Freight charges make up a sizable portion of your business expenses if you transport commodities. You may save costs by selecting the most cost-effective mode of transportation for your business, comprehending how cargo is transported through the supply chain, and increasing supply-chain visibility.
- Don’t categorize every shipment as urgent
Whether you’re shipping internationally or nationally, it’s important to do your research and find the most cost-effective option. Ensure that your logistics supplier is aware of any recent or future market developments, such as a general rate increase (GRI) or upcoming unexpected market changes. Overall, make sure you are informed about the market; scheduling your production ahead of the peak season of the year and sending your cargo when the cost of freight is lowest will help you save a lot of money.
- Buy FOB
When you buy FOB, you control the freight and freight cost. With CIF, your supplier is arranging freight at the destination. If the supplier pays the freight, they will add the cost on top of the selling price. Why not take control of the freight since it will be part of your landed cost?
- Choose the right transportation method
Combinations of air, ocean, and ground transportation can prove to reduce transportation time while reducing cost. It’s crucial to pick the transportation method that would save you money and time. Air, ocean, truck + air, and ocean + rail are the most widely used modes of freight transportation. To guarantee you are sending your goods for the least amount of money overall, go over these possibilities with your logistics partner.
- Consolidate your cargo
This is crucial if you are purchasing modest quantities of goods from many suppliers and if none of them has enough orders to fill a container. Your logistics service provider may combine the goods from numerous suppliers into a whole container load at every origin port. By doing this, you may maximize your container load and avoid shipping LCL.
- Ship FCL and try to avoid LCL
If you don’t have enough cargo to fill a container load, LCL is commonly utilized. You share the container with other importers once you ship LCL. Due to the necessity of taking the container to a container freight station (CFS) to be divided, there are additional fees. Based on how much cargo you have, there is always a breaking point where an LCL or FCL shipment may be less costly for you.
- Work with a reliable logistics partner
Make sure you are working with a reliable logistic partner that is securing the best prices and equipment. Make sure they have a lot of connections, and more options to find your best alternative option, and get your cargo shipped in a cost-efficient way.
- Work with logistics companies who can provide supply-chain visibility
Supply-chain visibility aims to enhance performance and lead times. You can respond to problems faster if you have visibility at every stage of your transportation chain, from suppliers to customers. You’ll ultimately save time and money by doing this.
- Ship More, Less Frequently
Encourage larger orders or bulk purchases from your customers to save on shipping expenses. To promote buying in bulk, try including advantages like free delivery on purchases over a certain threshold and providing extra benefits. The same idea applies if you’re working with retailers. To reduce total expenses and operate a more profitable firm, provide them with additional incentives to place large orders. The cost of shipping your goods shouldn’t be unreasonable. Avoid falling into the “this is how it’s always been” trap. Make an effort to cut expenses and increase overall firm profitability. Utilizing the most cost-effective mode of transportation, the same carrier, and load boards are all straightforward solutions that may significantly save costs.