How to Reduce International Shipping Expenses
International shipping costs have skyrocketed due to a sharp reduction in capacity caused by the COVID-19 pandemic. Port lockdowns, container ships being taken out of service, increased consumer demand, a lack of containers, a drop in commercial flights carrying freight in their bellies, and lengthy delays in loading and unloading have all played a role in driving up the cost of shipping goods internationally.
According to a McKinsey survey, the cost of shipping a container from China to Europe has risen six-fold since January 2019.
Retailers, therefore, have to weigh their shipping options far more prudently than they have in the past. In this article, we offer advice on how to optimize ecommerce logistics, and especially the transportation of goods, by using the most cost-effective methods possible.
First Things First: The Fundamentals of Shipping
When it comes to retail logistics, successful shipping requires determination of the size and weight of a package, the distance it needs to travel, and the timeliness of arrival at its final destination.
Let’s examine these factors a little more closely:
This relates to the space your package occupies in a truck or shipping container. The larger a parcel’s dimensions, the greater the shipping cost.
The weight of your package will impact the shipping rate—it costs more to ship heavier items than lighter ones.
The distance over which your package must travel will significantly affect shipping costs. As you might expect, international shipping rates are higher than domestic ones.
Delivery options vary between same-day, next-day, in two-three days, within seven days, or longer. The speedier the delivery, the higher the costs.
How to Optimize Shipping Costs
The most expensive way of sending goods internationally is via a courier service, which typically will make use of air transport. The cheapest—and slowest—way is to send it as freight, by truck across land and/or by ship across seas.
Whichever shipping method you decide to use, there are ways to cut back on your costs. Here are some of the possible options:
- When preparing your packages for shipping, use corrugated boxes. They are cheaper and lighter than conventional cardboard cartons.
- Try to match the size and shape of your packaging as close as possible to the item that is being shipped. This saves on the costs of infill.
- Use lightweight infill such as air pillows, bubble wrap, or foam inserts.
- Consider using padded envelopes or poly bags. They are more cost-effective than boxes.
- If you are a frequent shipper, buy dunnage, infill, and poly mailers in bulk.
- Make use of flat-rate shipping boxes offered by major shipping companies. As the name suggests, the shipping costs are fixed no matter how much you manage to stuff into their box.
- Choose a shipping company that offers free packaging.
- Buy shipping labels online from ecommerce ventures such as ShippyPro and Shopify.
- Integrate rail into your freight shipping strategy to reduce fuel use and shrink your carbon footprint.
- If possible, reduce shipping distances by partnering with companies operating multiple fulfillment centers.
- Scout around for discount rates, as offered by some companies for clients shipping high volumes of goods.
What's the Cheapest Way to Send a Small Package?
In general, air freight is quicker and ocean freight is cheaper. However, smaller shipments are often cheaper by air than by sea.
For consignments that weigh less than 100 kg, for example, the cost of shipping air freight and ocean freight is similar. In this case, of course, businesses will likely choose the air freight option to get the goods to their customers as quickly as possible. For consignments weighing more than 100 kg, surface shipping (using trucks, rail, and/or sea) is significantly cheaper.
Hidden Costs Can Blindside the Unwary
Inexpensive shipping plans look good on paper—until you are socked with a bill that includes fees which weren’t necessarily apparent when you signed the contract. These charges could include:
- Handling fees
- Last-mile delivery fees
- Fuel surcharges
- Residential surcharges
- Tracking fees
When considering your shipping options, be sure to check for these additional expenses. Sometimes, the seemingly more expensive options may work out cheaper in the long run.
Finally, there are necessary expenses, which should not be overlooked because they could all add up to a substantial amount. These include:
- Cost of boxes, packaging, and stickers
- Courier costs for collecting and delivering the goods
- Import or export duties.
To Insure or Not to Insure?
While sophisticated tracking software these days greatly reduces the risk of goods going missing in transit, there is no guarantee that they will not be damaged during their journey.
Since you want your customers to receive their deliveries in good condition, it is probably worth investing in an insurance scheme, especially for high-value goods.
If you are shipping in high volumes, the nominal extra cost of insurance (typically about three percent of the value of the goods) could well end up paying for itself.
Because shipping is a risky business that can be subject to a range of possible delays, especially in these uncertain times, it’s rare to find a company willing to extend the delay insurance they offer large shipping companies to ecommerce retailers.
Those few that do, charge a premium. The best the retailer can do is carefully examine the delivery track records of the companies they plan to entrust with their deliveries—and then choose the one that comes out tops.
Express versus Freight—Which to Choose?
The answer to this question depends, of course, on how urgently your customer requires the purchased item. As to be expected, express, or expedited, shipping is going to cost substantially more than freight, or standard, shipping.
Express shipping typically involves air or road transportation, while freight shipping uses slower modes of transport such as ocean-going ships.
If your customers are prepared to wait longer for their goods to arrive, the cheaper, standard shipping option is the obvious way to go. If not, express shipping will be inevitable—but be sure to appraise your customer of the extra shipping costs involved.
How Shipa Can cut Your Costs
So are you always corralled into choosing between pricey express shipping by courier and the slow, steady, and complicated freight option?
While once that was the case, a new breed of technology-powered fulfillment partner is changing things exponentially, as Hassan Mikail, Middle East CEO of Shipa Ecommerce, explains.
“At Shipa Ecommerce, we offer an option that is cheaper than express and faster than freight. Our process is tech-driven and involves connecting express parcels and freight shipping.
In other words, we facilitate the movement of consumer parcels as commercial freight, thus reducing costs.
Our tech platforms connect to e-tailers, freight forwarders, customs clearance agents, and various supply chain players. They exchange data with each other and simplify all the technical processes.”
Shipa’s Fulfillment Centers
Another way that merchants in the GCC can make considerable savings with Shipa Ecommerce is to ship in bulk and store their inventory in Shipa’s fulfillment centers in Dubai and Kuwait, from where orders can be filled by our team of last-mile delivery drivers.
Be Vigilant—Shipping Costs are Constantly Changing
Shipping companies typically adjust their rates every January, but because of the pandemic, changes are being made far more often, typically in response to port and border bottlenecks, container shortages, increased consumer demand, and, when it comes to air freight, a sharp reduction in commercial flights.
There is no one-size-fits-all shipping method and, as an international ecommerce retailer, it will pay you, currently, to spend more time than usual studying the trends, watching the markets, and comparing multiple quotes, before deciding on your shipping options.
The ultimate goal, of course, should be to ensure your customers’ orders are delivered safely, on time, and at the lowest possible price. It’s the greatest of challenges, but one of the most satisfying to overcome, and with help from Shipa Ecommerce, satisfaction is something that you—and your customers—can take for granted.