Removing the mystery: quote exclusions

With a background in HR and Relocation management, Robinsons Relocation’s Julian Grose-Hodge unravels the mysteries of Household Goods Removal. In this edition he addresses exclusions in quotes and why invoices may yet differ from the quote.

Why do quotes have so many exclusions?

There are many reasons why moving specialists must be explicit in stating exactly what is being supplied and for what price. As well as the complexity of household goods removals, there are a number of suppliers in the chain, government agencies, border controls, customs agents and uncontrollable or unknown events to consider.

Import duties and taxes are a good example. If the person who owns the goods is importing them to a country that has an “ad valorem” tax, (a tax based on the value of personal property), on all goods entering the country, it is unlikely that the moving specialist will know explicitly the value of the goods being moved at the time of a quote. Besides, taxes are subject to fluctuations and changing detail.

Parking permits are another example. As local governments have neither space nor desire for working vehicles to be parked in residential or commercial areas, a parking permit is frequently required. Invariably local governments charge the moving contractor for this privilege and may require several weeks notice. If a parking permit cannot be issued in time, the moving specialist will have to risk receiving parking tickets instead. The necessity for parking permits or the likelihood of receiving parking tickets is not always known at the time of quoting, so are generally excluded from the quote.

When it comes to moving pianos, some removals specialists will not automatically include the quantity of human resources required to move them as a matter of course.  Pianos require at least 3 men to lift them (and as many as 6 for larger pianos), and they also require additional and specialist dismantling and protection (wrapping, casing, specialist tools and knowledge). The removal company will also need to look at the measure of risk being requested. Would your company take on the liability of moving a £100K Steinway concert grand piano without charging an additional amount for this specialist service?

Another common “exclusion” is that of delivery over the 1st floor. At the time of quoting, the moving specialist will probably have absolutely no knowledge of the destination residence other than its approximate location in the world (generally a city, or area of a city). All moving costs are based on general time and motion measurements and the moving company’s experience of the human resource, material and vehicle time (mileage) required to complete the move within a given time frame. The further any resource has to travel, the longer it will take. Delivering goods over the 1st floor generally means an extra flight of stairs or more. The extra distance and difficulty involved in carrying large bulky and often heavy items up stairways, which are often narrow and have many corners to negotiate, can incur significant extra time and cost for the moving company.

Most moving specialists would prefer to give an all inclusive price covering all eventualities, giving them an opportunity to exceed client expectations. However with so many variables, unknown quantities, misinformation coupled with the highly competitive nature of the business, it would appear most companies now quote on the basis of a minimum service specification that excludes many items. This is also a response to HR Managers’ desire to make a direct comparison between what services are included or excluded by each quoting moving company and or in the case of a single supplier having an understanding of exactly what it is they are paying for. Good moving companies that believe in “transparent costing” will wherever possible work with you to estimate costs where it is known that a cost will be incurred.

Despite the exclusions why would a quote differ from the invoice and is there anything that can be done to remedy this?

The best way to reduce the probability of there being a difference between quote and invoice is to have a very clear policy that binds the assignee, you and the removal contractor. Some assignees have been known to stretch the company policy to his or her favour. Where there is an opportunity to exploit gaps in policy, there will often be an impact on the service that is actually delivered by the moving company, which will then need to charge for those services.

Another potential source of discrepancy can occur when estimating the volume of goods to be moved. The amount and type of goods eventually moved often differs from what was surveyed. For example, some assignees will suggest they are selling some items, or possibly buying additional items. Others may suggest that they will empty the garden shed or the loft so none of it will be required for removal. However, what happens on the day can be wholly different. . An assignee may change their mind about having an item cased or crated, or in the case of multiple surveys by different competing companies, become confused about which surveyor offered which service.

Specialist moving companies are generally fairly accurate with estimating the volume of goods that they are shown at the time of survey, but it is worth remembering that estimating the volume of an assignee’s goods to be moved is exactly that, an estimate.

Removing the mystery: cost variation

With a background in HR and Relocation management, Robinsons Relocation’s Julian Grose-Hodge unravels the mysteries of Household Goods Removal. In the first of a new series, he begins by addressing the issue of cost variation.

Just how is it that two almost identical removals can have such wildly differing costs?

Does the following scenario seem familiar? Two assignments, both families of four, both moving from 4-bedroomed houses in the same part of London to 3-bedroomed houses in the same part of Madrid, both using the same moving specialist. On the face of it identical and yet one invoice is 25% more expensive than the other. How is this possible?

The reality is that however similar the task may appear on the surface, in reality each household goods removal is intrinsically unique. The properties, the packing requirements, accessibility of properties, furniture contents, quality of goods, dismantling and reassembly requirements, the dates chosen, the declared value of the goods – with so many variables, even in apparently identical moves, prices will always vary.

To use the example given: The first assignee – let’s call him “Jack” – has a delicate collection of Venetian glass items that need special attention, additional packing materials and additional time to pack and collect. Jack also wants his goods delivered in Madrid on a Monday morning. However, in mainland Europe HGV trucks are not allowed to drive on weekends. This means that the truck and its delivery crew must be in Madrid on the Friday evening if they are to meet Jack’s requested Monday morning delivery deadline. Therefore the additional costs of having a crew and truck waiting in Spain over the weekend will be transferred to the client.

Jack has also revealed that his new residence in Madrid is in a very narrow lane that a large HGV vehicle cannot access, so he will need a “tranship” vehicle at the destination address. Another extra cost to the client.

Another eyebrow-raiser can be the price variances between very similar moves month-on-month.  This is due to seasonal price fluctuations across industry suppliers such as ferry companies, fuel companies etc., who often inflate prices on a supply and demand basis creating price variations which are beyond the control of the moving specialist.

Why do distance and cost not always go hand-in-hand?

You may wonder why it sometimes costs more to deliver goods between countries that are close together than countries that are far apart. For example, delivering the same volume within Europe sometimes costs more than between South East Asia and Europe, despite the far greater distances involved.  On the face of it, it makes no sense. After all, aren’t the costs of packing and loading at origin, and unloading and unpacking at destination, pretty similar irrespective of the mode of transport used? They are – but the difference lies in how the goods are physically transported from A to B.

Goods being delivered between European destinations usually go by heavy goods vehicle. But goods delivered between continents are usually transported by ISO steel shipping containers, carried on container shipping vessels. The huge difference in the carrying capacity of these respective modes of transport translates into a significant unit price differential. The heavy goods vehicle in Europe can carry up to 2.5 TEUs (Twenty Foot ISO Container Equivalent Units), whereas container ships can carry up to 15,000 TEUs (Korea plans to build ships with a capacity of 22,000 TEUs!) At 10,000 times the capacity of the humble HGV, the costs of operating a sea vessel may be very high, but the spread over the payload means that the cost per container, over distance, is very low by comparison.

The different modes of transport are also subject to different fuel taxation systems. All goods vehicles in Europe buy fuel at almost the same prices as the general public pays on the forecourt, which, as we know all too well, is subject to massive amounts of duty and tax. However the marine cargo industry purchases its “red” diesel free of taxation and duty, making marine fuel (which is identical to road fuel) up to 80% cheaper!

Also, the moving specialist has to take into account the much larger capital outlay. A professionally built pan-European specification removals vehicle is likely to cost around £120,000. This needs to be recovered over the vehicle’s useful life span. The cost of running one of these vehicles – fuel, servicing, tyres, road taxes, road tolls, operator licensing, meeting the costs of health and safety and local laws – will come to around £1 per mile travelled, before the costs of the driver’s wages, night out allowances, costs of ferries (UK channel links) and so on.

For all these reasons, using a removals truck owned and operated by the removals company, driven by a professional company-employed removals operator with the requisite HGV licence, will generally be expensive by comparison to sea freight.

However, the HGV truck does have one distinct advantage over a container shipping vessel. It has much greater flexibility, in that it can access pretty much any part of the world with a timetable that it is free to choose (generally the client chooses the timetable). Equally, a truck will deliver goods in a much shorter timescale than using sea freight. For example, you could quite easily move goods from the south of Spain to the UK by container vessel, but the quickest time you can expect to receive the goods may be as much as a month; a truck can do it in 3 days!

Why is it so expensive to insure goods?

With regards the level of premium charged, it comes down to the level of risk being taken by the insurer.  During the removal process, goods that normally wouldn’t be moved are suddenly being lifted, manipulated through narrow spaces, placed in an environment where they are very close to each other (to maximise space during transportation), transported on different types of vehicle (truck, fork lift, container cranes, sea containers, container ships, aircraft etc) on and over lots of different types of terrain and often through massively differing climates. The potential for damage is much greater than normal.

In general, people invest quite large sums of money in their furnishings and personal effects, so the replacement value of such items is generally quite high. Many of these items also have great sentimental value, so where damage does occur most people seek the highest value they can against the insurer. In many cases, any one item claimed for damage may well exceed that of the actual premium charged. The insurers work on the law of averages, therefore the premium charged is an expression of the insurer’s claims experience, their recovery for supplying the service and a margin for profit.

In summary, the reason why premiums are high is because the cost of carrying the risk is high!

No moving specialist wishes to damage or lose any assignee’s goods or belongings, but accidents and incidents do happen, (though fortunately quite rarely). Insurance provides both the moving contractor and the assignee with the confidence that should damage occur, both parties will survive the repercussions.

Success balloons for Robinsons!

We’re fast getting a name for bursting the bubble of convention in the relocation business.

At the recent Totally Expat Show we turned the “Bursting the Bubble” theme into a fund raising opportunity. We invited visitors to our stand to burst a balloon to raise money for Marie Curie.

Each balloon contained a different amount of money – and we are thrilled to say we managed to burst enough bubbles to raise £503 for Marie Curie. As this is such a worthy cause, we decided to match the money raised at the event, making our total donation £1,006.

So anyone who popped along to Robinsons’ stand and burst a balloon for charity can give themselves a well-earned pat on the back.

After the event, it was time to burst some bubbles of another variety! This time, to celebrate our award for “Best Overall Stand”, and runners-up for “Best Stand Design and Appearance (Large Stand)”.

As a company that favours innovative thinking over traditional thinking, we’re never afraid to challenge the norm and offer something a bit different.