The following is an interview with Bob Rebori, President and CEO of BioMicrobics, which exports its wastewater treatment equipment to some 80 countries worldwide.
When do you use air versus ocean shipping and why?
We use air for importing components when the normal lead time would be too long and we need to replenish inventory sooner than expected. When our sales increase, we have to replenish some parts that are urgently needed from overseas. Because we need them faster, we airlift them in.
What are some of the pitfalls of using air freight?
The Customs paperwork at the airports is typically a challenge and not as streamlined as for ocean containers. Air freight documentation understandably comes under more scrutiny because much of the air freight ships on commercial flights with passengers on board.
How much do you rely on your freight forwarders to decide how to ship?
We rely a great deal on our freight forwarders for exporting, not so much for imports. One time our shipping person had not included the required tariffs in an inbound shipment of parts; so the bill came in a lot higher than we thought. We learned the hard way to factor in those tariffs.
Actually, our purchasing staff bring their decisions to me, and I look for the most efficient ways to ship. If the freight forwarders offer different solutions, we always listen to them, but I always make the final decision knowing that it affects sales and return on investment.
What delays have you experienced with air and ocean freight?
Usually the paperwork at Customs causes issues for air freight. One time I was waiting on a flight from the Netherlands to Washington, DC, and I had to watch them unload tons of commercial pallets. It took a great deal of time. Because of the added scrutiny of air shipments compared to ocean freight, air freight often involves extra costs and delays even though shippers are trying to bring them in faster.
For ocean freight during the pandemic, prices shot up related to the limited availability of containers causing delays. We used to be able to ship a container to China for $3,000, and then the cost went up to $18,000. Shipping a container to Europe used to cost us $2500 – $2800; and then suddenly it was $10,000. Our customers (distributors) had to factor in that extra cost, which impeded sales for them and for us.
At one time, we discovered that inbound containers supposedly coming here to Kansas City were actually staying on the west coast and going back empty, leaving us with a painful shortage of export containers. That was a big problem, but the situation has now improved.
Another issue during the pandemic was that the ocean shipping companies decided that they would ship on each other’s vessels because they didn’t have enough freight for a particular destination. You believed you had scheduled a sailing on a particular vessel. Then, about a week later, you discovered that they had taken your container on a completely different vessel with an entirely different routing and a different arrival date, which was always later than what our customer had been planning.
Have you had more damaged goods with ocean than air?
We have really had few problems with damaged goods either by ocean or by air. The only problems we’ve had is with LTL trucking here in the States because of all the handling between terminals.
Have you found ways to lower the costs of air shipping?
We’ve had lower costs by air lately as both costs and supply have begun to get back to normal. What we do for our outgoing shipments is to figure out the maximum we can load on a pallet that can go on a specific aircraft in such a way that we take up all the cubic feet we can because we are paying the same for efficiently using all the available volume. Usually, weight is not an issue in air freight.
Have you found ways to speed up ocean shipping?
Lead time and availability of containers have improved, unless it’s for a route to a popular destination, as from Hamburg to New York or Houston to Argentina. If we think we get a better rate by going via Uruguay and then inland to Paraguay for Argentina, it is quite upsetting to learn that the container is on a different vessel and travels by way of different ports. One of our containers going out of Houston actually went through Brazil instead of the scheduled route pushing the delivery date back three or four weeks. This hurts both the customer and us because we want them to be able to sell as quickly as possible.
What are the pros and cons of trucking to the ports compared to rail?
I do have a pet peeve. We have a great intermodal system here, and it’s not very expensive. However, many of our distributors wait until the last minute to order. This causes us to send a dedicated truck, for which you end up paying maybe 30 to 40% more because it has to take several different routes, but it still takes about a week or so to actually get there.
We size all of our units to maximize outgoing freight space in intermodal containers. Whenour distributors order, they often contact us saying, this order could fit in a 20-foot container instead of a 40. We’ll reply that if we disassemble some components of the units, it will save them a certain amount of money in a 20. We’re often looking for high cube containers for the same price so we can stack them even more.
The best thing we ever did when designing our units was to size them so we wouldn’t have dead space in any part of the container. We were able to maximize the entire length, width and to the most extent, the height. Weight is not so much of an issue because there is so much light-weight plastic involved.
Something I began when I first started the company back in 1996 and consider indispensable to this day: when we’re getting ready to pack, I want to know the dimensions and whether we can make any changes to maximize use of the available space. Doing so may lower the cost of outbound freight for the customer; maximizing the volume in a 53-foot truck can also reduce the cost of inbound freight for parts because now those same parts take up less space. So, everything we bring in and everything we ship out is in 53-foot trucks and 40-foot containers. Rarely do we use a 20-foot container although it costs about 25% less than a 40-foot.
What kind of parts do you import?
We have two vendors in Germany. One has our molds to make extruded sheets that we weld together here for our most popular wastewater units. The second one supplied us with some filter modules using our molds but then sold out to a Chinese company and shipped them our molds. We still need that component for our parts sales to replace those out there. That’s where we face the tariff situation on Chinese goods, and the quality is not nearly the same. As a result, we are now working with a third vendor for those filter plates, which we are still testing. We may switch over to them, another German company bought by an even larger German company.
To learn more about BioMicrobics, visit its website at www.biomicrobics.com.
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