4 Ways to Save on Shipping Costs
We’ve outlined a few areas for importers to consider how you can maintain more control over or even lower your shipping costs.
Know Your Terms of Sale
The terms of sale between a company and the foreign supplier affect the ability to control the cost of shipping from the supplier to the company’s door, and your knowledge of these shipping terms can keep you from overpaying in some instances.
Example 1 — Control offered by shipping Ex Works (EXW)
If you are an importer, choosing Ex Works gives you the opportunity to make decisions concerning all freight costs from the warehouse loading dock of your supplier. This provides maximum control of those costs. Choosing Ex Works will also allow you to know the true cost of your product, rather than having freight and insurance built-in to your invoice for your goods.
If you are paying the freight cost, you have the right to choose how that freight will be shipped and who will ship it for you. It is in your interest to have someone shipping your goods that is accountable to your company.
If you are an exporter, there are other terms of sale that will provide the level of control you prefer.
Example 2 — Paying the correct amount in duties
When shipping CIF, as with other C and D terms, insurance and freight are non-dutiable charges that fall on the responsibility of the seller.
However, the exact insurance and freight costs are not always listed out on the invoice provided by the seller. In that case, neither the importer or the Customs broker will be able to know what non-dutiable charges can be subtracted from the transaction value — unless an itemized invoice is provided, or the importer of record is being billed for these charges on a separate invoice.
“I see situations where shipments are bought on CIF terms, but insurance and freight aren’t broken out itemized on the invoice – either the buyer hasn’t asked that they be itemized or the shipper has refused to itemize these items on the invoice – so the end importer ends up paying more duties than necessary.” – Jason Combs | VP of Indiana Operations @ C J International
Whichever terms your shipments are under, it’s important to understand the responsibilities, control, and costs assumed by the buyer and the seller.
Understand Your Options: Tips for LCL & Air Shipments
A couple practices to consider when shipping LCL and/or air cargo:
- If your supply chain schedule will allow, consolidating LCL shipments reduces the number of entry fees and freight forwarding fees.
Note that while shipping full loads typically used to result in lower costs, since shipping prices have gone up along with warehouse and devanning costs, this is no longer a given.
2. For air shipments, consider both the different costs and different palletizing requirements between passenger and cargo-only aircrafts.
Passenger aircrafts (which typically offer more affordable rates) require pallet heights to be shorter than what cargo-only aircrafts allow. Palletizing products as high as possible may restrict your rate options when it comes time to book your shipment on an aircraft.
Exercise Reasonable Care
Exercising reasonable care in your supply chain is a Customs requirement, and a way that shippers can avoid unnecessary fines, delays, and other complications with their shipments.
Recent statistics have shown a spike in Customs enforcing penalties and fines on importers who failed to exercise proper care in their supply chain.
- See related article on Customs Penalties and Fines & 5 Ways to Avoid Them
- Consider Customs Trade Partnership Against Terrorism (CTPAT) certification. This voluntary program helps to ensure a higher level of supply chain security.
While supply chain infrastructure and information-sharing begins to change slowly on a large scale, there are many smaller ways for shippers to improve communication within their own supply chains, which can result in lower shipping costs, or at least more predictable shipping costs.
For instance, it is absolutely crucial to complete key groundwork before…
- you begin shipping as a new importer
- your company begins shipping a new or different commodity
- your company significantly raises volume of imports
What does that mean?
- Ensure that you as an importer have a thorough understanding of what Customs regulations your shipments are subject to, as well as what the associated costs are of not complying with these regulations
- Ensure that you as an importer understand the ramifications of adjusting elements of your supply chain such as volume, re-routing, or otherwise shifting the established process
Many components have to work together for supply chains to function correctly — the sooner (and in more detail) you can communicate your company’s upcoming needs, the sooner all the parties involved in your supply chain can adjust to accomplish your goals in the most efficient and cost-effective way.
Our blog posts are for informational purposes only. While we use reasonable efforts to furnish accurate information, C J is not liable or responsible for the accuracy or reliability of any information contained herein.