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. 

Hidden costs I - How to cleverly enquire a fine art shipment estimate

It has already happened to each of us – we enquired an estimate for a certain service, we received an estimate and still the final invoice turned out to be an unpleasant surprise. 

First rule, which is valid for all business branches: always compare the invoice with the estimate! If the total differs, it may not always mean that the vendor is trying to cheat on you. It may just be a miscommunication between the person who prepared the estimate and the one who issued the invoice. Or possibly there have been extra circumstandes. But in many cases the reason is the discrepancy between what each of you meant and what the other party of the transaction understood.

I would like to give you some hints on how to enquire estimates for fine art shipments in order to avoid dissapoinments upon receiving the final invoce. Or at least to have a solid base for a succesful reclamation :) 

• Before sending, think your enquiry over and decide what kind of service do you really need? If you are not sure, what the possible options are, ask your agent for advice.
• Always communicate in writing. Even, if some arrangements have to be talked over on the phone, write a short „to-sum-up” email – for the record. It may save you a lot of money, in case something goes wrong on the agent's side.
• Ask for itemised charges so that you exactly know what services are offered according to the estimate. Please note that there are some charges that cannot be 100 % reliably estimated, but the more exact the information you deliver, the more precise the enquired estimate should be. If it already occured that you were surprised by your agent's final charges, insist on getting the details of your enquiry (like dimensions, package, weights, deadlines etc.) noted directly in the estimate. It leaves less space for manipulation.
• Provide your agent with all the relevant details about art works, conditions and circumstances of the shipment. If anything changes, inform them immerdiately and ask for a revised estimate. Again, it leaves less space for manipulation while invoicing. There are of course unlucky coincidences and unexpected changes, but the lack of proper information, like wrong dimensions (!!!), is the most common reason for extra charges, so be careful and precise - it does matter!

Here examples of some less obvious situations, in which I had to bill extra charges to a client:

• A painting that our art movers came to collect from an artist's studio was still wet. They spent an extra half an hour building a provisory shadow box around it. Then, a transport frame had to be constructed, which significantly increased the volume of this art work and consequently also the air freight charges.
• An art work was to be collected from a backyard but the gate was too low for a truck to drive through. Art movers had to carry the collected art works or roll them on skates for several hundred meters. Extra time, extra effort.
• A client enquired an estimate for an export shipment of several art works not mentioning that some of them were bonded. Bonded items require a separate customs clearance, a transit paper and most often an on-site inspection at a customs office. This means ca. 300-400 EUR extra right away.
• A client enquired an estimate for an export shipment of several art works not mentioning that not all of them are being shipped by the same consignor. For each consignor a separate customs clearance has to be submitted, and thus my charges for customs clearance multiplied.
• A client enquired an estimate for a consolidated transport and then demanded a delivery on a certain day. Consolidaded transports are offered when one or several clients already cover most of the costs for a ride to a certain destination, and the one who pays the most, can determine the delivery date. That means, if you are not the one who pays the most, you have to wait for a suitable opportunity or look for another option.
• Our client was the loaner of an art work and the invoice payer but the lender was the one determining the terms. It turned out upon collection that the art work definitely needed to be packed in a more sophisticated way than enquired and estimated. The object was one of Tomas Saraceno's spider web works – an extremely fragile one: just a spider web span on a branch of a tree. The lender demanded a customised crate, cushioned with dark foam, so that the whitish web could be easily seen while handling. Whereas we found this requirement fully justified, the loaner absolutely refused to pay for the requested crate, accusing our art movers of being „unable to properly do their job” by means of soft-packing materials. It took forever to find a compromise and needless to say, our charges rose.
  This is a very common case among museum shipments. Often these are lenders, who demand expensive, exaggerated and often simply redundant solutions but in the example above it was our client, who neglected checking the details with the lender and then acted unfair towards all parties involved. Again – simply lack of accurate information.

As you see – precise information is crucial for us, agents, to prepare reliable charges, which can be invoiced 1 to 1 when the project is over. The next post will be about reading estimates with understanding and recognising hidden costs! XXX

Why are fine art transports so expensive? The basic question

I can imagine that when a freshly employed registrar sees an estimate by a professional art handling agent for the first time, he or she is just heavily shocked. Why is it so crazy expensive? The agent surely wants to rip us off! It just can't be! 

 In many cases a professional fine art transport with all its extras is simply unnecessary and far too expensive indeed. Here an illustrative, slightly exaggerated example: A small, inexpensive framed drawing or sculpture will be travelling through a city almost equally safe  wrapped in a towel and carried in a rucksack on a bike courier's back, as it would on board of an air-conditioned, alarm-secured fine art truck with an extra spring system and two trained art handlers as drivers.

On the other hand, the transported volume affects often only the time of handling (pick-up, loading / unloading, warehouse handling) whereas the costs of the tranport itself, like leasing rates (or usage and insurance) of such a specially equipped truck, 
two art handlers per hour or petrol consumption stay the same, irrespective of the transported volume.

Consequently, it is crucial to recognise what kind of transport and packing is actually needed: A consolidated city ride and a bubble foil wrapping? A dedicated fine art transport and a T-frame? Or maybe a shipping via airfreight, with a courier assistance, supervision at the airport and a climate controlled crate?

As you suppose, the price for the transport of one and the same art work may span from several tens up to several thousands EUR, depending on how precious it is to its owner. It is good to remember that expensive services of the high-ranking art forwarding agents are meant for the most fragile and valuable art works and might just not be necessary in all cases.

And here an example of how you definitely shouldn't transport your art works - spotted accidently on a bus today :)

experimental art handling :)