Supply chain, transport and logistics expenses make up a considerable proportion of the cost of goods and any reduction has an immediate and profound impact on the bottom line.
Shippers can take positive actions that will cut their costs with some planning.
Check out our ten tips for reducing freight costs.
1. Plan ahead
Last minute shipping to hit a deadline is always expensive. And – in accordance with the simplest of equations – the shorter the deadline the more expensive the freight becomes.
Direct air freight can be more than three times the cost of sea freight.
By keeping on top of your order book and planning in advance you can avoid overpaying and be more flexible in terms of choosing a carrier and tariff.
2. Vendor management
Keeping in touch with your vendor to monitor production and order availability means you will have transit flexibility and enough time to select the most appropriate transportation method.
Work to a two-week cargo booking lead-time
3. Sea Air solutions
Even when deadlines are pressing don’t assume that air is the only option.
Unless the goods are absolutely required for delivery within 24 hours there will be opportunities for you to mitigate the cost of transport.
Depending on the absolute final delivery date, it will be possible to use less expensive air freight options, or fly them a portion of the journey, then load them onto an ocean vessel for the rest.
The result is fewer air miles and lower freight bills.
4. Take advantage of DC bypass
Clients increasingly use our de-consolidation centres to direct-ship smaller loads to customers, reducing transport expenses to, and handling charges at, their own DC’s.
5. Consider multi-vendor and multi-country consolidation
Small groupage consignments, especially those that incur ‘minimum’ charges are the most expensive and inefficient movements.
We can work with you to investigate opportunities to consolidate orders from your vendors to make larger and less frequent consignments.
6. Container utilisation
Utilisation planning is reliant on the dimensional data being provided.
Double-check the accuracy of packing measurements by physically checking received cargo against pre-advise from the vendors. We can use the refreshed data to run improved container cube utilisations.
It is also worth talking with us about opportunities for minimising packaging to enhance utilisation.
7. Commodity codes
Check what commodity codes are being provided to HMRC to calculate VAT and Duty to ensure that they are not outdated, or that other more generous classifications are not available.
You should also make a point of regularly checking GSP availability for your sourcing regions.
8. Control your supply chain
Your suppliers role is producing product not negotiating shipping rates, so do not assume that you are getting a good deal. The chances are that you are not.
If you buy on a ’delivered’ basis, you have no control over timings, cost or efficiency.
You should consider buying on terms like Ex Works and FOB that give you responsibility for managing and optimising your inbound supply chain.
9. Controlled procurement.
Running your own supply chain will give you a singular, focused freight procurement effort that also paves the way for analytical, strategic, and relational advantages that you cannot achieve by advocating responsibility to suppliers.
10. Continuous improvement
We can help you to review vendor and shipping performance, to strip out inefficiencies and drive economies.
Ticking off these Top Tips will provide more control over all supply chain activity, better optimised transportation, an ability to track costs, and an enhanced ability to negotiate more effectively.