Dear Shigyo san
I think you are on holiday this week, so I copied my message to Hana san and Pui san just in case.
I tried to reply on your question one by one as follows;
1. Transportation
As you know, we rely on BTL to arrange transportation (trucks & trailer). We mark up a little bit on their transportation charges especially for shipment of Craft Industry as it was handled by BTL before and selling rate was fixed previously. In general, our structure is that if BSG wants to gain more profit, then BTL loses their profit while selling rate remains same. This is very similar to Sankyo’s model between NVOCC team and other departments when they quote local trucking to NVOCC team. I do not think I can do anything about BTL’s charges as they have to protect their own profit as well.
2. Ocean Freight
Ocean freight looks good, but some of our sales cost on ocean freight may be included in other charges such as service charges. We understand that revenue and cost of each category should be met in the same category, but sometimes it is difficult to classify everything as order. For example, we have to split charges when we make a quotation but BTL charges us as one line – transportation charges. In addition, CFS/CY service for Craft Industry is more complicated and it is very difficult for Pui san to sort it out by herself. It is very difficult to write and explain it here, so I will call Hana san tomorrow.
Please note that margin of ocean freight is usually not so good, I assume around 10% as far as my experience is concerned. Our profit on ocean freight is quite good because of numbers from Craft Industry. If we need to secure new business from competitors, I think profit percentage will be lower.
Currently, I am chasing most customers but Puay san also takes care of some of our local customers with me. Apart from Puay san and me, BSG can not expand our capability to acquire ocean business now unless we hire new and local sales person, on which I am currently working.
I tried to gain ocean freight business from BTL’s customers as well. However, please note that BTL now concentrates mainly on cross-border trucking, not ocean freight as they transferred some staff to RCL Logistics who were capable of understanding and selling ocean freight.
3. Local Charge
Local charges are basically charges associated with ocean freight (THC, Doc Fee, D/O Fee etc.) Again, number appears good but I started to doubt that some costs may be covered by service charge.
4. Service Charge
Service charges are all of those that are not classified as above, such as labor charge, container loading etc. I know that business with B&B Thailand (storage and trucking services) terminated by June, so number dropped in July. Please note that we do not make any losses by each service. In order to prove it, Pui san and I have to try to examine accurate classification.
5. Commission
This is simply commission (handling fee) paid to Sankyo Corporation only. More shipments we consign to Sankyo, then it is obvious that AP will increase accordingly unless Sankyo consigns shipment to us and off-set account. Currently, as you can see we usually consign 4-5 shipments per month.
To answer more questions below,
Kik san is not a sales person but customer service staff who usually supports documentation. She is learning gradually and I must admit her effort, but I feel that she still lacks of knowledge about logistics. It is just my feeling but teaching here is not same as teaching someone in Sankyo. It may take some more time that she can think by herself and serve our customers without problems. As far as local sales recruitment is concerned, we have started to post our recruitment flyer in web recruitment company for one month. We have started to pick up some resume and try to meet some candidates soon.
If you have any questions, please let me know.