Don’t get excited, there is no discount coupon or promotion code at the end of this article, but I am offering some suggestions to importers to save on freight.
Keep up with the market trends
What is the current freight market trend? What should you be aware of the current market? Make sure your logistic provider is informative with current and upcoming market news, such as a general rate increase (GRI) or upcoming unexpected market changes. For example, there are times freight rates reach their peak season, like prior to Chinese New Year. This is the time where all ocean carriers works with full capacity, since many importers rush their goods before China closes for a long holiday. It is like buying a flight ticket at Christmas time. The same flight will be cheaper any other time of the year.
This is why you should be aware of the market; managing you production time before peak season and shipping your cargo when the freight rates are lower can save you a lot of money.
The more boxes/product you load in an ocean container, the less you pay for each product. You pay for the container, so why not load as much cargo as you can fit inside (within container weight limit of course).
The 4 most common container sizes used for ocean transportation are 20/40/40HQ and 45hq. The most common used container type is 40HQ. Here is the typical estimated CBM you can fit in to a container:
- 20” – 27 CBM
- 40” – 57 CBM
- 40HQ – 67 CBM
- 45HQ – 78 CBM
Ocean carriers charge per container from point A to point B. Since you already paid for your container, maximize the space you use. There is a small ocean freight cost difference between 20 and 40”/40 HQ. Using 40HQ container instead of 20” is a big savings, since you can double the product you are loading with a small cost difference.
Once you buy FOB, you control the freight and the freight cost. You will have a better chance to gain a more competitive rate. If your term is CIF then it is your suppliers responsibility to arrange the freight to the destination port. If the supplier pays the freight, they will add the cost of transportation on top of the product selling price. Why not take control of the freight since it will be part of your landed cost!
Choose the right transportation method
International transportation can be a complex mode of serious shipping or it can be a simple way of moving the cargo from point A to point B. Choosing the most cost efficient and timely transportation mode is critical. Most common ways of freight transportation are air, ocean, truck+air, ocean+rail. Discuss with your logistic partner the different scenarios of shipping your cargo to meet your needs in the least costly method.
Consolidate your cargo
This is important if you are buying small amounts of products from different suppliers and if each supplier doesn’t have enough orders to fill a container. At every origin port your logistic provider can offer a consolidation service where they can club various suppliers’ products into a full container load. This way you can avoid shipping LCL. (see below why LCL is costly) and you can maximize your container load. Sometimes it is beneficial to ask one of your suppliers to truck the goods to a different location where you have the most cargo shipping and consolidate with those. While you are paying extra on trucking costs you might save big on ocean costs by avoiding LCL loads. Your forwarder can always guide you with such of freight cost calculation.
Ship FCL and try to avoid LCL
For some cases it might not be possible to avoid shipping LCL. LCL is commonly used if you don’t have enough cargo to fill a container load. Once you ship LCL, you share the container with other importers. As a result, there are more add on costs since the container needs to go to a container freight station (CFS) to be split. Make sure to discuss this with your logistics partner. Based on how much cargo you have, there is always a breaking point where LCL or FCL shipment might be less costly for you.
Work with a reliable logistics partner
Is your logistics partner securing the best pricing with truckers, air freight companies and steamship lines? Does your logistics partner have multiple ocean carrier contract? If your logistics partner has more than one carrier option then the chance of your cargo getting on board in the most cost efficient way will be higher. Your logistic partner can always find an alternate option if they have various carrier contracts.