In today’s world, reducing your shipping costs is a key part of success. It doesn’t matter much which category your business falls into, the result is the same.
The less money invested in the total cost of a product, the more you save and can pass those savings on to your customers, without losing money. Offering a better price than your competition, without taking a hit gives you an advantage and helps ensure success.
If you want to reduce the shipping costs associated with exporting your goods, look no further. Below we’ve laid out the key things to keep in mind in order to lower your shipping costs when importing products from China.
Plan Before You Ship
That’s right, every aspect of a successful business begins with a plan. This includes logistics. Major holidays, like the Chinese New Year for instance can negatively affect the cost of shipping and at times, delay your shipment too. However, even when there isn’t a holiday approaching, last minute shipping always costs more, a lot more.
If you find yourself requiring a last minute express freight shipment, you’ll be charged extra. Planning your inventory and shipment needs ahead of time will benefit you by allowing time to secure extra storage space if needed, open opportunities for shipping discounts and give you time to research logistics options, choose a suitable transportation method and be more prepared.
Choose The Right Shipping Provider
At this time there are 5 key players in the business of international shipping, by name they are FedEx, UPS, DHL, TNT and EMS. You may be most familiar with the first 3 on that list, this is mainly because they are the most popular.
Each of these logistics companies have their pros and cons, but when it comes to decent prices, reputation, delivery speed and guarantees, FedEx is the winner. This doesn’t mean you should automatically choose the provider with the best reputation, your company’s individual import needs will vary.
Take the time to research all of your options, compare shipping methods, prices, insurance terms and delivery guarantees to be sure that you are choosing the best fit for your needs. Quality shipping services will give you the upper hand when it comes to expanding your business and treading the waters of the international market. Remember to keep these key things in mind when choosing:
- Your shipping destination
- Product material
- Average order size
- Your shipping lead time
- If you need a tracking service (Is knowing where your shipment is important?)
- Shipping prices
Common freight fees to keep in mind:
- Trucking and docking fees
- Ocean freight fees
- Customs fees
- Handling fees
Condense Your Packaging
Freight charges are most often determined by the weight, or in some cases the volume of the packages you are shipping. If your packages are larger than needed, you’ll be paying unnecessary costs for that wasted space, in more ways than one.
Not only will you be wasting money on product packaging material, but you’ll be wasting money on cargo space that is only housing air. The more you can fit in a given space, the less you’ll pay. It’s a basic concept, but it’s not always easy to accomplish.
Unless the product you are importing is especially fragile, or prone to damage, opt for the lowest rating of packing material, think less packing peanuts and less unused space in the box.
Another way to optimize your packaging and reduce shipping costs is to consolidate items. This is done by combining smaller quantities of different goods together, to create less shipping mass.
This method works best when you import a range of different products. You can usually opt for this style of compact shipping by contacting your chinese supplier’s warehouse and asking about freight consolidation.
It is important to be sure proper precautions are taken when condense packing though. Some materials become a hazard when stored together, so be sure proper packaging and safety guidelines are being followed to avoid potential accidents.
Weigh and Measure Your Packages
If you have the basic size information for your products, you will be able to use freight estimates more accurately. The more accurate your estimate is, the more likely you are to get the best shipping deal.
Online shipping estimates require basic information about your package(s). Shipping companies will also request this information, make sure the information you give them is correct.
Inaccurate information can lead to paying too much if, or surprise fees. Width, height and weight are the dimensions used to determine the size of your package, and the cost to ship it. This is an important step if you want to find the best price.
Choose FCL (Full Container Load), or LCL ( Less than Container Load) Shipping Over Air Freight
These two different methods of shipping come with very different price tags. FCL means you have a large enough quantity of product to fill an entire cargo container by yourself.
FCL shipping is cheaper in terms of cost per volume, usually totalling to 30-40% less than LCL. The downside to FCL is that you need to be importing huge quantities of products for it to benefit you.
FCL and LCL shipping methods rely on being transported via sea, not air. Keep this in mind as sea freight tends to take a bit longer to arrive than air freight does.
LCL on the other hand is best when you are only importing a few items and can’t fill an entire cargo container, or when you need the product asap.
When you ship LCL your products will only occupy a given area of a container shared by other people’s shipments. Given the high rate of freight, LCL is still cost effective.
This method may be more convenient, but it almost always comes with additional fees, so the costs may be higher than you initially expect, either way it remains the most cost effective and efficient way to ship lower quantities of product.
Choose the Right Container
If you choose to ship FCL, it is important that you have an understanding of container sizes. Choosing a container that is too big, or too small for your actual needs can both lead to wasted money and a delayed, or fragmented shipment. In general, you’ll have 4 options to choose from when choosing a FCL shipping container.
- 20 Foot FCL
- 40 Foot FCL
- 40 Foot HQ (High Cube)FCL
- 45 Foot HQ (High Cube)FCL
The 20 foot container is designed to hold more weight, but less volume. For example, these containers are better suited to things like raw metal, machinery, mechanical parts, like engines, and fill material. Products that weigh a lot, but aren’t necessarily large in size.
40 foot containers are designed for large items, or large a quantity, that isn’t as unproportionate in a volume to weight ratio. For example, furniture, tires, clothes and things of a similar nature are best suited to 40 foot containers.
High Cube containers are the same length and width as their standard counterparts with the only difference being that of height. HQ containers have a ceiling clearance of exactly 1 foot (12 inches) more than a standard FCL. In the case of a 40 foot HQ cube, this means your container will have an interior height of 8ft 10in. This extra foot equals out to 2,694 cubic ft of storage space, vs the standard 40 ft FCL, which only has 2,350 cubic ft of usable space.
You should take these things into consideration when choosing your FCL container. Knowing how much product you have and which container to choose will save you money and remove the potential for unexpected problems, or surprise costs.
Opt for Freight Insurance
Freight insurance is exactly what it sounds like. Accidents and lost, or damaged packages don’t happen very often, but when they do the loss can be very costly. The cost of a loss is always more expensive than the cost of insurance. If a person has freight insurance they will be reimbursed the total value of their shipment in the event that an accident should happen during the transportation.
Always remember to tell your shipping provider about insurance requirements and inquire about exact coverage specifications. It is best to be fully informed of any exclusions, or fine print before you need to file a claim, not after. If you are not happy with the price of coverage, you can always opt to negotiate.
Insurance is most often applied by determining a percentage and then applying it to the value of the products. The insurer decides this percentage and it is reflected in the cost of the premium. Incoterms usually state who is responsible for insuring a shipment and it may be included with the Incoterms.
In the case of CIF (cost, freight, insurance) insurance is included. However, when using DAF, or DAT you have to inform the shipping provider of insurance needs. Cargo insurance is not very costly on average, this is due in part to the low rate of incidents.
Gain More Shipping Lead Time
Shipping lead time is basically the time it takes your shipment from point A to Point B. Time is money, it matters to your business and in reducing your shipping costs. If you have a long lead time, you will have to plan accordingly and place shipments earlier.
Say you need a shipment in October, but your lead time averages 8 weeks. You will need to place that order in late July, or early August to ensure your delivery falls at the time when you need it. By ordering earlier, you’ll avoid having to express ship, or lose business.
Factors that help determine lead times:
- When the cargo is initially shipped
- How long your shipment is held over at a port, or warehouse before being loaded (up to 7 days)
- Customs delays in China, or the U.S.
- Unexpected delays, like inclement weather
You are entitled to increase your lead time to a reasonable extent in which to leave a safety zone when placing an order. This rule is set in place for the most part because of how unpredictable ocean transport can be. Increasing lead time is a wise business choice, it allows you to take full advantage of your assets and allows your carrier to plan for and ship your product more effectively.
Never Ship on Peak Days
Certain days of the year are an absolute logistical nightmare. Most of these days fall into the week leading up to, or after major holidays when a lot of merchandise is being purchased and transported, or when a holiday has caused a back up.
During these days congestion is at its highest, delays are rampant and shipping prices skyrocket. Choosing to ship ahead of, or after these days leads to much better prices and a more accurate delivery time.
Friday is generally a good day to ship your items, it is considered an off-peak day due to customers preferring to get their deliveries on tuesday. For industrial, commercial and other non consumer shipments, this means a lower shipping cost.
It’s possible that this method of shipping manipulation may not work for your company and if it doesn’t, that’s ok. But, if it does, it’s one more way to make the shipping process cheaper for you.
Avoid Surprise Charges
POL (point of load) and POD (point of delivery) charges can be a pain. Oftentimes these are acquired due to demurrage, or detention because of improper documentation. When this happens you will be charged extra for the inconvenience of not having your shipment properly documented.
Sometimes these charges can be absurdly high and it may leave you in a position where you have to abandon your shipment on the port in order to deal with customs. To avoid these types of charges always be sure to follow any and all customs rules, properly document your shipment and never try to import restricted, or banned items.
Avoid Marking Everything As Urgent
Marking everything as urgent can be tempting, after all, we want our products delivered as fast as possible. However, you should save this option for when a delivery really is urgent. If a shipment is not needed asap, there is no reason to rush it along.
Rush shipping is always significantly more expensive than standard shipping and for good reason. When you rush a shipment, you are also rushing along the people responsible for getting it from point A to point B, making your delivery an added priority to keep track of and push along.
