US with us. They know what they did. I mean they are there. They’ve gone from, I can’t name the name, but they’ve gone in the last five years to the Forbes 100 list for one of the fastest. They’re Amazon seller as well. But they started just on ecommerce, but they then move into Amazon. And that just doubled and almost tripled their turnover there. They’re up to last year there was 55 million turnover, they’re going over 85 now. They’re just nonstop.
And I could touch on that later if you want some of their some of their philosophies that they feed back to us of why they’re successful in Amazon, but most of them are that are yet DDP. So they know what they’re doing. They ship FOB all the time, just like every other high street retail major successful store does. But they had smaller, smaller actual parcel size that we didn’t get involved with. We don’t need to so they’ll book it with a supplier. It all went DDP. But then so many of them, they got $50,000 Fine. And repayments of I think is 1 million, 1 million US dollars. I’ve got I’ve got a screenshot. If you go back far enough on our Facebook page on Westbound logistics, you’ll find it. I’ve tried to get out for you if you weren’t, but I’ve covered their name up and I’ve shared it for people. This is what can happen. But there’s it’s not just that risk, DDP terms.
It’s the big sort of scary part of having something misdeclared when you’re responsible. But it’s also you’re not actually in control. You don’t legally own those goods until the parties to you. And that’s what Incoterms do as well, it says, who’s responsible for these goods at what point not just the money terms of paying for it. So it’s probably more sort of scary and realistic in the in the sea freight and air freight world while a smaller parcel so the risk grows. So if you’ve got a full container load and you’re moving it up. They do do that because it’s easier and they know what to do and they move faster than the my supplier, there are people convinced themselves that their supplier is the best freight forwarder in the world.
But what can happen and we’ve seen happen that people don’t really fathom this, this risk is let’s say that your supplier is now the customer of the shipping line, or another freight forwarder. Your supplier hasn’t paid the bill, maybe in this scenario to the freight forwarder. And your supplier gets into financial trouble and they go bust. Those goods that you paid for are not legally yours yet on DDP terms because it hasn’t transferred into your ownership at arrival of delivery. With 30, 40, 45 days on the water, that is a risk because if something happens to your supplier in that period, lots of people going to come in and take a lien, which is an L-I-E-N. They’re going to take a lien on your goods legally which they can do as salvage because they’re not yours, they’re the suppliers’. That supplier owes the money. They’re going to take that and they’re going to salvage somewhere. All of a sudden you think, well, that’s, that’s not right. It’s gonna probably cost you the value of those goods to legally untangle that and get your money back. So either way you’ve lost and that does happen.
So that’s a big risk factor for me. If I wasn’t in this business, knowing what I know now from this side of the fence, if I was importer, I would never ever touch DDP with a bargepole. I just think I bought those goods from Shanghai. I want them legally in mind from the minute they leave their premises. That’s what I would aim for.
Ben Donovan 20:31
Yeah. Yeah. Which is FOB.
Ryan Clark 20:33
Yeah. Yeah. FOB or X works. But x works. Your you can negotiate better as FOB because you are you should be a valuable customer to your supplier in China. And the difference between X works in XYZ black and white, you’re paying for it from from the door FOB, you’ve got a little small window there of where they will lift your price per pair skew slightly. But normally, it’s in your favor that they’ll take a guess they’ll go or we will we know what the rough charges are, we’ll build that in. And sometimes if they’ve got their own vehicles, they can save their money. So it is better. And plus, it’s less time for an importer to worry about quotes. So for instance, for us, we can issue a tariff. There’s nice and easy FOB to door all in. In your go in our system. It’s like a mortgage tracker. Soon as the rate change set as our rates they automatically pay out to every customer. You’d never have to contact us for rights.
To check, “What’s this one? What’s that one?” Because we don’t have to go out the China’s like, what’s the tracking for this time? It’s 100 kilos more. What’s the difference of the zip code? Just it’s so much, much more efficient. So that’s the way to go.
Ben Donovan 21:46
Yeah, that’s good. That’s good. You mentioned that the brand, I would love to hear more about that as much as you obviously can. But you know, in terms of yes, what you’ve said they fed back to you, but also their their logistic strategy. They what was some things that they’re doing at that scale? Firstly, just have interest because there may not be many people listening that would implement maybe some of the strategies, but just out of interest on what what does that look like? Do they? You know, is it like several shipments a week for containerized? How they’re doing that? But yeah, also their strategies and stuff. Talk to us a bit that you’ve you’ve gleaned from them?
Ryan Clark 22:18
Well, when I get the chance to go into depth, and again, if not like this, but not really so much on text because it would just be too mind boggling. I think that the rethrow. But this is actually what I base it on this customer and what I’ve learned so I you could you could teach me everything that I would possibly need to know about selling on Amazon. But freight wise, from what they’ve told us on their side. It’s so totally makes sense. So I understand in from for me in your world, Ben, going out of stock is disastrous, right?
That’s what they said to us. That is for them. That’s the biggest no-no, because their ranking just gets annihilated. So it takes them years, months and years to get word of God number one position in order to use and they must never ever all costs even if they have to airfreight something that never go out of stock, because that’s what they believe is got them their success. So off the back of that their logistics plan is to help them never go out of stock. They’ve got, whether you’re starting small, which you should and build up, the strategy is still the same ship: from China to the destination.
But more so now there’s there’s restrictions on what’s allowed in Amazon, whatever always bought in much, much more than what Amazon could ever cope with. Even if they were allowed to store more in there, they wouldn’t because, you know, our free PO in both UK and Los Angeles actually charges less rent than Amazon anyway. So they’ve always used us as a pit stop. So this works with other free POs as well. It’s not an advert for Westbound, whatever, you know, if you’re somebody adopts this strategy, it’s a good one. So find a free PO, ideally, a forwarder that’s offering both because that way your your goods don’t have to transition and get an extra delivery charge out before it comes back in. So we would unpack the container in the center where we store it for them. We’ve got about 4000 pallets for these guys just hundreds of skews stored, and then they call it off from there. So when they go low in Amazon, they call it off from us, and then when they go low enough, they call it off from China. So it’s a constant conveyor belt with a two-stop process: China, fulfillment center, Amazon. And that’s how they work. It is quite simple when you break it down like that, but it’s hard to describe otherwise and if it was kind of doing this and talking on screen.
Ben Donovan 25:00
Yeah, good stuff. Okay. And then talk to us about the, you know, the question everyone’s asking: prices. It’s probably your least favorite question right now for the last couple of years. But it’s pretty wild, eh?
Ryan Clark 25:14
Yeah, it’s crazy. I mean, usually, you can predict, I mean, I’m quite, quite proud of the fact that over the last 12 years, and plus, that have not been in the business a lot longer than that, as well. But for 12 years, I’ve been analyzing and predicting, and I’ve … got almost everything bang on. And even when other people haven’t, I called it differently. I was right. This is just got so much wrong. Everybody get everything wrong, you just can’t predict you need a crystal ball. I mean, when it last last year, we when we saw the rate start to ease off a bit, where even in the UK, we touched $20,000 for 40. But that started to come down again. And then it was almost like, if you’re British and watching this, at the moment, you’ll get this but and DEC kind of coming on a mic in the background going. Now blocked the Suez Canal, it was almost like this is gonna be a wind up surely, just as you know, we start to make ground and rates and we see a little bit of light at the end of the tunnel that happened. And then I might be just the demand as is being messed up as to when they’re going to change.
I don’t know, Chinese New Year has always been mine and many other freight forwarders and seasoned importers prediction to be that’s got to be the that’s got to be the circuit breaker that we need. And it has to it’s going to be a different rate after Chinese New Year, it has to be. It cannot, it cannot stay where it is now. Because the demand will drop. No factories should be empty. They all like to be empty going into Chinese New Year. That means that everyone’s got their stock out before that should be.
And therefore there is going to be so much demand for containers or vessels based off the Chinese New Year. Not only that, but you’ve got no average of 30 days lead time for new products. You’ve got that to continue with to there shouldn’t be a big tap, that turns straight on again, like a fire hydrant hose off the Chinese New Year. It should it should trickle. And that’s what we’re really after to see a rate change. But I think the question is, how much? How much difference are we going to see between now and post Chinese New Year? I don’t think it’s I don’t think it’s going to be a big drop that I once predicted even a month ago. I said, “I can see this being you know, instead of 16,000 I think it’s going to be around 10,000?” I don’t think it’s going to drop that low that quick.
I know it’s a crystal ball question. But you know, long term, should we you know, not have any more global plagues or anything with issues? Like, what do you see? Like, where do you see it stabilizing? Is that too hard to predict what your thoughts are?
I mean, take it with a pinch of salt. It’s just it really is a an opinion, really. I previously said I would probably you know, hang my hat on this still, I think the future when it stabilizes, I think the new rate levels as opposed to pre pandemic, the right level that fluctuate throughout the year would be anything from $800 to $2,000 from a low and a higher. And that’s painful for people to hear now, but I think the new bracket is going to be $6,000 to $10,000. I think that is going to end up being the stable fluctuation between for a full load freight.
But I don’t think we’re going to get 6000 this year. I’ve been getting feedback from shipping lines this week. Some of them saying that they don’t see that there’s going to be a change in this Chinese New Year next year. And again, as part of my head just I don’t know whether I’m refusing to believe that I want to believe it or or whether they’ve got a point whether they know that I don’t know they’re on the front line. Are they saying that to you know, manage expectations further down the line for a forwarder and then to import was like yourself and your viewers? I don’t know.
I don’t think it’s going to be I’d like to think it’s not gonna be another year of a 16,000 to $20,000 container? I’m hoping for. I’m not hoping for a miracle is no good. So being realistic, I would recommend to anyone doing their sums to base that between a conservative 10k container being best scenario, and 15 to 16 being the worst.
Ben Donovan 30:28
And what does that work out on putting on spotland office? But in terms of like a per cubic meter, does you how do you guys work out price offers lots to factor in but say if someone’s reading the news, and they’re like, oh, container prices are 10 k, is there an easy way to work out why it’s roughly x amount per cubic meter, if I’m doing LCL.
Ryan Clark 30:50
From our point of view, we don’t like to change the rate too much. Because we like to try and give some stability. And that means sometimes we take the rough of this move, sometimes we’ve not covered ourselves so well. And other times we’ll make up for it. From that can be one week to the next. So what we tried to do is, is give a month validity, which you can’t do on full loads. So on LCL, we’ll look at it, we’ll take it as a view as, “OK we’ll use you again, Ben.” So if you’re using this every week with a shipment, or even once a month, it’s not gonna be the same time every month, it’s not gonna be the same rate every month, we know that we can kind of ride through week by week and fill a container.
So we’d average that out. And at the moment, you know, we another telltale sign actually of who’s actually buying their own service is whether you get a freight rate broken down in dollars, and then document charge, clearance charge, import security, you know, a long list of charges, or we’ll be getting all in Sterling, right. So we do as all in to make it easier. So say 349 pound a cubic meter, all in from FOB for door delivered Amazon.
That way, it is easier for us, it’s more efficient for us to work through and do invoicing. But it’s actually much easier for importers to to work out what the landed cost is, you just you know what your your pack total cubic meter size is just times that by 349. And if it’s if it’s under a minimum, use the minimum. And if it’s over that, just tell me about a cube. But you can get a rough, you can get a rough calculation, because in that, in that 349, if you in a 40 foot high cube you’re going to get, you can actually get 68 cubing. But you’re never going to do that in this it was matchboxes. So we tried to work off of 60 Cube do that by 349.
You’ve got a lot of charges that are built into the UK charges as well. So you know, you can kind of roughly work out what it is. Okay. If issues up to 20 you know, in line with that ratio is going to go up.
Ben Donovan 33:20
Yeah. And you guys let you say you have like a weekly rate email people can subscribe to.
Ryan Clark 33:26
Yeah, so if people are already on FOB terms, or they want to shoot, change the FOB, if they’ve got regular, safe rate, then it’s just so much easier. So they can even if they use this at the moment, if someone’s watching this and you think I didn’t know that, yeah, get in touch drop the guideline on Amazon at westboundglobal dot com say, “Hey, I’m trying to I’m already using you for a few jobs in the past to take me getting quotes on the under the Dine on FOB turns, and China cannot just go on a tariff.” And we’ll load you on our tariff system. And you’ll get automatic rate updates whenever it changes. So there’ll be a validity point. So say now, if you locked in, it will be valid to another 10 days, it’ll be the end of January.
First of Feb, you’ll get another update. Even if the rates haven’t changed, they’ll automatically issue and get sent out. If there is a change. Normally, we validate it for the longest period that we can or the worst case. But the great thing about that is because it is linked to a tracker of our costs on the full load. If say on the fourth of Feb, or the seventh of Feb, rates drop on the full load, those would automatically trigger out and adjust your LCL rates. So you think, “Oh, that’s good news. I’ve actually ordered something on there and will leave on the 15th of Feb, but that means I’m going to get it 200 pounds cheaper now.”
Ben Donovan 34:47
Yeah, no, that’s good. That’s good. Yeah, definitely recommend people sign up to that then last question just on prices just so again, just trying to help people understand like the whole shipping climate. These prices obviously have gone crazy and I know there’s so much behind it. But if you could kind of like summarize the, you know, saying two minutes, you know, what is behind all of these huge price increases? What do you put it down to?
Ryan Clark 35:14
Right, I’ll try, I’ll go for the brief. Imagine a hose pipe that’s actually connected itself together, and it’s full of water. So it’s just circular motion going around, that’s the supply chain. If we go back to March 20, when the pandemic hit, somebody’s got that hose pipe, and I’ve gone like that and made a kink in it. And now, if you imagine what happens to that hose pipe, there’s a bolt building up the other side, like this, and nothing coming through. So this is definitely UK, if you like, you can apply this to the US wherever you are the same principle. So there’s this big bowl, just building, that sort of containers in order vessels that building up, they’ve got nowhere to go, everybody shut down and cancel their orders and postpone them is bold, all of a sudden gets released, when governments around the world said, “Okay, in June, we’re going to open up.” Panic, right? Get those orders back on everything, go go, go, go, let go of that kink in in the hurt and hose pipe and all sudden, this bold slug clot, like a blood clot.
It hasn’t, it hasn’t disintegrated, it’s moving around like this. So it’s gonna take ages and ages for that to get smaller and smaller and actually disintegrate back into a normal supply chain. So that what that bold represents is all of the containers not moving. When the vessels weren’t moving on shutdown, then, of course, no empties, were going back there, because there’s no empty containers going back, everyone turned on that massive fire hydrant of a hose, say orders, get them out, get them out of China, get them in every single empty containers, full gone. There’s no more left. So then prices go up. Right? If you want the container, you pay that shipping line to all of them, all of a sudden gone, this is good.
We stick another $1,000 on that, oh my god, they’re still buying it. Again, another 1000 She’s looking over their shoulder think they’re still paying it. So it just kept on going and going and going and going. And, you know, I wouldn’t be surprised if a 20,000 vessel was just about to come on board. Now. Hold that back. Now, don’t do that. Don’t don’t bring that into the loop because we’re actually making money for once and to be fair to them. They’ve lost money on that trade line for years and years. But my God, this is a hell of a difference.
Now. That’s in a nutshell, what’s happened. And that’s still happening. So, again, going back to the Suez Canal, when when that when that boat starts to ease off Suez Canal, blockage, it here. Now again, no containers coming back, massive shortage, and it’s just another revolving problem. So it’s going to take it’s gonna take quite a while for that to even out get back to normal.
Ben Donovan 38:06
If it ever does.
Ryan Clark 38:10
It will, it will take long, quite a long time. It’s going to need next year and if the shipping lines’ reasoning for that comment earlier, saying that next year, they see easing up because that’s when, you know, some more super vessels are coming on board and other 22,000 container vessel times 10. If that comes into the equation, then you’re going to have shipping lines fighting over market share again. And that is a good thing for … because that’s when the right to get competitive.
Ben Donovan 38:39
Yeah, can’t wait for that. Have you ever been on one of those?
Ryan Clark 38:46
Ben Donovan 38:47
Okay. That’s an experience.
Ryan Clark 38:49
It’s an eye opener. Yeah, huge. Absolutely. Yeah, yeah. We went on a tour on one of the was the Maersk Emma. If you look that up, it’s one of the one of the largest supervessel was it was at London Gateway port. So when our offices was the space down there a couple of years ago, we did a tour. And it was yes, huge, quite scary going up the top as well. Very high.
Ben Donovan 39:18
Yeah, I’ve seen a video of a guy on one of the cranes, you know, and he kind of like puts the camera down all the way down into the belly of it and it’s just insane you know, you you think about the containers on top but you forget there’s just as many underneath as well as crazy.
Ryan Clark 39:32
Yeah, we did that, too. So we went up one of the key cranes and looked down on a glass bottle and that’s quite, quite hairy moment, but yet very skilled, very, very clever how they get those containers off. And it’s no wonder, again, probably don’t realize it takes 24 hours to get your average amount of offloaded containers from from the stock on the ground, or even when people are looking to go in when can I have my delivery. Finding the best within your container might be at the bottom. We don’t know if that that might be off in another day. And then I’ve got customs clear …
Ben Donovan 40:09
Yeah, yeah, for sure. For sure. No, that’s awesome. Listen, I know you’re super busy. I don’t take up loads of time. But this has been, for me massively insightful. And I know for people listening, you know, there may be a bit newer, or just don’t understand shipping as much just as lots of insight there. And, you know, hopefully a little bit of optimism about where we’re going in the future. I just thought it’d be cool. Just to finish with I don’t if you have any, but just if you have any, like, crazy stories about shipping, you know, like, containers lost at sea, something crazy that you’ve shipped. I don’t know something. Some huge fine. I just like some crazy story from shipping. Surely, that’d be something over the years that you’ve experienced. I thought that was absolutely mental.
Ryan Clark 40:49
It’s quite a boring industry, alright, Ben?
Ben Donovan 40:57
If there’s nothing that’s fine, you know, but I just, I don’t know, maybe like a shipment of live animals or something.
Ryan Clark 41:03
But no, I never never, never live animals. No, we’re not in that sector. Thankfully.
Ben Donovan 41:13
So good. No, it’s good. I mean, it’s good to know, in a way that there’s no crazy crazy stories, because it’s, you know, you have to sort of sleep at night a bit if there’s nothing terrible happening now. That’s good. It’s good.
Ryan Clark 41:23
Yeah. I think most of what we’ve seen on the news anyway, there’s been a few vessel fires. There’s, there’s been the one the one Opus that a year or two ago that. Yeah, yeah. Yeah. Get your insurance in place, or use your forward as insurance take out all all risk marine insurance, because it does happen.
Ben Donovan 41:44
How often would you get containers overboard?
Ryan Clark 41:48
Thankfully, Touchwood, not not that often. But not not for us. So the chances of, of one particular forward or an input we’re experiencing or even hearing about it is rare. But the actual amount of time it does happen is a lot, you know, at least at least once a week, there’s concerns going overboard as to loads. Absolutely. Hundreds of the seabed somewhere across the Atlantic and the Pacific. Yeah. So when you think about it, any freight forwarder that you use, whether it’s in China, or UK or US your destination, never rely on the standard terms and conditions of your bill of lading. It doesn’t cover you it covers you for 43 pence per kilo. So if you if you times that by how many kilos and what you’ve actually paid for it, just always pay the insurance. It’s like minimum 35 pound just as a no brainer.
Ben Donovan 42:45
Yeah. Yeah, for sure. Definitely recommend that. Definitely. Awesome. That’s good to know. Where can people find out more about Westbound if they want to hear and get in touch.
Ryan Clark 42:56
Follow our social pages because we do release some tips and hopefully we’ll do some more on our that’s generally Westbound Global or Westbound Logistics, depending on what platform you’re on. Shouldn’t be too hard to find us. Our website is westbound global dot com. And on there, we have actually got a specific Amazon Help section. So we’re always trying to add to that to tailor for startups, people have not really had too much experience in shipping for so we’re going to be adding to that as well. So keep an eye on that. There’s a couple of videos as well to talk through what I mean opened up on the page of what to expect when you buy from China for the first time that’s quite a, quite a good one. There’s only a couple of minutes long.
There’s a quote request on there as well. A lot of people email us which can Amazon atwestboundglobal dot com. Or even, I would say the best way to ensure that we’ve got all of the details that we need to say come in backward and say no, we need that. Now we need that. There’s actually a quote form on online, dedicated page soon, which will hopefully add some instant rates on there as well. So definitely one to keep an eye out for.
Ben Donovan 44:13
Yeah, that’d be really helpful. Yeah, great. Awesome. Well, highly recommend everyone check that out and checks you guys. Fantastic service always got brilliant service from Westbound. So thanks for coming on the show today, Ryan. Really appreciate your insight, and hopefully some better days and cheaper prices ahead.
Ryan Clark 44:29
Yeah, I hope so. It’s a pleasure having me on
Ben Donovan 44:31
What an episode that was with Ryan Clark. I honestly love that guy is just such good insight and so down to earth and you know, super, super helpful. I hope you enjoyed this episode. If you did, I’d love it if you took just two minutes to leave us a review on iTunes or Spotify or subscribe if you’re watching on YouTube. Hit that like button let people know that there is helpful content out there. The Brand Builder Show keeps moving on forward, baby. We’ve got some more great guests coming up for you in the weeks to come so make sure you look out for those and I’ll see you in the next episode real soon.