Since the resumption of sales earlier this year brokers have started cataloguing more than one storage location on the same catalogue page. When wool selling regulations “existed”, this was not allowed, however in November 2011 NASC have approved cataloguing in this manner – refer NASC minute N32/11/8 http://bit.ly/AE5TTs.
To enable buyers to better understand the implications we have prepared a summary of issues for further discussion.
- Catalogue Pages and Sale Identifications We will refer to the ‘same page’ as is the current practice of only printing a new page when the broker’s catalogue page alters. Whilst it has been a tradition to print a new page when the sale identification changes, the above means that a new page will be printed only when the selling broker indicates a new page. For example we may have a page of lots with an initial sale defined as M32G (Melbourne Sale 32, sale storage location of Geelong), then M32M but with the same page number. This is because a buyer will not print multiple pages for each location as they do not want to be ‘out of step’ with the auctioneer. Of course we may need to be aware that there is nothing stopping a broker selling ‘under’ sale identifications of – say – M32M but with a storage organization of Geelong. So it may simply be a matter of removing the redundant sale storage location suffix.
Of course this only applies to those brokers who transmit a page number. Those that do not will have the traditional practice applied – refer WIEDP standards.
- The change just reflects an existing practice! The NASC decision was merely a decision to enact what brokers were already doing, but not correctly presenting at point of sale. It is our understanding that the decision was primarily designed for situations where a broker ‘cored’ a clip in one location, then for reasons such as lack of storage needed to move individual lots to another location. However the broker wanted the clip presented in the catalogue ‘as one’; that is, the clip was not to be ‘split’ over several pages. For example, a clip may be received and cored in Geelong, but one lot moved to Melbourne. It should be noted that previously, at the time of invoice the correct storage location was defined. This opens up an issue should there have been an insurance claim post fall of the hammer; as it is then that the lot transfers to the buyer, not upon receipt of the invoice.
- Precedent implications! There are now no constraints on this practice, and therefore there are no restrictions on brokers selling SxS lots on the one page. For example, it is now possible for brokers to sell – on the one page – Melbourne lots, with Brisbane lots, with Freemantle lots etc. Some of the implications of this decision follow.
- Multiple PSC costs per storage location. The current practice, in the above scenario, is to apply the PSC (Post Sale Charge) of the ‘cored’ location to the lot, not the storage location of the lot. For example, a lot cored in Geelong but then moved to Melbourne for sale will have a Geelong PSC charge. If this is the case then it is questionable that the charge is in fact a “post-sale charge” – that is charges solely attributable to costs “getting the lot to the buyer”. It is more likely that the costs are associated with the selling/coring location, not the delivery location. It is also unlikely that brokers will change this practice, or buyers have any influence on these costs, so it may be better to revert back to the previous definition of the charge as a “buyer’s fee”; and buyers continue to educate the growers, and mills, on how they discount for these wools. As the PSC is no longer based on the storage location, the implications are that we may see PSC charges based on various factors, possibly even clip based PSC’s, or wool characteristic charges, etc.?
- PSC Tracking and verification. Most buyers monitor brokers PSC to ensure they are ‘converted’ to a bidding prices discount/premium. That is, there are discounts and premiums applied to the greasy bid price based on the PSC, freight costs, storage location performance/quality costs etc. Whilst it has always been the practice to monitor these charges, it now becomes somewhat more difficult; to the extent that all lots will now likely have conservative charges built into the buyer’s bareme to the detriment for the grower. Whilst most buyers record the actual PSC cost against each lot, buyers also commonly apply additional PSC premiums to allow for additional freight, locations performance costs etc. It is not uncommon for broker to ‘accidentally’ have a wrong pre-sale PSC and then correct the charge upon invoice. Hence the buyers usually have record the minimum PSC for a location. The PSC tracking and verification processes will now require far greater sophistication should the above implications be enacted.
- Storage Organizations and EDI Codes It has become apparent that some brokers did not realise that every individual storage location must be recorded/approved by AWEX/EDI standards. Apart from the legal/insurance issues, buyers must have the actual valid storage organization recorded in the catalogue transmission to enable appropriate bid strategies. The current ‘review’ has identified storage locations not currently covered by EDI codes!