What should I ask about an import company’s container timing and storage costs?
Ask how long containers take from order to shelf, how often they arrive late, and who pays the demurrage, storage and handling charges when they do. Request the charges as a line in the books for a full year. Then ask how the owner times orders to the selling season.
Begin with the calendar. Ask for the dates on a run of recent containers: when ordered, when shipped, when arrived at port, when cleared and when received at the warehouse. Gaps between those dates are where cost and risk build up. Ask what the owner does when a ship is late or the port is crowded.
Then follow the money. Ask which costs sit in the cost of goods and which are treated as overhead: freight, port charges, delay fees, trucking to the warehouse and storage while goods wait. Compare a year of these against sales, and ask your accountant to separate the fixed costs from the ones that rise with volume. Ask whether the figures include customs-related charges. If the company rents space for overflow stock, ask for those terms.
Finally, ask about discipline. Are orders timed to the selling season, or do they arrive in clumps that tie up cash? Does the company track unsold stock by container? How does it decide when to reorder? A business that understands its own calendar is easier to run, and one that guesses is expensive to inherit.
Key takeaways
- Ask for dates on recent containers from order to warehouse, and look at the gaps.
- Find out which delay, port and storage costs are in cost of goods or overhead.
- Ask how orders are timed to the selling season and how unsold stock is tracked.
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentWhat is the cost of goods sold (COGS)
- 02Business Development Bank of CanadaGovernmentWhat are fixed costs?
- 03Business Development Bank of CanadaGovernmentWhat are variable costs?
- 04Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
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