In 2017 over 200 million TEU (20ft equivalent units) of containerised cargo were shipped across the globe, this is the first time this milestone has been reached.
Sea freight is projected to continue growing, and today about 90% of non-bulk cargo worldwide is transported by container. However as recently as the 1960’s most people saw it as a risky investment and in 1968 fewer than 1 million TEU of containerised cargo were moved.
Before the advent of containerisation, cargo was carried in breakbulk ships – loaded, lashed, unlashed and unloaded from the ship on pallets, in crates, bags, slings or nets, both time-consuming and dangerous. The first shipping container was invented in 1956 by American trucking tycoon Malcolm Mc Lean.
By packing cargo into containers, a significant volume and mass of goods are handled with minimum disruption and delivered ‘door to door’ in a single unit, providing greater protection to the contents. This has inevitably reduced shipping costs and today with some planning and preparation it is possible to make considerable savings on your imports, here are our top tips.
1. Consolidate Shipments
If you are shipping multiple items from different suppliers, you can consolidate the separate shipments into one, as long as the suppliers are not too far apart, in what’s known as a Buyers Consolidation. This means freight, customs and delivery charges only apply on the one shipment, instead of multiple times.
2. Think long term, ordering more to fill an entire container
Increasing your order won’t decrease your shipping price, but ordering in bulk may add less than you think to your order costs, and it will make the cost of shipping more cost-effective as the cost per unit will go down.
If you increase your order size by enough, you may have enough product to fill a FCL (full container load), which can be more cost-effective depending on the volume of your shipment, as opposed to LCL (less than container load) shipping where you book a portion of space within the container.
The two differ in a few ways – when you ship using FCL, you pay a flat rate and have an entire container to yourself. When you ship using LCL, you pay according to the volume of goods that you’re shipping and you share a container with other importers. Full-Container Loads (FCL) are cheaper than Less-Than Container Loads (LCL) once you reach a certain volume of goods (approx. 25/26 CBM).
Choosing the wrong option can leave you spending far more than you need to, so ensure that you check you’re picking the right option for you.
3. Send straight to your Fulfilment Centre
By importing your goods straight to your distribution warehouse you can save yourself time and money. The turnover time (and amount you’ll spend on transport) will be eradicated – you won’t even have to touch your goods before they’re up-and-running. We can help with eCommerce, storage, fulfilment and distribution solutions and we work alongside Amazon, ebay, and all the major eCommerce platforms. Using our software, fulfilment takes place in real time, as soon as your customer clicks to purchase.
4. Don’t ship during holidays or peak times
As with most industries, there are times of the year where the shipping world is busier. Some of these times are more obvious – such as the lead up to Christmas – and some are lesser known, such as national holidays in China, but these can disrupt supply chain for weeks.
Around certain dates there will be more congestion, more delays and, unfortunately, price hikes. Last minute shipping is a bad idea for this reason; if you plan your shipments, you can try to avoid the peak times and holiday congestion. We work around these dates and are able to negotiate and prices for our customers at peak times, your TPS Global account manager will ensure you are informed throughout your planning phase.
5. Choose your shipping terms carefully
Shipping terms determine who’s responsible for this and who pays for that – so if you get them wrong you could end up in a situation where you end up paying way more than you need to.
This is especially true for EXW and CIF/CFR shipping terms, where you can run into massive hidden fees through things like export licenses and unforeseen extra charges at customs. When choosing your shipping terms, make sure that you’re aware of the costs and responsibilities for each term so that you know what you’re paying and why. We personally recommend FOB shipping terms as it’s an even split of responsibility and all of your costs are visible from the outset.
6. Which port are you shipping from and to?
The location and the size of the port are both important factors when determining whether it’s a cost-efficient option.
Particularly in China, as it’s such a large country the cost to transport goods varies from one end to another. Another reason that your outbound port is so important is the size of the port itself – the larger the port, the more equipped it is to deal with vessels and the lower the price. Smaller ports are more expensive due to being less efficient to use – some even need feeder vessels to be reached as they aren’t directly accessible through common routes.
Both of these factors affect your price – which affects your bottom line. We can advise on the best ports for your goods, and utilisation of multi-modal forwarding means it can save money to use rail as well as sea freight when moving containers.
7. Insure your goods so that if (worst case) something happens, you’re covered.
This tip won’t necessarily save you money, but it will ensure that you don’t lose it.
If you make sure you’ve got marine insurance, you’re covered if something goes wrong in transit. Imagine – you’ve just spent all your savings on stock for your start-up and insurance is often as low as £35 so even if you don’t need to claim money back, you aren’t going to be destroying your bottom line.