There are numerous ways a company can lower its international freight costs through different practices and better supply chain management. Partnering with an experienced and seasoned international freight forwarder, pre-planning, and paying careful attention to the nuances of import regulations in the destination country, are just a few of the ways to lower your costs. Supply chain solutions are easier to find when you are utilizing the right tools and logistic plans.
Pricing the Export
A company’s pricing strategy correlates directly to shipping costs and shipping rates. The export must be appropriately priced not only to sell in the importer’s country but also to account for the freight forwarding costs which is built into the price of the product.
Many times, you can charge significantly more for an item in one country than in another when involved in international shipping. This will help lessen the international freight cost’s effect on the bottom line.
Market research and third party logistics involve traditional areas such as demand and local competition, but other factors include tariffs and customs fees.
Initial Pricing Considerations
Consider more than just competitive pricing in your marketing strategies. Also, consider:
- Federal anti-dumping laws.
- Eligibility for free-market status.
- Flexibility in product designation to reduce custom charges.
You can consider these factors almost like a freight calculator that you use to solve the equation of finding the best pricing. 3PL services can also provide help in determining what the best freight rate is.
Determining the Export Category
The category used to classify an export will often affect the tariff rates and customs fee.
For example, you may be eligible for certain free-trade exemptions, depending on the current agreements between the country of origin and destination. With trade tariffs factoring in a lot to international policy, even more so in recent years, it is in the best interest or your shipping company to pay close attention to what tariffs are currently in place.
Reduce the Amount of Dunnage Used
Many times, shippers use much more dunnage than may be required to protect a product.
Work with your logistics services or freight forwarding agent to determine how you can minimize the dunnage used while still adequately protecting your product for order fulfillment.
Ensure the company’s accounting firm understands the exporting costs and how each relates to accounting.
Taking the correct deductions and using the right accounting strategies that take into consideration all the costs associated with shipping can often make a significant difference in profitability in the short and long term.
Don’t forget about exchange rates, which must be factored in when planning costs of shipments.
Third party logistics services include assisting in managing your paperwork on costs and rates, so utilizing a 3PL can greatly optimize this process and leave more time open for you to focus on other pressing concerns.
If you regularly export products, encourage your customers to place larger orders.
Customers may have concerns about storage costs, but you can offer them a discount on the order based on size.
You can also consider a Vendor Managed Inventory system whereby your client is not charged until the item is placed for sale in the retailer’s establishment.
Although not relevant for larger shipments, small and irregular exporters can take advantage of tax-free thresholds.
These thresholds related to the amount of goods of a certain category a company can ship tax free can change, so a company needs to be mindful of the most recent rulings or law and regulation changes in the destination country.
Shop around for insurance. Don’t necessarily use carrier-offered insurance. Third-party insurers can often save you money when shipping goods abroad.
Choose Your Logistics Partner Wisely
The most significant savings you can make on international freight costs is by choosing the right shipping and logistics company.
Ultimately, the right shipping partner can help a company realize the most savings.
Experienced and seasoned shipping firms have experienced and knowledgeable personnel in place with the right expertise to smoothly, efficiently, and cost-effectively move your goods from country A to country B.
A company’s shipping and logistics partner should handle all warehousing and fulfillment, ocean and air shipping, and drayage.
The logistic partner should have the right connections, not only at the point of origin and destination but also in any transshipping locations, to ensure the client gets the best freight handling prices and service possible.
Keeping international freight costs under control requires regular review by company management.
Schedule monthly or quarterly meetings with the shipping and logistics partner to discuss potential changes that can affect pricing then adjust marketing and export strategies accordingly.