Freight costs account for a large portion of your company’s expenses and with rising fees, you’re likely looking for cost-saving options. As your company grows, your operations will evolve alongside it and there are many resources and tips you can use to reduce freight costs and save you time. Whether you’re shipping internationally, nationally or both, it’s important to do your research and find the best options for you and your company. Ultimately, you’ll be able to save time and money by implementing some simple changes.
Check out the 10 tips below for reducing freight costs:
- Choose the best mode of transportationThis will depend on the type of goods and services you’re transportation and the travel distance, however it’s important to know which will be most cost-effective. Ocean shipping is often cheaper than air, especially if you’re shipping internationally. If you’re shipping closer to home, rail is typically less costly than trucking. Knowing transportation costs will help you to understand the best choice for your company based on budget and deadline.
- Try hybrid transportationYou can use a mix of transportation if necessary. Combinations of air, ocean and ground transportation can prove to reduce transportation time all while reducing cost. You can have the best of both worlds. If air shipping is proving to be too costly for you, and you’re worried about the time it will take for inventory to ship via the ocean, a hybrid transportation plan might be the best choice for you.
- ConsolidationConsolidating goods or services from multiple suppliers in one country might cost you a bit more time in transportation; however, it might be worth it from a costs standpoint. Many smaller shipments, or less container load shipments (LCL), can also be consolidated into larger shipments, or full container loads (FCL) to provide additional cost savings.
- Supply chain visibilityUnderstanding each level of your transportation chain from supplier to customer will help you to better pinpoint inefficiencies and cut excess costs. As well, you’ll be able to react more quickly to problems as they are occurring, saving you time and money in the future.
- Be sure to understand international outsourcing costsIf you’re shipping goods or services from overseas, you could end up facing a variety of costs including duties, brokerage, carrying costs and more. What might have started out as the least expensive option is now rising your freight costs. Buying inventory closer to home might be a more cost-effective solution for your company.
- InsuranceYou’ve spent time cutting back on freight costs. However, your efforts might be wasted if your inventory isn’t insured. Ensure your supplier’s insurance is up to date or that you have obtained the proper insurance to fit your inventory. As well, it’s important to note what your insurance covers so that you don’t spend extra money on shipping premium goods and services.
- Automate where possibleAutomating certain processes and procedures will prevent errors, reduce paperwork and shorten or prevent delays, such as those at border crossings. Doing so will save you money and time, as well as mitigating risks associated with damaged inventory or invoice errors. Performing necessary tasks manually can take up your time and resources.
- Understand express shipping costsIf you experience late shipments due to an issue or error, your company will likely ship that inventory express or priority. You can save money by determining which inventory are needed immediately and send the rest using a standard shipment method, as opposed to shipping all items as high-cost express or priority.
- TariffsIf you’re shipping internationally, being knowledgeable about tariffs can help to save you money. For example, non-tariff trade barriers are set in place to reduce sweat shop labour, and crossing these barriers can cost you. However, you can also manufacture products that fall under classification duty rates and are eligible for special trade programs.
- LogisticsUsing a third party logistics service can insure you shipping procedures and shipping patterns are fully analyzed and you receive ultimate supply chain management. This can significantly reduce costs and save you time. As well, the insights you’ll achieve from using a third party logistics service will help you to better plan the economic future of your company.
Freight costs are a significant part of your company’s expenses, so it’s important to keep the above 10 tips in mind to maintain your competitive edge in your market. Choosing the best mode of transportation for your company and inventory, consolidating multiple suppliers or loads, automating certain procedures, improving supply chain visibility, researching outsourcing costs and tariffs and adding proper insurance are all ways to help you save money. However, having a third party logistics company can help you to better grasp the day to day procedures of your company’s freight and ensure you can get focus on doing your job.