Warehouse Consultants

October 10, 2017

FAQ About FOB

If you’ve been in the supply chain business for very long, then you’ll have seen the term “FOB” on various invoices. While some people in the supply chain and warehousing industries might feel comfortable with their knowledge about what FOB means for them and their business, there are a lot of people who are confused by it. It becomes even more complicated when there are additional terms attached to it, such as “freight collect” and “freight prepaid.” Each of these terms means something slightly different but could have huge ramifications for your business and your customers. If you are confused by FOB, our warehouse consultants have put together this simple guide to help you understand what it is and why you should care about it.

Answers to Frequently Asked Questions About FOB

What Does FOB Mean?

FOB stands for “freight on board” or “free on board.” The two terms are used interchangeably, so don’t let that confuse you if you see it spelled out instead of abbreviated as FOB.

International versus Shipping the United States

While the abbreviation means the same thing, there are differences in what FOB implies in international shipping and what it means for shipments within the United States. Within the United States, FOB indicates at which point the seller is no longer responsible for the cost of shipping the items. They might cover the costs up to a certain point, after which a third party shipping company will take over and deliver the items the rest of the way at the buyer’s expense. In the international shipping industry, FOB is used to indicate where the risk and costs of delivering goods change from being the seller’s responsibility to the buyer’s responsibility.

Where Did the Term Come From?

The term actually originated hundreds of years ago when sailing ships were the primary means of transporting freight around the world. The rail of the ship was used to designate when the freight left the responsibility of the shipper and became the responsibility of the recipient. It’s been in common use since 1936 and is used as a shipping term around the world.

What Do These Additional Terms Mean?

The term might stand for “free on board” but there is nothing actually free about it. Someone is still paying for the shipment of the cargo. However, what FOB does is let all the parties involved understand who is paying for it and how they are paying for it. This is typically designated by an additional term that comes after FOB.

FOB port

In international shipping, you’ll see FOB followed by the name of a port. This port is where the responsibility and risk of the shipping transfer from the seller to the buyer. For instance, if you purchase something from China and it’s shipped FOB Seattle, then the seller is assuming the responsibility of shipping the item until it reaches Seattle. After that, you’ll assume the risk and responsibility of making sure the items make it the rest of the way.

FOB origin

In North American shipping, this means the responsibility of getting the goods shipped ends once the seller gets them onto the truck. The buyers will pay the costs of shipping the item from the point of origin.

FOB destination

In North American shipping, this means the responsibility of shipping the goods remains with the seller until it reaches the final destination. The sellers will pay for the shipping of the items to the final destination.

Why You Should Care About FOB

It might seem like a little thing on your purchase order or invoice, but the terms and conditions that are implied in these simple terms can have a big impact on your business. First and foremost, it means your business could have a legal responsibility for the goods that you are shipping. Depending on how your FOB terms are worded, if something happens along the way, you could be responsible for the risk and costs associated with the shipment. So if you are responsible, you’ll likely want to take out insurance on the shipment just in case something goes wrong along the way. Otherwise, you could be eating the costs of damaged merchandise and lost sales.

Knowing what you are responsible for and being prepared can help you mitigate the damage in a worst-case scenario. Additionally, not understanding the costs associated with FOB terms could dramatically raise the cost of your goods and decrease your bottom line. So knowing what you are paying for and what the seller is paying for will help you manage those costs now and in the future, since the cost of insuring FOB origin shipments will need to be factored into your selling price.

Who Can Help You Manage FOB

There are a number of third-party shipping companies who specialize in FOB shipments. If your seller is only responsible for the merchandise up to a certain point, then you’ll need to work with a company who can help you bring those items the rest of the way. Look for companies who have handled these arrangements in the past and are used to the process.

How to Lower the Costs of FOB Shipments

If you are covering the costs of a lot of shipments, it’s going to eat away at your profits. Insuring and paying for shipping costs isn’t cheap. There are a couple of ways you can try to lower these expenses:

  • Reduce the number of shipments. Ordering larger quantities can help you avoid paying insurance and shipping costs repeatedly.
  • Renegotiate your terms. If you are ordering a lot of merchandise from a company, then they may be willing to give you a break and assume some of the shipping costs up to a certain point. It’s worth talking to them or shopping around.

Confused About a Supply Chain Term?

Our warehouse consultants are here to help! Get in touch with our team and we’ll take the mystery out of whatever term you’ve been puzzling over. Simply give us a call or contact us through our website and let us know what term you’d like to know more about. We may feature your request in a future blog!

Read more

 
 
 

August 10, 2017

Should You Install Your Pallet Rack Yourself?

You’ve ordered your new pallet rack equipment from DAK Equipment & Engineering and it has finally arrived at your warehouse. So now what? Should you crack open your tool box and get to work setting them up yourself? Or should you call in the professionals? It can be a tough choice and one that is often dictated by time and money.

If you aren’t sure whether you should do the installation yourself or not, we have three very good reasons that you may be better off letting the DAK Equipment team set up that new equipment for you.

Why You Should Let a Pro Set Up Your Pallet Racking

Safety

Putting your new pallet rack together wrong could end up in disaster. You could end up with a collapsing pallet rack that crushes inventory or even hurts your employees, which is the last thing you want to do. Plus, putting together pallet racks is no easy job in itself. Our professional team knows how to safely install your pallet rack and ensure that it is set up correctly. They’ll go through all of the necessary steps to ensure that every nut and bolt of your pallet racking is assembled correctly.

Money

The attention to detail that our assembly teams offer can actually save you money. When you reduce the risk of accidents and injuries, you are lowering your operating costs and the costs associated with worker’s compensation claims. Installing pallet racking right the first time can extend its use, too, so you get more years out of your racking and don’t have to replace it sooner than absolutely necessary. Reducing costs is putting more money back into your bottom line.

Time

Setting up a pallet rack correction takes time, and that’s probably something you don’t have a lot of during the day. When you allow our team to do the installation work for you, you free yourself and your employees up to focus on building your business and serving your customers. Having professionals install your pallet racking can allow your team to focus on keeping the business running so there is no work slow down or stop while the new equipment is set up. Let our team take care of the heavy lifting so you can focus on building your business.

Convenience

While we’re at your location, we can perform a safety check on your existing pallet rack inventory. We’ll make sure your pallet racks are safe for your inventory and your employees, and help you repair or replace any unsafe pieces. We can also help you maximize your existing equipment with the right carton flow racks, bins, boxes, and help rearrange existing equipment so you get more out of every inch of your space. You can learn more about all of DAK Equipment & Engineering’s services when you speak with one of our project managers.

Call to Schedule Your Racking Installation Today

If you are ready for the safety, cost savings, and convenience of having our team do your installation for you, give us a call! Our project managers will work with you to coordinate a time for our installation team to visit your site and get your pallet racks ready for use. We take care of everything from beginning to end so you don’t have to worry about anything. You’ll be amazed at how much easier the installation process can be when you trust our experienced team to get the job done for you.

Give us a call or contact DAK Equipment & Engineering through our website so we can get started on your installation project today. We can even help you place an order for the pallet racking you need to get started!

Read more

 
 
 

August 03, 2017

How We Installed Executive-Worthy Office Space Inside This Warehouse

The DAK Equipment & Engineering warehouse consultants have worked with hundreds of customers over the years, helping them find solutions to all of their warehousing challenges. One of the challenges many of our clients have faced is finding space for their executive and administrative teams in the middle of a busy warehouse operation. They want their managers and executives close to the action, but those same people need a little peace and quiet to get their work done, too. We’ve found that modular offices are an ideal solution; they move your teams into the warehouse instead of sequestering them in an off-site trailer and feel like their own building with comfortable amenities and plenty of peace and quiet. We’ve installed many prefab office in warehouses across the country, and one of our most recent projects took us to the East Chicago warehouse of ICO Polymers.

The Challenge

ICO Polymer was facing a number of challenges within their warehouse. First, their management and office teams were currently working in trailers outside of the warehouse and had been for years. While that had worked for a while, the team knew they could be more effective if they were closer to the action happening in the warehouse. However, they needed something nicer and quieter than simply moving their desks into a corner of the warehouse floor. In fact, they wanted a conference room and offices that would be worthy of any executive meeting. With a large office team and the desire for a great conference room, they’d need to maximize their use of space. They turned to the warehouse consultants at DAK Equipment & Engineering to help them find a solution, and we did.

The Solution

The answer to ICO Polymers situation was a modular office, but not just any old modular office. We partnered with a reputable prefab office manufacturer to create a custom modular building that could be assembled right in the warehouse. In the end, we designed and helped install an incredible 6,000 square feet of new office space with two-story modular buildings that connected together right in the warehouse. When we were finished, ICO Polymers had all the office space they needed along with an incredible conference room they couldn’t wait to show off. We even hooked up a heating and air conditioning system so they could regulate the temperature of the space and stay comfortable all year long. While they didn’t need it, we could have also included restroom facilities or even a fully-functioning kitchen space.

Now the warehouse has their managerial team on-hand to help with any issues and a conference room to host visitors. It was everything they needed, all in a perfectly-sized package at a fair price.

How We Can Help You

You can read more about the incredible modular office installed at ICO Polymers on our case study page. If you like what you read and think that this could be the right solution for your warehouse, too, get in touch with our team. We’ll listen to you about the challenges that your warehouse is currently facing and then offer solutions that will meet your needs and your budget. Whether it’s a new modular office, a warehouse mezzanine, new pallet racking or automating with a conveyor system, DAK Equipment & Engineering will work with you to find the solutions that you need and manage the project from start to finish.

Get in touch with our team today by giving us a call or contact us through our website and connecting with one of our project managers. We’ll get back to you right away so we can start working on your next warehouse improvement project!

Read more

 
 
 
 

Built by Clique Studios