5 Ways to Reduce Freight Costs
All business owners know that shipping, freight forwarding, and other types of related logistics services can eat up a huge chunk of their budget if they rely on a third party vendor for the transportation and delivery of their products.
The annual total cost for these services can even go higher if companies use these solutions frequently and do not choose the best service providers to work with.
However, in the busy world of the smaller enterprise, shipping tends to be seen only as a means to an end, and as a result, does not get the same degree of attention as other areas of business. It does not have to be this way though, and even small reductions in freight rates add up to a considerable increase in profit over time.
Ship for Success by Avoiding High Freight Charges
If your company can begin to take a strategic approach to freight rates and other transportation costs, rather than considering logistics only out of necessity, you can reduce overall costs, improve customer service, and essentially turn logistics and distribution into a competitive advantage for your business.
The following five tips will help you to take some first steps in reducing your shipping expenditure—an important consideration if you really want to ship for success:
The best way to start saving money on your freight costs is to know the rates different service providers offer. Be on the lookout for companies that offer low or discounted freight rates, bulk shipping rates, or have special promos.
But before you choose the service provider that offers a budget-friendly rate, read up on the company as well.
Make sure they have a good reputation and are operating legally. You will do well to choose a service provider that has been operating for a number of years now since they already have the expertise, experience, and means to deal with all kinds of shipping issues.
2. Pick the most cost-efficient mode of transportation
In general, ocean shipping is more affordable than air, especially if you are sending your products internationally. If you are shipping something locally, rail is often less expensive than trucking.
Once you have an idea of the going rates, find out if the freight forwarding company can deliver your products in good condition and within the given timeframe. This will help you select the best option for your company based on your budget, requirements, and schedule.
3. Plan your freight forwarding needs in advance
Last-minute or rushed shipping to meet a deadline always costs more. Keep in mind that most freight forwarding companies will always charge more when they are given a shorter deadline.
Because of this, it is important that you always stay on top of your order book and plan in advance to avoid overpaying. When you plan in advance, you will also have more options in terms of choosing your service provider, mode of transportation, and tariff.
4. Rethink your packaging
Another tried-and-tested way of reducing freight costs is to consider the packaging for your products. If you are currently using bulky boxes and containers, they will take up more space on an LTL (Less Than Truckload) truck.
Start by getting rid of features that are not needed in your current packaging or things that do nothing to keep your product safe and sound. If possible, package your product in square boxes that can be easily stacked to avoid wasting cargo space. By doing so, you will be able to fit more products onto each pallet. You will also save time on loading and unloading your items as well.
In addition, it is also important to note that insufficiently-packaged shipments can suffer from insurance claims due to loss and damage. They can also be subject to accessorial liability. As such, even if you are modifying your packaging, make sure it will still be properly protected and secure.
5. Consider hybrid transportation
Even if you are trying to beat a deadline, do not immediately assume that air freight is your only option. If your product does not have to be delivered within 24 hours, you can mitigate the costs of transport.
In most instances, you can use a mix of transportation. A combination of air, ocean, and ground transportation can reduce transportation time and lower costs at the same time. For instance, you can use a less expensive air freight option to fly your products a portion of the way then have them loaded onto an ocean vessel or truck for the rest of the journey.
Shipping your products should not be tantamount to paying for each service with an arm and a leg.
By following the tips above, you will be able to reduce your freight costs and, at the same time, meet your customers’ demands and expectations, and maintain an impeccable reputation.
The result is a business that is more profitable and ultimately, more successful, which is why at Shipa Freight, we believe SMEs can be more competitive if they ship not just to meet a need, but instead apply the effort and attention necessary to ship for success.
Toby Edwards is the CEO of Shipa Freight and is based in Dubai.
Shipa Freight is a new online platform powered by Agility that makes it easy to get air and ocean freight quotes, book, pay and track shipments online. Shipa Freight empowers small and medium-size businesses, taking the complexity out of International Freight Forwarding, making it easy to manage legal, regulatory and compliance issues, and offering convenient ways to pay to move their goods.
Having led Shipa Freight from 2016, Toby originally joined Agility in 2007 and worked in a number of different marketing roles, with has last role as SVP of Marketing for Agility’s Global Integrated Logistics division. Prior to Agility his roles included working in a shipping line, global telecoms company, and research and consultancy.
Toby is passionate about how technology can be used to improve existing ways of doing business and how it can drive new processes and productivity and enable companies to compete on a global scale, while creating value for all stakeholders.