Hidden costs II - how to read a fine art shipment estimate with understanding

In the former post I was giving you advice on how to enquire an estimate, so that your agent can calculate the costs as accurately as possible and what factors can significantly influence the final charges. 

Today we'll be dealing with the second part of this topic: how to correctly read a fine art shipment estimate and understand what actually means what.There are some insider expressions used in estimates that for less experienced clients may be misleading -  the explanations below. 

Good luck with tracing the hidden costs in your estimates - hope it will save you some unpleasant surprises :) 

„all charges net”

• even if it is not explicitly mentioned, assume that the charges you receive are estimated net. To agents and the vast majority of their clients the VAT is irrelevant, as they are either entitled to VAT deduction or based in another country. If you need the VAT and the gross total to be indicated on the requested estimate, let your agent know. Please note that if the invoice's payer is a private person based in an EU country, they will be charged a gross total, according to VAT rates valid in the agent's country! (see also my post about the VAT)

„if nedeed”/ „if requested”

• read the estimate carefully and see, if all services you needed are included AND if there are no services added that you didn't ask for (like supervision, climate controlled crate etc.). Some services are offered „if nedeed”/ „if requested” and their prices have to be added or substracted to the total. Do not be surprised, if your final invoice is suddenly much higher, after you asked „the nice art moving gentlemen”, if they could unpack your new art work and take the crate back, cause you do not need it anymore. Whereas „the nice art movers” are usually nice indeed :) and obliged to deliver parcels to where the client wishes, please note that unless indicated, estimates usually do not include unpacking, installing and crate disposal. It is because most of our clients do it themselves. Besides, environmentally friendly disposal of used crates it not cheap (!) and crates can be re-used, if a work of art travels to a fair or an exhibition anyway.

„if necessary” / „if required”

• there are some services that may turn our necessary after the project has already started. It may e.g. include an extra customs inspection, which is almost never the case, but the customs are entitled to require it anytime they wish. As you can imagine, is quite time consuming to bring a crated art work to the customs office, unpack, let it be inspected, pack and bring back. Therefore, the phrase „if necesary” gives agents, who are obliged to execute this action but have no influence on wheter it occurs or no, the possibility to invoice their extra efforts.

"on hourly basis", "by consumption", "by effort" etc.

• some services, like packing, loading, unloading, warehouse handling etc. are offered on hourly basis, by consumption, by effort etc. If the information you provided while enquiring the estimate was exact and your agent is reliable, there should be not much dicrepancies. It may seem like such open, unspecific expressions leave a lot of room for manipulation or amendments; well...they do. But they have to! It happens frequently that a client, eagerly accepting an estimate, „forgets” to mention that e.g. they live in a street that is not accessible for cars this week, in the second couryard, in the third floor and the elevator has just broken down. Or the painting he/she has just finished yesterday is not dry yet and needs to be packed in a much more sophisticated way than originally planned. In such a cases, the time and effort originally calculated for this client increase rapidly and have to be invoiced, especially if it causes delays by other clients. If you are comparing several estimates, try to find a „common denominator”, like the price for an art mover / hour or for a roll of bubble wrapp. You can also simply ask for their price list of packing materials – it will tell you a lot and make it possible to check, if your invoice is issued honestly and correctly.

„insurance not included”

• this is a phrase which often outrages new clients:„It is brazen of you! Do you know how much this work of art is worth!? (Here comes usually quite a small amount, as owners of really valuable art works are more familiar with the market... :) Who is going to pay, if it gets damaged during the shipment? Are you not insured? Is it legal at all?” Of course, the goods transported by us are insured, as it is legally required. However, the maximum liability according to German law (§ 451e HGB ) is 620,00 EUR / cbm. Not too much, if you claim that this damaged piece of paper with 3 dots in pencil used to be actually worth 2 Million EUR :) As determining the value of an art work is highly subjective and speculative, and its material costs are in most cases objectively lower than these of crates and frames :), our clients are kindly requested to care for a suitable insurance policy themselves or ask us to arrange it for them. Insurance polices' prices are based on the declared values, destination and technique (glass and ceramics are much more expensive) and are usually well affordable.

"Total till JFK" / "delivery Madrid Int." / "delivery sea port Sydney" / "DDU Zurich" etc.

• Make sure that the estimate you receive for a shipment to a non-EU country also includes import customs clearance in the country of destination and, applicable by shipments via sea and air freight, sea/airport handling and final delivery costs. These costs are usually included in a separate quote by a local partner of your agent, are forwarded 1:1 to the client and they may be subject to a prepayment provision (see below). I have experienced many clients who were surprised by the fact that a shipment doesn't end upon landing and has also a „second part” in the country of destination. Even by road, if a shipment involves non-EU countries, goods may be delivered by the same agent who collected them in the EU, but have to be customs cleared, which inevitably requires a foreign agent to be engaged! In German we have a nice word for it: Nachlauf :)

"MPF not included" / "import charges to be determined" / "bond fees based of value" etc.

• Please note that estimates usually do not include the import VAT (nor American MPF) – it has to be paid by the buyer / final consignee and agents have no influence on its amount. The percentage of the declared value or information on how it is going to be accessed, should be though included in an estimate. Please do not assume that the import VAT is already included, if it is not explicitily stated on the estimate → leads to inevitable disappoinments :)

"provision on initial costs" / "provision on prepayment"/ "money transaction costs" etc.

• these costs apply when your agent has to prepay some charges before they can be invoiced to you. For example, when import fees have to be paid immediately or during import shipments. Let's imagine, you commissioned your agent to bring 5 large paintings from Tokyo via air freight. Your agent, if not located in Japan, has to organize this shipment in coordination with their local, Tokyo based partner, who will collect the works, construct a crate, prepare all the paperwork and ship them to the requested airport abroad. Your agent will shortly receive an invoice for these services and, as the commissioner, will be obliged to settle this bill, regardless of when (and if at all) you will pay for the whole shipment. As a reward for this risk and for „lending” you this amount of money for some time, as well as to cover costs of international money transactions and currency exchange charges, a provision of several percent of the transaction's value applies , usually between 3% and 10 %. If you are befriended with your agent, you can ask them to arrange for direct invoicing between you and their foreign partner agent – that will save you the prepayment provision but you'll have to cover money transaction costs yourself.