As the world deals with new challenges every day, the international shipping industry has to get smarter and more creative with their routes. Ocean, air, road, and rail freight all play an essential role in getting your goods to where they need to be, but making the right connections at the right time requires significant logistical work.
Importers and exporters must balance cost, speed, reliability, and other factors when deciding on carriers and routes for their goods. Doing all of the research and logistics for shipping can seem overwhelming, especially for smaller companies or new entrepreneurs.
Many variables affect the final cost of shipping, and understanding them is the first step to making smarter shipping choices. Partnering with a reliable and experienced freight forwarding company can reduce the amount of time and energy you spend on freight logistics.
One of the biggest factors influencing freight costs is supply and demand. In the months leading up to Christmas, ocean freight costs increase dramatically, and air freight also increases in the last few weeks of November.
Since seasonal products start shipping in October, ocean freight rates increase the most during October and November. However, this has a ripple effect on other shipping, causing rates to increase as early as August.
If you want to avoid peak season rates, focus on doing as much of your shipping between January and July. As long as you avoid the small surge in pricing just before Chinese New Year in February, you’ll likely save money, even if it means having to store goods a little longer.
Keep in mind that other factors can drive up rates as well. Global events and threats of increased tariffs can send suppliers scrambling to ship goods as quickly as possible, driving up demand. Naturally, these events can be hard to predict, but you can work with your freight forwarder to figure out ways to mitigate their impact.
Sending boxes in palletized form requires a little more labor up-front, resulting in significant savings in shipping. Freight carriers try to reduce their labor and handling costs as much as possible, and having to deal with individual boxes saves them time and money. They typically charge slightly more for depalletized items than for the same weight in pallet form.
Also, make the tops of your pallets as flat as possible. Having a pyramid-shaped or otherwise uneven top may result in your shipment being charged extra due to the unusable space above it.
The overall density of your shipment matters as well, since shipping companies will charge higher rates to high-volume shipments even if they weigh very little. Although some goods will inevitably be assigned to more expensive freight classes, you may be able to keep your rates slightly lower.
If you’re importing goods that will be resold with bulky packaging, consider assembling the packaging after the goods have arrived at their final warehouse. Consulting with an experienced freight forwarder can help you figure out the right way to import your goods.
Use Contract Rates
If you ship goods regularly, your freight forwarder may be able to set you up with a contract rate. Contract rates are essentially a bulk discount on shipping, in which you are granted a preferable shipping rate if you ship a certain amount of goods over a set amount of time. Usually, contract rates are good for one year and can be renegotiated between each contract.
Contract rates may not be the best option for you if you ship items irregularly or frequently source from different locations. However, they can be helpful for established businesses that have regular supply chains. LTL carriers that work with your freight forwarder may be able to offer especially generous discounts, since they want to keep their container logistics as simple as possible.
Understand LTL vs FCL
Shipping companies like being able to move an entire container’s worth of goods. They will usually charge slightly less to sellers who pay to ship the entire container, rather than just pay to include their goods in a small portion.
This practice is known as Full Container Load (FCL) shipping rates, and it’s a good way to score a discount on shipping even if you’re not quite using the full container. If you can consolidate shipments so that they take up most or all of a shipment container, the per-pound or per-item shipping cost can be much lower.
Less than Container Load (LTL or LCL) shipping rates are slightly higher by weight and volume to account for the labor and administrative costs associated with combining shipments into one container. LTL freight rates are still a good option for shippers sending small quantities, but they should be avoided for larger shipments.
Get Spot Pricing
Shipping companies generally use the same rates for all customers, but occasionally, they can provide spot rates. These special deals are one-time discounts and are usually only for very large shipments of 5,000 lbs. or more.
This is especially true for backhaul routes, which are return routes that frequently run with little to no cargo. Trucks, planes and even boats sometimes have an imbalance of goods moving in one direction versus another, and will often give discounts for goods traveling in the less-used direction.
Your freight logistics company will know about these routes and can negotiate with a shipping company to secure a discount. A good freight forwarder can advise you on what quantities are needed and where to ship to get the best spot pricing during certain times of year.
Air freight costs can add up quickly, and should be avoided except for perishables and other items that truly require fast shipping. For general goods, planning and communicating further can make it easier to take advantage of ocean FCL rates, lower seasonal rates, and contract rates.
Naturally, market forces can change at any time, so it’s not always possible to plan orders and shipments. But even small changes in planning can help you avoid LTL shipments and other measures that cut into your profit margins.
In some cases, planning may require you to think critically about how much storage space you can get in the U.S., and whether the cost to hold that space is cheaper than the cost it takes to ship things on short notice. If you’re always ordering items just in time for manufacturing or delivery to customers, consider rethinking your schedule to take advantage of slower yet cheaper shipping options.
Using the Right Freight Forwarder
Freight forwarders need experience and relationships with shipping companies in order to get you the best deal possible. An inexperienced freight forwarder without connections all over the world won’t be able to get you the best deals possible on shipping.
Freight forwarders will know the freight markets’ specifics and which base rates and regional carriers actually work for your route. In some cases, regional shipping companies will be more expensive than national or international ones, because local companies may have to transfer the shipment to another carrier midway through.
A good freight forwarder needs to be transparent with you about fees, customs broker charges, fuel surcharges, and other costs for each freight shipment. This transparency and honesty is essential to accurate budgeting and management.
Logistics and Supply Chain Solutions
New and veteran trading companies are facing unprecedented challenges. You need a world-class team of experts to get you the most reliable shipping at the lowest freight forwarder will have the advice and connections you need for your business to succeed.
Asiana USA is an experienced freight forwarding company with a full team of customs brokers, shipping agents, and other professionals who work around the clock and around the world. We can handle everything from bills of lading and other documentation to the final drayage needed to get goods to your warehouse.
Our solutions can be customized to suit your needs, whether you ship regularly or have an irregular ordering schedule. Contact us today at (855) 500-1808 to learn more about how we can help or request a quote.